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Advice on GM Used Cars: Stay Away for Now

Too Many Problems Could Arise in the Coming Months


Advice on GM Used Cars: Stay Away for Now

Customers inspect a certified pre-owned Cadillac. Now is a good time to stay away from used cars being sold at GM dealerships.

Photo © Getty Images

As I write this update, GM has declared and come out of bankruptcy. Hundreds of dealers were to see their doors closed by October 2010, but here it is December and the final list of dealers is unknown. Want my advice on GM used cars? This is a lousy time to buy a GM used car from a dealer.

Primary reason to stay away from a GM dealer selling used cars is you have no idea what dealers are closing. Originally, the list was to be finalized by October 2010. Then, the timing was delayed. The problem with buying from a dealership closing is you'll have no built-in support network if your dealership closes. Sure, the federal government is guaranteeing all warranty work, but you'll be at the bottom of the pecking order at the new GM dealership.

Closing dealerships will be looking to maximize profits. I hate to paint all closing dealers with a broad brush, but corners are bound to be cut. How to put this? Longtime employees with sterling reputations may have sought employment elsewhere. New employees will be seeking a fast buck before seeking employment elsewhere.

GM Certified Pre-Owned is fairly worthless right now. That statement is going to engender some controversy, but it's true. Sure, the federal government is backing all warranties, but the new GM is probably going to pay less for warranty work than it currently does. That makes it even more of a loss for dealerships to take on. Sure, they have to do the work, but in what time frame? Your car may get fixed, but how quickly?

Plus, nobody independently certifies the pre-owned used cars at the manufacturer. Don't be surprised if mechanics certify a lot of cars that aren't qualified just so they can be sold for more money. (That reinforces my point to always have an independent inspection.) Again, what's to stop a dealer who is closing from certifying cars to:

  • make more money off a lower value car
  • atick another dealer with the warranty work
  • make GM lose money on certification

A dealer forced out of business by GM doesn't care how much warranty work it straddles GM with once the dealership doors are closed. The dealership just wants the extra premium it can charge for a certified pre-owned vehicle.

Sure, your car is going to get fixed, but you want to drive your car. The best warranty is one you never have to use. It doesn't amount to a hill of beans that the work is free if you don't have your used car for a week once a month because it's at the dealer.

The government doesn't know how to run car companies. Decisions made on new cars always affect used car prices. Expect them to be depressed for GM used cars for a while. Now, that's normally a good thing, but GM has been in a state of turmoil for the last year. I'd be leery of anything coming from GM in the 2008-2009 period, which is what typically is the certified used car fleet.

Right now there are better alternatives to GM certified pre-owned. Some that come to mind are Ford, Hyundai, Subaru and Honda.

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