In its path toward full electrification of the Buick lineup, General Motors has offered to buy out any of its roughly 2,000 Buick dealers that are not willing to invest in expensive store upgrades to sell and service electric vehicles, The Wall Street Journal reports.
It comes on the heels of June’s announcement that Buick will offer its first electric vehicle in 2024 and fully electrify its lineup by 2030. All new vehicles will launch under the “Electra” brand with a new logo, the first significant change to the Buick logo since 1990.
Next stop? Our electrifying future. ? Don’t worry, we’ll drop a pin.https://t.co/b1HF84GxPk pic.twitter.com/dY3Hqy7YAf— Buick (@Buick) August 17, 2022
“The Buick brand is committed to an all-electric future by the end of this decade,” Duncan Aldred, Global VP of Buick and GMC, said in June. “Buick’s new logo, use of the Electra naming series and a new design look for our future products will transform the brand.”
Three months later, news of the buyouts indicate hesitation from dealerships to make the necessary changes for an all-electric lineup. Facility upgrades, including vehicle chargers, upgrading the electrical grid, and new service equipment, can cost up to $300,000.
"The future dealer requirements are a logical and necessary next step on our path towards electrification," Michelle Malcho, executive director of communications for Buick and GMC, tells PCMag.
Given the tall ask, the buyouts offer a solution for dealers unable or unwilling to make the changes. “Not everyone necessarily wants to make that journey, depending on where they’re located or the level of expenditure that the transition will demand,” Aldred tells The Wall Street Journal. “So if they want to exit the Buick franchise, then we will give them monetary assistance to do so.”
Taking a buyout offer does not necessarily mean a dealer will go out of business, as all but 13 of the 1,963 Buick dealers in the US sell multiple car brands also under the General Motors umbrella, Automotive News reports. Most have dual showrooms with truck and SUV brand GMC.
GM has not released an official statement on the details of the buyout or the number of dealers it expects to accept. The goal is not to reduce the number of dealers selling Buicks, but rather to upgrade the customer experience.
"We see Buick’s dealer network as a business advantage, and they will remain a critical part of the retail and relationship chain with customers," said Malcho.
However, in 2020 GM offered to buy out any dealers unwilling to invest in EV upgrades for the Cadillac brand. It offered anywhere from $200,000 to $1 million to dealers, the Wall Street Journal reported at the time. About 150 of the country’s 880 Cadillac dealers, or 17%, took the offer and stopped selling the Cadillac brand.
Unlike Cadillac, whose sales are declining in the US, Buick sales increased in 2021. “Last year was Buick’s best sales year ever for its current lineup, with US retail sales up 7.6%,” according to a Buick press release. But total sales for GM brands declined 13% in 2021, Statista.com reports.
The brand sees full electrification as a required change to keep up with the market. "The shift toward electrification is accelerating here in the U.S. and in markets around the globe," said Malcho. "This forward product offering needs to be combined with an exceptional customer experience."
Most if not all major US automakers have announced a full or partial electrification of their fleets in the near future, according to Consumer Reports. Doing so requires a new supply chain for new raw materials and personnel with different skills and experience than the traditional auto industry, Automotive News reports.
For example, Last month, Ford announced it will cut 3,000 gas engine-related positions as it transitions to electric vehicles. It's no surprise that major dealership changes, like those asked of Buick and Cadillac, are also required.
Editors' Note: This story was updated with comment from Buick.