GM's 'Price Protection' For Buyers Only Goes So Far

Image: Carlos Osorio (AP)

GM is making moves to protect vehicle pricing by offering buyers price protection on nearly every vehicle it sells — that includes Corvette and commercial vehicles. The price protection works by ensuring that the agreed-upon price for a vehicle is honored in the event that a price hike (either through markup or normal price increase by the automaker) occurs, according to Cars Direct. But only to a certain extent.

While this would appear to be great for customers on the surface, there’s a big catch to this: the price protection is only for vehicles that have sold orders on them, which are custom orders. The protection does not cover dealer stock. There’s also the urgency part.

The production date, or build date, of the vehicle, must be on or after the effective date of the price increase. The dealer must submit the sold order to GM within one business day of the price increase. The vehicle must be delivered immediately to the customer who placed the order. That is, the name of the customer who ordered the vehicle must match the name of the customer who receives the vehicle.

Notice how this actually doesn’t do anything to stop markups at the dealership-level. Dealers are protected by franchise laws, which means even as manufacturers are protecting buyers from markups from the factory, the dealers can still markup vehicle pricing as they please when cars arrive on their lots. The offered protection only guarantees to issue you, the buyer, a credit for the difference of the price when you ordered, and the new, higher price. The dealer can still add whatever markups it would like from there.

So yea, this doesn’t do much for the buyer, but understand that this is all GM can do. Franchise laws leave manufacturers’ hands tied and dealers have most of the control in the entire purchase process. The only real protection that you can have against markups and price increases is to get a signed purchased agreement that will guarantee the dealer will sell the vehicle to you at an agreed-upon price. And as I’ve said before, if a dealer is unwilling to sign one, it’s likely not a dealer you should be doing business with.

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