Buick Dealerships Taking Buyouts, EV Sales Program Rejected By 47 Percent

Buick reportedly spent 2023 closing a lot of dealerships. The brand lost 47 percent of its American retail locations through the year, which has been attributed to General Motors buying out storefronts that refused to invest in the necessary changes required to sell all-electric vehicles.

With GM still saying it’s committed to pivoting its lineup entirely toward electrification by 2030, it wants dealerships to install requisite charging stations as service centers undergo some retooling. Sales and service departments are also supposed to get additional training to better understand how to deal with EVs. However, these changes will cost dealerships hundreds of thousands of dollars and some don’t see it as a worthwhile investment.

Ford encountered a similar situation with its EV sales program and has been forced to adjust the terms several times, walking back requirements. Smaller dealerships simply didn’t want to pay to have fast chargers installed at their stores. Most were claiming they weren’t having trouble keeping vehicles charged to begin with and others were concerned that electric sales volumes weren’t significant enough to rationalize the kind of expenditure. EVs adoption varies broadly between geographic regions, making it hard for some stores to see the point of spending so much when so few of their customers are interested.

While the total sum can vary by hundreds of thousands, based on the size and needs of individual dealerships, the average Buick showroom is estimated to be paying somewhere around $350,000 to make the changes necessary to satisfy General Motors.

Bo Mandal, chairman of the Buick-GMC National Dealer Council, told Automotive News that some dealers who opted to give up their Buick franchise wished to prioritize other aspects of the business. Sometimes this had been as simple as noticing truck sales were more lucrative, meaning they’ll be missing Buick less than they otherwise might have.

Unfortunately, Mandal seems to be viewing the situation through rose-tinted glasses. With General Motors committing itself wholly to electrification, it’s just going to be a matter of time before other marquees are subjected to the same kind of demands. Whether intentional or not, the end result seems to be mass dealer consolidation.

Buick went in 2023 with nearly 2,000 franchised dealerships located in the United States. Thanks to the EV requirements and related buyouts, almost half those stores are now closed.

From Automotive News:

The buyouts were offered on a voluntary basis and in consultation with dealers, said Duncan Aldred, vice president of global Buick-GMC. The program remains open and will "continue to be done in a voluntary and consultive way" should additional dealers choose to give up their franchise.

"I'm really pleased with where we are," Aldred told Automotive News. "The network, where we are now, is a good size. It's with dealers who are focused on the business, who've shown that they can recover the volume that the dealers who transitioned away were doing."

The roughly 1,000 dealerships that left the brand this year previously represented about 20 percent of Buick's U.S. sales, Aldred said. Dealer throughput has increased by an average of 300 percent this year, he said, adding that that shows the brand has been able to retain customers. About 89 percent of the nation's population is still within 25 miles of a Buick dealership, according to the brand.

Despite having fewer dealers, Buick said its U.S. sales rose 58 percent year over year through November, with the Encore GX subcompact crossover nearly doubling and the Envision compact crossover up 56 percent. Buick has sold more than 10,500 of its new Envista since it reached dealerships in August.

This is basically what we saw happen with Cadillac during Project Pinnacle. The luxury brand witnessed about 400 dealerships decline to update locations, allowing themselves to be bought out starting in 2016. That left Cadillac with about 900 U.S. showrooms. But the brand saw a secondary culling when GM introduced new EV requirements. Cadillac is said to have bought out about one-third of its remaining dealerships with the average payout estimates ranging between $300,000 and $500,000. Compensation for Buick dealers that are electing to bow out should be comparable.

Based on GM's third-quarter financial statement, the Buick buyout program had cost it roughly $1 billion through 2023. But the year's not over yet.

"Buick is transforming, launching the best vehicles the brand has ever had and is the fastest growing mainstream brand in 2023. This all needs to be supported by the best customer experience in the transition to EVs," Buick spokesperson Sean Poppitt stated. "As stated before, this year we’ve given dealers who are not aligned with Buick’s future to exit voluntarily in a respectful and structured way; with the full support of our National Dealer Council."

[Image: General Motors]

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