Earlier this week, the Michigan Department of State suspended the dealer license of LaFontaine Chevrolet, Buick, GMC in St. Claire, Michigan over selling loaner vehicles as new units.

While this might seem like a typical open and shut case, there’s alot more going on here than most might realize and it shines a broader light into the inner workings of a typical auto dealership.

What’s a loaner car exactly?

As a former auto dealer employee, I spent most of my days in the service department (with occasional layovers in sales) preparing loaner vehicles to be delivered to customers, with these vehicles often serving as tempoary transportation while their main vehicle was in for long term service.

Many loaners (aka demos) are commonly taken out of new vehicle inventory with many of them being mid-level versions of popular sellers, i.e a Ford Explorer, or a GMC Acadia (managers get top level trims.) The goal of a loaner vehicle program is twofold, not only does it help create an opportunity to improve customer service, but the vehicles themselves promote a particular model line with the unique long-term road test opportunity they provide. After a vehicle’s time in loaner service ends (usually after hitting a mileage cap,) it’s sold as a discounted used vehicle.

In the case of LaFontaine GM St. Clair, MDOS says they were misrepresenting these vehicles and still selling them as freshly new units. This deceitful practice is harmful to customers because it not only gives them a vehicle that is not as new as advertised, but can also expose them to problems that might not pop up on a factory fresh vehicle with considerably less mileage. The altered titles of these vehicles can also create trouble later on especially if the vehicle changes hands in a private sale.

Dealership has been in trouble before

MDOS said they found the fresh violations during an inspection carried out in the dealership back in September. The inspection revealed the dealership was reselling loaner vehicles as new units including one example that reportedly had over 6,000 miles on the odometer despite being advertised as a “factory fresh” unit. The new visit also came as LaFontaine was still serving an ongoing 18 month probation for other vioations after it shelled out a $3000 penalty to the state.

These types of violations were also part of a notice MDOS sent to dealerships across the state back in 2024 reminding them that under state law loaners must be sold as used vehicles after their time in the dealer loaner fleet is completed.

Service department still open

As a result, the state suspended its dealer license but unlike other headlines that have stated the dealership was “shut down” this is not quite the case. While the sales floor (front of house) is indeed shut down, the service department (back of house) is still active. This is mainly due to the service department often being treated as a separate part of the business and the essential role service plays in not only maintaining customer vehicles, but also vehicles used by local governments and munincipalities.

What is LaFontaine saying?

For its part, LaFontaine Automotive Group released a statement to CBS news that aggressively pushed back against MDOS’s findings saying the issue stemmed from a “long standing disconnect” between automaker program definitions and state titling requirements. The group also says that under GM’s factory programs, loaner and rental units still qualify as new vehicles eligible for full warranties and incentives, something Michigan’s “outdated titling laws” fail to reflect.

While this defiant response will do little to cool the air between the two camps, this is not the first time LaFontaine has found itself in MDOS’s crosshairs. Back in December of 2024, the group’s LaFontaine Hyundai store in Livonia had its license temporarily yanked after the state found evidence of irregularities and misconduct including missing titles, altered odometer statements, and loaner vehicles sold as new vehicles.

The Department of State says customers who have a complaint against LaFontaine Chevrolet Buick GMC of St. Clair contact the MDOS Office of Investigative Services automotive complaint line at 844-372-8356.