GM's Online Sales Program Isn't Direct-sale, But It Is Pretty Clever

General Motors will sell highly coveted lease returns and company cars online starting next month through a program called the Factory Pre-owned Collection.

The program, which we’ve covered briefly, will sell lease returns and company cars through an online portal that makes those cars available nationwide. GM said its inventory would be roughly 30,000 cars, which all have fewer than 37,000 miles and be covered by extended warranties from the factory. Potential owners can apply for credit through the online portal and pick up their cars at a nearby dealer.

So … if GM is selling the cars owned by GM and GM Financial (or related bank) from a nationwide database, which can be financed online, and merely picked up at a nearby dealership, isn’t that just a direct sale?

Not exactly, according to a GM spokeswoman.

The program simply inserts the public into a buying process that dealers have used exclusively for company cars, rental cars and lease returns. Those sales already return a healthy profit for the respective parties.

With this program, dealers would still be able to bid on those cars at auction if a private buyer doesn’t pick it up first. If there is no private sale, those cars go onto dealer lots just like they always have. However, should a buyer pick up a car before another dealer can, the nearest dealer buys the car from GM or GM Financial before selling it to the customer. That’s how GM avoids the direct sale to customers and biblically pissing off its dealers.

In return for bringing that incremental business to their dealers (30,000 used cars isn’t a huge slice of the pie), GM gets to better control residual values for its cars and offer leases on new models at lower prices based on those better prices.

(There’s an argument as to whether that higher residual value is a better deal for used car buyers, but that’s a different story. — Aaron)

Not a bad idea if you’re GM, really.