The flow of retired rental vehicles that General Motors normally sells at auction to its dealers has slowed to a trickle since mid-November, dealers say.
The prices that GM can fetch on program vehicles -- those that the automaker takes back after they're retired from rental fleets -- dropped dramatically in late October, said Tim Walters, owner of Walters Elkland Chevrolet in Elkland, Pa.
Dan Kennedy, senior manager of GM Remarketing, said when the prices dropped, GM made the decision to dramatically scale back on vehicles sent through the auctions to protect prices. He said the auctions will resume on a normal schedule around the country on Jan. 5. The vehicles are typically sold at auctions open exclusively to GM dealers.
"The old GM would have taken a drubbing on those cars," Walters said. "Had they just flooded the market with those cars, there would have been consequences for residuals, which would have made it harder to sell new cars. I give them credit."
Many dealers rely on program vehicles to round out their inventories of used vehicles, including certified used cars.
One GM dealer, who asked not to be named, said he is seeing GM typically offer fewer than 70 program vehicles per auction, well below the 800 or so he was seeing in October. It is unclear when normal auction volumes will return.
The dealer said he stocked up on vehicles in October when prices dropped so he isn't hurting for inventory. But some dealers could be feeling the pinch.
"Some guys didn't stock up and got caught," he said.
The dealer said he last bought program vehicles at auction in early November. At that time, he bought desirable sedans, such as 2014 Chevrolet Impalas and Malibus, for 50 percent of the original sticker prices. In September, those vehicles in similar condition had sold for 65 percent of the original stickers.
GM has a surplus of program vehicles largely because recalls required the vehicles to be fixed before they could be auctioned, GM's Kennedy said. That backed up the normal flow of vehicles to auction and resulted in an oversupply that depressed prices, he said.
Walters said he briefly took advantage of falling prices.
In September and October, he bought 2012 Chevrolet Cruzes with mileage in the low teens for around $12,000. At that time, he considered such a purchase "a good buy."
But at an early November sale at State Line Auto Auction in Waverly, N.Y., Walters said he was surprised to see low-mileage 2014 Cruzes -- retired from rental fleets -- selling in the $12,000 range. Also in November, 2014 Impala Limited sedans, which are sold only to rental fleets, were selling at auction for around $13,000, he said. He wound up buying 15 Cruzes, four Impala Limiteds and two Chevy Sonics. All were 2014s.
"I went to the auction hoping to buy four or five cars and ended up buying 21," Walters said. "I should have bought more. I've been doing this for 20-plus years. Every now and then the stars align and there's a blip -- you take full advantage of it."