General Motors Cuts Buick Dealership Network in Half to Increase Sales and Profits
General Motors (GM) has implemented a voluntary buyout program to reduce the size of its Buick dealership network in the U.S. by approximately 50%, according to Duncan Aldred, global head of GM’s Buick and GMC brands. The goal of this reduction is to increase sales per location, known as throughput, and boost profits for the remaining dealers. The buyouts also provide an opportunity for dealers who are not interested in investing in electric vehicles (EVs) to exit the business.
Continued Buyouts and Cost
Buick plans to continue offering buyouts into the next year. So far, these buyouts have cost GM around $1 billion. The average sales of the remaining Buick stores still lag behind those of GM’s GMC brand, which shares showrooms with Buick.
The majority of dealers who participated in the buyout program were smaller stores, representing only about 20% of Buick’s annual sales. As part of the buyouts, GM provides payments to dealers who choose to cease operating their businesses.
Transition to Electric Vehicles
The voluntary buyout program was initiated last year as Buick began its transition to exclusively offering all-electric vehicles in the U.S. by 2030. Dealers are required to invest in training, tools, and special equipment for this transition. However, Buick has not disclosed the specific costs, as they may vary depending on the size and scope of each dealership.
Future Plans and Market Demand
Duncan Aldred confirmed that Buick is still targeting its all-EV plan for 2030. However, achieving this goal will depend on customer demand and the acceptance of EVs in the coming years. Buick currently does not offer an EV in the U.S., but it does have a lineup of four gas-powered crossovers and SUVs. The brand’s sales in the U.S. are recovering from the impact of the pandemic and supply chain issues, with a 63% increase in sales through the third quarter compared to the previous year.
Buick’s newest entry, the Envista, a small entry-level crossover, along with normalizing fleet sales, is expected to help boost Buick’s sales back to pre-pandemic levels.
Overall, General Motors’ decision to reduce the size of its Buick dealership network aims to improve sales and profits for the remaining dealers while aligning with the brand’s transition to electric vehicles.
