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

by Matt Posky

Published: December 20th, 2023

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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Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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2 of 107 comments

NJRide on Dec 23, 2023

I feel like one of the Detroit 3 (this could even include Stellantis on a larger scale) will be bought out in the next 10 years.

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Akear on Dec 26, 2023

GM is on the road to a 12% marketshare.

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Recent Comments

Bouzouki Cadillac (aka GM!!) made so many mistakes over the past 40 years, right up to today, one could make a MBA course of it. Others have alluded to them, there is not enough room for me to recite them in a flowing, cohesive manner.Cadillac today is literally a tarted-up Chevrolet. They are nice cars, and the "aura" of the Cadillac name still works on several (mostly female) consumers who are not car enthusiasts.The CT4 and CT5 offer superlative ride and handling, and even performance--but, it is wrapped in sheet metal that (at least I think) looks awful, with (still) sub-par interiors. They are niche cars. They are the last gasp of the Alpha platform--which I have been told by people close to it, was meant to be a Pontiac "BMW 3-series". The bankruptcy killed Pontiac, but the Alpha had been mostly engineered, so it was "Cadillac-ized" with the new "edgy" CTS styling.Most Cadillacs sold are crossovers. The most profitable "Cadillac" is the Escalade (note that GM never jack up the name on THAT!).The question posed here is rather irrelevant. NO ONE has "a blank check", because GM (any company or corporation) does not have bottomless resources.Better styling, and superlative "performance" (by that, I mean being among the best in noise, harshness, handling, performance, reliablity, quality) would cost a lot of money.Post-bankruptcy GM actually tried. No one here mentioned GM's effort to do just that: the "Omega" platform, aka CT6.The (horribly misnamed) CT6 was actually a credible Mercedes/Lexus competitor. I'm sure it cost GM a fortune to develop (the platform was unique, not shared with any other car. The top-of-the-line ORIGINAL Blackwing V8 was also unique, expensive, and ultimately...very few were sold. All of this is a LOT of money).I used to know the sales numbers, and my sense was the CT6 sold about HALF the units GM projected. More importantly, it sold about half to two thirds the volume of the S-Class (which cost a lot more in 201x)Many of your fixed cost are predicated on volume. One way to improve your business case (if the right people want to get the Green Light) is to inflate your projected volumes. This lowers the unit cost for seats, mufflers, control arms, etc, and makes the vehicle more profitable--on paper.Suppliers tool up to make the number of parts the carmaker projects. However, if the volume is less than expected, the automaker has to make up the difference.So, unfortunately, not only was the CT6 an expensive car to build, but Cadillac's weak "brand equity" limited how much GM could charge (and these were still pricey cars in 2016-18, a "base" car was ).Other than the name, the "Omega" could have marked the starting point for Cadillac to once again be the standard of the world. Other than the awful name (Fleetwood, Elegante, Paramount, even ParAMOUR would be better), and offering the basest car with a FOUR cylinder turbo on the base car (incredibly moronic!), it was very good car and a CREDIBLE Mercedes S-Class/Lexus LS400 alternative. While I cannot know if the novel aluminum body was worth the cost (very expensive and complex to build), the bragging rights were legit--a LARGE car that was lighter, but had good body rigidity. No surprise, the interior was not the best, but the gap with the big boys was as close as GM has done in the luxury sphere.Mary Barra decided that profits today and tomorrow were more important than gambling on profits in 2025 and later. Having sunk a TON of money, and even done a mid-cycle enhancement, complete with the new Blackwing engine (which copied BMW with the twin turbos nestled in the "V"!), in fall 2018 GM announced it was discontinuing the car, and closing the assembly plant it was built in. (And so you know, building different platforms on the same line is very challenging and considerably less efficient in terms of capital and labor costs than the same platform, or better yet, the same model).So now, GM is anticipating that, as the car market "goes electric" (if you can call it that--more like the Federal Government and EU and even China PUSHING electric cars), they can make electric Cadillacs that are "prestige". The Cadillac Celestique is the opening salvo--$340,000. We will see how it works out.
Lynn Joiner Lynn JoinerJust put 2,000 miles on a Chevy Malibu rental from Budget, touring around AZ, UT, CO for a month. Ran fine, no problems at all, little 1.7L 4-cylinder just sipped fuel, and the trunk held our large suitcases easily. Yeah, I hated looking up at all the huge FWD trucks blowing by, but the Malibu easily kept up on the 80 mph Interstate in Utah. I expect a new one would be about a third the cost of the big guys. It won't tow your horse trailer, but it'll get you to the store. Why kill it?
Lynn Joiner Just put 2,000 miles on a Chevy Malibu rental from Budget, touring around AZ, UT, CO for a month. Ran fine, no problems at all, little 1.7L 4-cylinder just sipped fuel, and the trunk held our large suitcases easily. Yeah, I hated looking up at all the huge FWD trucks blowing by, but the Malibu easily kept up on the 80 mph Interstate in Utah. I expect a new one would be about a third the cost of the big guys. It won't tow your horse trailer, but it'll get you to the store. Why kill it?
Ollicat I am only speaking from my own perspective so no need to bash me if you disagree. I already know half or more of you will disagree with me. But I think the traditional upscale Cadillac buyer has traditionally been more conservative in their political position. My suggestion is to make Cadillac separate from GM and make them into a COMPANY, not just cars. And made the company different from all other car companies by promoting conservative causes and messaging. They need to build up a whole aura about the company and appeal to a large group of people that are really kind of sick of the left and sending their money that direction. But yes, I also agree about many of your suggestions above about the cars too. No EVs. But at this point, what has Cadillac got to lose by separating from GM completely and appealing to people with money who want to show everyone that they aren't buying the leftist Kook-Aid.
Jkross22 Cadillac's brand is damaged for the mass market. Why would someone pay top dollar for what they know is a tarted up Chevy? That's how non-car people see this.