Buick Will Buy Out Dealers That Refuse To Sell EVs

Industry News / 16 Comments

Not everybody is on board with the electric revolution.

These days, Buick is barely a shadow of its former self. The brand sells boring crossovers like the Enclave and is no longer the pantheon of luxury greatness that it once was, but that is all set to change as the manufacturer makes the change to electric vehicles. Its first EV will be the Electra, and if the recently unveiled Wildcat concept is anything to go by, Buicks of the future will be anything but dull. In fact, the automaker says that every one of its new cars will be highly luxurious, which should give dealers plenty to celebrate. But no. Some dealers are reluctant to embrace the switch to EVs.

Selling EVs will require these dealers to make additional investments so that they can support upgrades and provide charging stations to customers, and not everyone wants to spend that money. In such cases, Buick will offer to buy the dealerships out.

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The news comes via The Wall Street Journal, which reports that Buick's global boss Duncan Aldred has confirmed that all of the brand's 2,000 or so American franchise dealers will be given the option of a buyout. If the dealer takes this route, it will no longer be able to sell the brand, although it will be allowed to sell other General Motors products.

"Not everyone necessarily wants to make that journey, depending on where they're located or the level of expenditure that the transition will demand," he said. "So if they want to exit the Buick franchise, then we will give them monetary assistance to do so."

However, it's not clear which nameplates they will retain access to. Cadillac dealers were made a similar offer in 2020, while GMC dealers, which Aldred also oversees, were not. The GMC dealers were told to either make the required changes or give up on the brand altogether.

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For the dealers, the expenses can be immense. According to WSJ, some dealers have reported that facility improvements aimed at supporting electric vehicles can cost in excess of $300,000. Of course, dealers could easily make the investment back with their scandalous markups, but GM has made efforts to encourage standardized pricing and is likely to pursue the imposition of penalties against offending dealers. That makes it a very difficult decision to justify, but there could still be some good to come from the investment for those who make the change. The most obvious benefit that Buick dealers will get is less competition, as some dealers have complained that there are too many Buick stores.

According to data from research outfit Motor Intelligence, Buick's US market share has held steady at 1.2% in recent times but has shrunk by nearly 50% since 2000. As a result, the brand has continually ranked near the bottom of industrywide sales-per-store statistics.

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On the one hand, fewer dealers means less competition and fewer opportunities for buyers to haggle. But on the other, it allows Buick to retake control of its sales model and prevent those greedy brand-tarnishing dealers from applying such ridiculous markups. Fewer dealers would also make the brand seem more exclusive, and as it attempts to recapture its luxury status with a number of all-new vehicles that are sure to attract new buyers to the brand, that can only be a good thing.

The Cadillac buyout we mentioned from 2020 was completed last year and saw the brand's American dealer network shrink by approximately a third to around 575 franchises. GM said that this program cost it around $275 million, but now that it has only the most EV-friendly dealers remaining, the long-term benefits will surely outweigh the initial outlay. Perhaps the same will soon be said for Buick too.

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Source Credits: The Wall Street Journal

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