A few days ago The Wall Street Journal made it known that according to people familiar with the matter, a decent portion of Cadillac’s dealers have forgone going forward with EV upgrades for their dealers in favor of just being bought out by GM. Is this a sign of things to come from other dealers as electric cars become more prevalent?
According to the report, GM starting giving out buyout offers to their Cadillac dealers that ranged anywhere from $300,000 to $1 million for the franchise depending on the volume of the location. The offer also stipulated that if a dealer did not go through with the buyout then they would have to go through with EV upgrades such as installing charging points and having the appropriate tools for electric cars. These upgrades are believed to cost the dealers about $200,000.
Reportedly about 150 of Cadillac’s dealers have taken GM up on their buyout offer and will give up their franchises instead of proceeding with doing any EV-specific upgrades. While it’s easy to paint this as an example of dealers stifling the progress of electric vehicles, it is important to note a few points here.
One, $300,000 to over $1 million is a lot of money for the franchise owners. Two, according to the report, most of the dealers who agreed to the buyout also had other GM franchises as well. Three, Cadillac has triple the dealerships of their luxury counterparts such as Audi or Lexus, leading to volumes being low due to the sheer number of dealers, meaning that in comparison to their other dealerships, many dealers are not seeing much traffic in their Cadillac franchises.
Of course, I also believe that some of the franchises that took the deal were set in their ways and didn’t care for the effort of bringing in electric vehicles, but we shouldn’t paint a broad stroke here.
This situation however does bring up an interesting talking point regarding how we will interact with dealerships in the future. We have noted on multiple occasions how dealerships and the dealership experience as a whole might lead to the Ford Mustang Mach-E having a less than stellar launch. Tesla has shown that a direct to consumer approach can work and we have wondered if other automakers will start sliming down their franchise or abolish them all together to take more control of the selling process. It seems that almost every startup such as Lucid, Rivian, NIO, and Polestar are all going for a showroom only experience. Keeps your eyes peeled on any of the legacy automakers trying their hands at a similar concept to test the waters.
What do you guys think of the news? Do you think this is the beginning of other automakers trying to a direct to sales method? Let us know down in the comments below.