In a Feb. 9 letter addressed to GM North America President Alan Batey, the California New Car Dealers Association said it has "strong concerns" about whether the program violates a number of California consumer protection laws and other legal requirements.
"We have had our attorneys review the program and they have raised various legal issues that need to be addressed by GM," said the letter, signed by Brian Maas, the association's president. Automotive News obtained a copy. At least 169 of the association's 1,100 members are franchised GM dealers.
The letter questions whether the program puts GM in unfair competition with its dealers for used-car sales. It also expresses concerns that GM is engaged in auto brokering -- for which GM would need a California license -- and that the Kelley Blue Book suggested price that accompanies each vehicle listing is "unrealistic" and "therefore misleading."
"There are a whole host of issues relative to the Pre-Owned Collection program, and it's not clear to us, based on what we can surmise from the program itself, whether [GM has] thought about these issues," Maas told Automotive News.
Brian Sweeney, Chevrolet U.S. vice president, when asked about the broad issues raised in the California association's letter, acknowledged that the program "probably came on the dealers a little quickly" but said the Chevrolet National Dealer Council supports it. "They understand it," he said.
"It's a lead source," Sweeney said. There also was "noise" from dealers when GM's Shop-Click-Drive online buying program started in late 2013, he added.
"It's the unknown. They're not used to it," he said. "They're used to either buying on the online auction or going through the physical auction. And now there's another portal."
The website is "an opportunity to really just connect the customer back to the dealer," and "it moves some of our product quickly through the system," Sweeney added.