As GM Authority reported a few years ago, GM Financial, the Detroit-based automaker’s captive finance arm, put an end to end-of-lease purchases for non-GM dealerships in an effort to prioritize participating General Motors dealers. A luxury dealer in California took The General to court over this decision, and recently had its cased dropped.
According to a report from Automotive News, the luxury used-car dealer claimed that General Motors, along with other automotive companies, has effectually limited off-lease capability to franchised dealers. GM retorted that lessees don’t technically own their leased vehicles, and any right customers have to buy their leased vehicle is not transferable to non-franchised dealers.
California Judge Terry Hatter Jr. dismissed the lawsuit on grounds that the luxury used-car dealer didn’t explain why the issue couldn’t be solved with “legal remedy,” and that courts could only grant an “equitable remedy” provided a legal remedy wasn’t possible.
The luxury used-car dealer also pointed out that California’s Civil Code allows lessee’s to terminate their lease early and purchase said vehicle. “When doing so, the money owed to the lessor is the payoff as amortized, based upon the financial structure of the lease,” the dealer said.
However, Judge Hatter dismissed this argument as well, writing that the luxury used-car dealer “provided no authority to support its argument.”
For those who may be unaware, this policy was brought about due to the global microchip shortage, and was intended to better support franchised GM dealers through limited vehicle supply. For obvious reasons, this decision was not popular among non-franchised dealers. It was officially put into effect on July 1st, 2021.
It’s worth noting that several other automakers, including BMW and Mercedes, have also enacted similar policies regarding leased vehicles.
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Comments
This is another half truth. the reality is that this policy is designed to benefit the leasing company not the dealer. if the lessee elects to trade the vehicle in with a non GM dealership, the GM store is unable to facilitate the buyout from GM Financial. Should the lessee take the vehicle to term and “drop” the vehicle off at a GM store, the dealer MUST send the vehicle back to GMF. This is purely designed for GMF profit from any available equity within the vehicle.
Used car dealers and their sales people’s practices can sully the buying experience of a good car very quickly. When back alley used care sales people get jobs at legitimate franchised brand dealerships, the dealer name and his product, suffers quickly.