Half Of GM’s Buick Dealerships Take Buyout Over Electrification, What Does It All Mean?

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General Motors is embarking on a push to expand its electrification strategy with Chevrolet, Cadillac, and GMC already offering buyers production EV models for sale. However, Buick has been the lone exception with the brand still offering a gasoline-powered only lineup while also revealing very little to the world (and Buick buyers) about its long-term electrification plans in the U.S. We pressed GM CEO Mary Barra on this topic a short while back and while she chose to not formally address our questions directly, a related GM buyout program appears to indicate that not all of its franchised dealerships are willing to embrace an electrified future.

 

Half of Buick’s U.S. Dealer Arm Takes Buyout

GM offered a voluntary buyout program to dealerships this year that didn’t want to participate in Buick EV sales and service. The program saw half of the company’s 2,000 Buick dealerships take the buyout versus going all in on electrification. The elimination of 1,000 Buick dealers will definitely be noticed by buyers in affected areas but the reason why some of these franchisees took the buyout become clearer once you look at the fine print.

For many of the dealerships that took the buyout, cost was a key motivator. GM had expected dealerships to invest at least $300,000 into making their dealerships more EV-friendly. That included the installation of chargers and the related infrastructure to support them as well as separate training for sales and service staff to help them sell and service these vehicles effectively. While this high initial cost could easily be absorbed by large mega franchises and family chains, the same cannot be said for smaller operations that often have smaller or older buildings. For some of these franchises, the installation of some of the charging infrastructure would require a complete teardown and subsequent rebuild of the sales floor and the building itself which creates higher costs that would be unsustainable. 

Then there’s the matter of formally selling the EVs to make a profit and recoup some of the initial costs of the investment. EV sales have cooled recently and there’s still a large pool of customers that are hesitant to make the switch to EVs due to the high purchase price for many electrified offerings as well as the costs of not only servicing them but also adding a charging station to their home. With Buick planning to be an all-electric brand by 2030, the elimination of ICE-powered models in the lineup would reduce the potential avenues for profit a dealership might have to work with while also potentially creating excess supply from unsold BEVs clogging up space in their inventory lots.

 

Buick Still On Track For Sales Growth

Despite the reduction in the amount of Buick dealerships that buyers will see (and the $1 billion cost to GM from all the buyouts,) the company is claiming that the reduced amount of showrooms will play a big role in its long-term success. Global head of GMC/Buick Duncan Aldred revealed in a statement that the smaller sales footprint will help increase sales at the remaining locations while also boosting profits due to the bigger pool of customers that would be coming in from dealerships that took the buyout. 

This boost in profits will also help build on Buick’s already strong sales numbers with the brand reporting that sales in 2023 have gone up by 60% despite the dealership points being reduced by 47% A key factor to this growth is the normalization of fleet sales but the recently launched Buick Envista is also proving to be a key player too thanks to the stylish CUV attracting buyers that would otherwise be priced out of a Buick offering. Duncan Aldred himself also confirmed to us in a discussion at the aforementioned APA event that luring Verano owners back into the fold was a goal for the Envista and it appears that this is happening based on candid conversations we had with dealership reps in our slice of Metro Detroit prior to the publication of this piece. 

It’s not known what Buick’s full electric vehicle lineup will look like beyond the use of the Electra name and the continued focus on utility vehicles. But look for more information to emerge this year, with several Chinese market offerings potentially giving us a sneak peek at what U.S. buyers could expect moving forward.