Dealerships might hamper GM’s plans to electrify its cars. Wall Street Journal tipsters claim that roughly 150 GM dealerships in the United States have decided to drop the Cadillac brand and accept a buyout (ranging from $300,000 to over $1 million) rather than spend about $200,000 to upgrade the dealerships with charging stations, repair hardware and other equipment needed to sell EVs. Many of these dealerships only sell a few Cadillacs per month versus more for Buick, Chevrolet and GMC, but it’s still a significant blow when GM has 880 Cadillac dealers in the country.
Cadillac brand leader Rory Harvey confirmed to the WSJ that GM was offering buyouts, but didn’t say how many dealers took them or how much they were worth.
The exodus underscores the challenges for conventional car brands as well as the potential advantages for alternatives like Tesla. As brands like GM are heavily dependent on dealerships, they have to please owners to have a chance of strong sales — and that’s difficult when they’re not certain about demand, even without the pandemic. Tesla and other direct-to-customer EV makers aren’t bound by physical stores and already have the infrastructure in place for service centers.
Dealers might not have much choice in the future. California is banning sales of new gas-powered cars by 2035, and that will likely force automakers to electrify no matter how dealership owners feel. The buyouts now aren’t necessarily temporary, but we wouldn’t rule out some shops having a change of heart as the effective EV deadline approaches.
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