Buick offers to buy out dealerships not wanting to sell EVs

As wonderful of an idea as it may sound, selling only electric cars is not that easy for many dealerships across the US. All of them have invested heavily for decades into sales and servicing of fossil fuel-powered cars. Buick’s decision to manufacture only electric cars by 2030 means tough decisions for its dealer network.

Just over 7 years are left until the deadline, but the transition has already started. We will seeless and less ICE cars on forecourt and more EVs for sale and to service. It means retraining existing staff or training new workforce, it means a lot of new equipment and many dealerships are not happy about spending as much as $500,000 on aligning their business with this trend.

Although it may sound like a relatively small amount compared to millions in profit raked in by dealerships every year, we need to remember that the majority of profits come not from sales but from servicing. With electric cars requiring significantly less servicing, dealerships are facing tough decisions - transitioning to electric cars may mean slower investment return.

With that in mind, Buick is offering to buy out every dealership that does not want to go ahead with the EV transition. The offer is to buy back the rights to sell Buick cars from the franchise owners to allow them to exit the franchise and work with other brands.

Buick has 2,000 dealers in the US and will offer this deal to every one of them. Cadillac has been offering its dealers the same option since last year. According to Reuters, GM spent $274 million buying out Cadillac dealerships with the brand currently having 40% less outlets than it did in 2018.

Buick doesn’t want to lose all the dealers, nor does it want to use Tesla’s model of direct sales. The company reinforced its commitment saying it “sees its dealer network as a business advantage and that it will remain a critical part of the retail relationship chain with customers.”

This decision comes at a time when Buick doesn’t actually offer any electric cars in the US yet. In fact, the company sells four times as many cars in China as it manages in America. The picture is changing though, Buick unveiled recently its concept car, the Wildcat which is a preview of the upcoming all-electric model for the US.

For the franchise owners, less dealerships means more business. Those who will decide to stay with Buick, will have more customers to work with and will operate over larger areas. Those who choose to leave the network, will end up with a handsome payout to see them through potentially difficult years ahead. Buick and Cadillac both want to sell upmarket electric cars and having less dealerships creates the air of exclusivity. In the end it looks like everybody wins.

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