UPDATE: The customer and the retailer have worked together to find a solution that will allow the customer to receive the delivery. Please read this update before reading the article below.
Click here to read about the resolution
Just when you thought the last minute surprise “at the table” GMC HUMMER EV markings and runaways couldn’t get any worse, a dealer in Fayetteville, Arkansas has taken it to a whole new level. It makes us wonder if this is just the new normal when it comes to GMC’s flagship electric super truck.
This story started with a simple post about GM-Trucks.com HUMMER EV Facebook Group that caught our attention. We reached out to the customer.
HUMMER EV #210 arrives at dealership
The reservation and order holder for the GMC HUMMER EV #210 is currently dealing with an issue that we have never heard of before. We call him “A”. After making a reservation of the Edition 1 in October 2020, patiently waiting over a year and getting a promise that his dealer wouldn’t charge him more than MSRP, “A” sat down with his GMC HUMMER EV dealer last week to to complete all the paperwork so he could drive home his new HUMMER pickup a few days later. That’s when things went south out of the blue.
For “A” it was supposed to be a lucky day. After waiting nearly a year and a half for the most amazing product GMC has ever sold, wouldn’t you be excited to take delivery of your $112,000 electric Super Truck that has 1,000 horsepower and can go 0-60 in 3.5 seconds? “A” certainly was and even more so after he received word that his new HUMMER EV had arrived at his GMC dealership ready for delivery. The plan was to visit the dealership a week before delivery to sign the paperwork and then return a few days later to drive his super truck home.
Upon arrival, “A” sat down and began signing the paperwork. In the process, his salesman gave him a non-standard looking deal. His salesman said it was a “standard dealer form”. Turns out that wasn’t necessarily the truth.
Inside the pile of papers was a “right of first refusal and security agreement”. It suggested that after signing, “A” as the owner of HUMMER EV #210 would have no legal right to sell or transfer said HUMMER EV to anyone other than “Superior Buick GMC”, at MSRP, for TWO YEARS. Even weirder, the dealer would put a lien on the HUMMER to make sure that was the case as well. It also specified potential damages as the excess of the vehicle’s value minus the MSRP.
“A” balked, refused to sign the agreement and demanded the manager explain what was going on. “The manager called the owner of the dealership, who explained that other examples of the HUMMER EV were being auctioned for north of $200,000 and they would not give up the potential profit,” “A” said. “I asked what we needed to do to get the first right out of the contract and the owner said they needed $100,000 over MSRP”.
So “A” went and said he was still going to buy the vehicle and that he considered the HUMMER EV #210 to be his, but that he needed time to process the dealer’s claim.
Management demands the customer’s sign but then pulls the plug
The next day when “A” asked by email for another copy of the contract to review. Shortly thereafter, the dealer called him and said they “intend to keep the vehicle for themselves.”
Pictures of HUMMER #210 were posted on the dealer’s Facebook page shortly thereafter and comments from the dealer’s account made it appear the vehicle was for sale.
Refusing to sell a customer a HUMMER EV ordered through the reservation process likely violates GMC’s reservation contract, but asking for more than MSRP is not.
But while the reservation contract doesn’t spell out exactly what options a customer has when a dealer tries to get them to waive their right to sell their own car for two full years, a recent letter to all General Motors dealers shines a light. more light on situations that can be like this.
This letter from GM North America CEO Steve Carlisle reminds dealers that they have already agreed to “effectively, ethically and legally sell and promote the purchase, lease and use of products by consumers.” by being tied to a GM dealer agreement. It also mentions that dealers selling to brokers or auction houses is another action that runs outside their dealer agreement.
Concern for all HUMMER EV reservation holders
If a dealer can hook demands on a HUMMER EV sale like a poison pill and then shop around the truck to get the highest price after scaring away the reservation holder, the entire reservation system is pointless. The implied benefit of reserving an Edition 1 HUMMER EV was that exclusivity was determined by the reservation system and how quickly you could register your interest, not by how much of a markup a dealer would try to apply.
GM is said to have made stricter agreements for dealers participating in the HUMMER EV programbut so far it hasn’t stopped retailers from trying to slip in huge markups at the last possible second.
In the face of all this, “A” plans to retain the representation unless the dealer reconsiders its proposal. “I have nothing to lose in this business and have the financial ability to fight them just for fun. If it prevents it from happening again, I’m all for it,” says “A”
Meanwhile, other dealers are approaching “A” and other HUMMER EV reservation holders – offering to transfer their reservation to their own dealer without additional labeling or agreement. One is even offering a free flight and $1,000 in accessories to anyone who transfers their booking. It is not clear whether these retailers would also request a “Right Of First Refusal”.
Even if it’s too late for “A” (once a HUMMER EV is shipped it can’t be transferred), everyone else with a HUMMER EV order should get warranties from their supplying dealer or transfer their order to a dealer that promises to do not sell with a markup.
GMC dealer response
I contacted the dealer and have yet to hear back from management.
The GMC’s response
I contacted the GMC about this story and they responded with two statements.
“We are investigating this specific case. We do not support sales practices or brokerage activities that undermine the integrity customers expect from the GMC brand.” -Chad Lyons, GMC Communications
“To protect the privacy of all involved, we are not providing specific details about this situation. We encourage both independent parties to resolve this matter in a positive manner.” -Mikhael Farah, GMC Communications
Other responses from GMC dealers
After publishing this article, GM-Trucks.com was contacted by two different GMC dealers explaining why this “No Resale” policy may have been implemented. Employees of both dealerships expressed that several vehicles at their dealerships have recently been sold to customers at MSRP and quickly resold at a profit by customers who had no intention of owning them.
A Michigan dealer has immediately turned over all three GMC HUMMER EV deliveries they have sold on sticker. The other has yet to receive a HUMMER EV but has had a Cadillac Escalade and another vehicle immediately turned around.
From a business perspective, this may shed more light on why retailers can get extra protection from their “sell on sticker” goodwill during a tough industry period.