General Motors dealers are now required to tell customers who purchase a GM vehicle whether their vehicle is equipped with non-GM goods or services.
Specifically, dealers are required to use a new disclosure form for the following items on new or used vehicles:
- Non-GM service contracts (warranties)
- Non-GM parts
- Non-GM accessories
Failure to use the disclosure form could result in penalties and even termination of the dealer.
Dealers Already Required To Use The Form
GM’s franchise agreement has required dealers to disclose when a service contract, part or accessory is a non-GM product. That’s been that way for a few years.
What’s different now is that dealers are required to use a standardized form to make the disclosure.
According to GM, the change is intended to make clear to consumers the extent of its responsibility and liability for non-GM products.
Specifically, GM “has no obligations to the customer under a non-GM service contract” and that “GM is not responsible for the consequences of installing non-GM parts, equipment, or accessories on the vehicle,” according to a letter signed by GM North America President Alan Batey dated August 10th.
So, if a dealer installs non-GM parts while reconditioning a used vehicle or accessories on a new or used vehicle, the dealer must disclose this to the customer with the new standardized form. Customers can also request to see a list of non-GM parts installed by the dealers on request.
GM does not require dealers to disclose non-GM parts or accessories installed by previous owners or a used vehicle. Over-the-counter part sales are also exempt from the disclosure obligation.
Dealers who do not utilize the new disclosure form could be penalized in various ways, including:
- A fine of $500 per incident
- Becoming ineligible to buy other GM dealerships
- Becoming ineligible for GM’s incentive programs, including EBE (Essential Brand Elements)
Eventually, the dealer could face franchise termination.
On August 24th, GM Vice President of U.S. sales, service and marketing, Steve Hill, issued a follow-up letter to Batey’s. In it, he explained that most deals sell GM parts, accessories and service contracts or properly disclose when they sell non-GM products. The purpose of the new, standardized disclosure is to ensure that consumers understand the source of the product, said Hill, as reported by Automotive News via F&I and Showroom.
“For the disclosure requirements to have any meaning, however, there must be a consequence for a dealer who ignores or refuses to make these very important disclosures,” he added.
Dealers have 90 days from September 1st to add the form to their sales and service process. After that, GM zone (field) and central office teams will consider the dealership’s disclosure practices and the severity of the violations before imposing penalties.