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Old 01-13-2016, 12:07 PM   #1
XDCX
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Default GM to launch FactoryPreownedCollection.com website

GM indicated they'll launch a new website, FactoryPreownedCollection.com, where consumers will be able to search through approximately 30,000 pre-owned vehicles. All of the vehicles will have less than 37,000 miles and will include a 12 month/12,000 mile warranty. (24 month/20,000 mile warranty for Cadillac vehicles.)

For a link to the GM Press Release - click here

The vehicles will be sourced from GM's lease returns, rental returns and their company car program. The consumers will select their vehicle and then select a GM Dealer to complete the transaction. The Press Release does not indicate how the GM Dealers will be compensated.

Any bets on how much GM will pay their Dealers to deliver these vehicles?

Additionally, from a GM Dealer's perspective, do you think this is a good program or a bad program or is it too early to tell?
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Old 01-13-2016, 01:13 PM   #2
steve_biegler
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Most state franchise laws keep manufacturers from selling new cars but these are used. This is a slippery slope for dealers. I'm going to guess that the amount of compensation will be no where near the average gross on used now. Do you want your customers buying directly from the factory? Who sets the prices? How do you deal with the trade? If this proves to be successful, getting franchise laws weakened or completely overturned can't be far away.

Dealers remember, THE FACTORY IS NOT YOUR FRIEND OR PARTNER!


The site is already up!

http://www.factorypreownedcollection.com/

Last edited by steve_biegler; 01-13-2016 at 01:22 PM.
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Old 01-13-2016, 07:28 PM   #3
mryan55
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It will be interesting to see how this pans out. As we have a few GM dealerships in our dealership group I suppose I will get to see what happens as this program grows. I don't think there will be too much traction at the end of the day.

Part of me thinks at the end of the day that this will just work out as a regular retail deal with some type of guaranteed markup -- but we will see.
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Old 01-14-2016, 08:08 AM   #4
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Interesting to me that there has been no chatter out there by the GM dealers. I guarantee this was discussed (or should I say they were "informed") with some of the dealers. Was the press release done now to prevent a flare up at NADA make meetings?
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Old 01-14-2016, 08:30 AM   #5
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Nothing GM does would surprise me.
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Old 01-14-2016, 11:01 AM   #6
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Quote:
Originally Posted by mryan55 View Post
It will be interesting to see how this pans out. As we have a few GM dealerships in our dealership group I suppose I will get to see what happens as this program grows. I don't think there will be too much traction at the end of the day.

Part of me thinks at the end of the day that this will just work out as a regular retail deal with some type of guaranteed markup -- but we will see.
I'm inclined to agree and my bet is the whole program will end up being a non-event when we look at this issue in the rearview mirror.

If I were a GM Dealer I'd me frustrated that the factory is seemingly entering a segment of my business that has historically been 100% the Dealer's domain. By contrast, I'd look back at all of the other GM initiatives of late (e.g. selling cars on Ebay) and conclude that GM will likely piss away a lot of time and money but they won't end up selling many cars.
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Old 01-14-2016, 11:07 AM   #7
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Quote:
Originally Posted by 57years View Post
Interesting to me that there has been no chatter out there by the GM dealers. I guarantee this was discussed (or should I say they were "informed") with some of the dealers. Was the press release done now to prevent a flare up at NADA make meetings?
I just read the report that Automotive News did concerning the GM program and there were only 18 comments that followed the story. While some Automotive News readers expressed their concern that GM's actions were weakening their franchise there really were not too many comments given the size of Automotive News' readership.

I'd still be curious to know how GM plans to compensate their dealers and how the car deal is structured.

It's possible the GM may have crafted a program that's win-win-win for the factory, the customer and the Dealer but I'm a born skeptic. As always, time will tell...
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Old 01-14-2016, 06:23 PM   #8
jbellx02
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"GM indicated they'll launch a new website, FactoryPreownedCollection.com, where consumers will be able to search through approximately 30,000 pre-owned vehicles"

Where will all these cars come from?
The cars that were not sold during the Closed GM Sales, GM Leasee Turn-Ins & Company Cars. My local "GM Closed Sale" only sells about 40% on Sale Day. 60% are reruns that stay for the next sale, some have remained at the Local Auction up to 6 months. GM does not always consider live bidding as true market value for their vehicles.

The website will feature all of the above with Kelly Blue Book used as a guide to price these cars for customers: High-Low and a fair market value for each listed vehicle considered actual price customer will pay for the vehicle.

Dealer Mark-Up Margin will be $750-$1700

Vehicles will have no more than $500 physical damage, not reconditioned.

Dealer must agree not to charge the customer for an auction pick-up fee.

Advantages to Dealer per GM

No Advertising Costs
No Floor Plan Costs:
GMF Dealer Source Buy Fee Waived
No Fee for Extended Warranty 12/12
No Maintenance Fee

The above are highlights from Global Connect.
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Old 01-14-2016, 08:12 PM   #9
mryan55
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As someone with nothing really invested in GM's race to retail CPO vehicles on their own, I am interested to see how many vehicles are actually retailed via the program and how much this program just becomes wasted money and time for GM and its employees.

It's a good in concept, but within 100% buy-in from the dealers I am not sure how much success there will be. It is certainly possible that by using KBB as a pricing guide and an estimated margin of $750 to $1700 that these vehicles could come in significantly higher than a non "Preowned Collection" vehicle that was bought or traded for at average to clean Black Book, reconditioned, certified and put out on the lot. Doesn't the GM CPOV include some sort of extended maintenance anyhow?

It will be interesting to see how things shake out though.
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Old 01-15-2016, 08:40 AM   #10
57years
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Do I not see some problem with this website skimming the credit worthy customers away from the dealer lot?

Also, does this not "fix" the retail pricing for the "credit suspect" customer, where "special financing" comes into play?
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Old 01-15-2016, 11:45 AM   #11
mryan55
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Quote:
Originally Posted by 57years View Post
Do I not see some problem with this website skimming the credit worthy customers away from the dealer lot?

Also, does this not "fix" the retail pricing for the "credit suspect" customer, where "special financing" comes into play?
I am afraid it will. With that margin there will be no hiding of any bank fee, nor any additional profit center for higher margins on those 'less than worthy' credit risk customers.
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Old 01-15-2016, 01:34 PM   #12
XDCX
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Quote:
Originally Posted by jbellx02 View Post
"GM indicated they'll launch a new website, FactoryPreownedCollection.com, where consumers will be able to search through approximately 30,000 pre-owned vehicles"

Where will all these cars come from?
The cars that were not sold during the Closed GM Sales, GM Leasee Turn-Ins & Company Cars. My local "GM Closed Sale" only sells about 40% on Sale Day. 60% are reruns that stay for the next sale, some have remained at the Local Auction up to 6 months. GM does not always consider live bidding as true market value for their vehicles.

The website will feature all of the above with Kelly Blue Book used as a guide to price these cars for customers: High-Low and a fair market value for each listed vehicle considered actual price customer will pay for the vehicle.

Dealer Mark-Up Margin will be $750-$1700

Vehicles will have no more than $500 physical damage, not reconditioned.

Dealer must agree not to charge the customer for an auction pick-up fee.

Advantages to Dealer per GM

No Advertising Costs
No Floor Plan Costs:
GMF Dealer Source Buy Fee Waived
No Fee for Extended Warranty 12/12
No Maintenance Fee

The above are highlights from Global Connect.
Thanks for the post - that was great information.

It was very interesting to read that in your area only 40% of the GM Auction Cars end up selling at the first sale and that some remain at the auction for as long as six months. I'm betting these vehicles are either a bit rough or they have the wrong color and/or equipment. Additionally, I've also seen some lease returns where the residual is way off from reality because the vehicle was loaded with expensive options that are not really in demand.

A $700 - $1700 margin seems pretty thin if the Dealer has to pay the auction and then pay to have the vehicle transported and reconditioned.

If GM is using this program in an effort to retail their auction misfits before they take a hit and sell them wholesale then I'm betting it will never amount to a program that delivers much volume or poses a real thread to the Dealer Network.
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Old 01-16-2016, 07:27 AM   #13
jbellx02
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Default GM to launch FactoryPreownedCollection.com website

Bottom line is GM will no longer be selling vehicles on Ally Smart Auction. Those vehicles will appear on the FactoryPreownedCollection website(lease turn-ins, Company Cars, etc)

Our dealership sales staff has sold from the Smart Auction website for many years. All we need to do is adjust our process and put a new website in our favorites bar.

Hopefully the new website will direct a few more customers to our dealership.
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Old 01-18-2016, 01:32 PM   #14
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Quote:
Originally Posted by jbellx02 View Post
Bottom line is GM will no longer be selling vehicles on Ally Smart Auction. Those vehicles will appear on the FactoryPreownedCollection website(lease turn-ins, Company Cars, etc)

Our dealership sales staff has sold from the Smart Auction website for many years. All we need to do is adjust our process and put a new website in our favorites bar.

Hopefully the new website will direct a few more customers to our dealership.
Thanks for the information.

It's great to hear your perspective - especially since you're not worried about the new program.
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