GM is offering a Cadillac dealer buyout to stores whose owners feel unable or unwilling to commit to the brand’s forthcoming commitment to battery electric vehicles.
According to a report by Automotive News, the chargers, tools and training required by GM are estimated to cost $200,000 or more. In extreme cases, this is understood to be the equivalent of up to five years’ worth of new-car sales profit for lower-volume outlets among Cadillac’s 880 U.S. dealers.
The amount of money offered in the Cadillac dealer buyout has not been confirmed by General Motors, and dealers who accept it are being asked to refrain from discussing it publicly. However, it’s possible that the figure could be anything from $300,000 to over $500,000.
The offer is being made to all Cadillac dealers but is most likely to be accepted by those which sell only a few vehicles per month. Location may also be a factor in whether or not a dealer decides to accept the buyout. In the short term, at least, EVs are unlikely to find many customers in rural areas. By contrast, a dealership located in a metropolitan area could well see its sales increase as battery electric Cadillacs become available.
“We wanted to move fast and make sure dealers are ready for the acceleration,” Cadillac North America vice president Mahmoud Samara was quoted as saying. “This is purely an option for those dealers who feel the EV journey is not suitable for them.”
Another factor worth considering, though, is GM’s reported opinion that Cadillac has “too many” dealers in the U.S. – the exact wording used in 2016 by the brand’s then President, Johan de Nysschen, now Chief Operating Officer at Volkswagen Group North America. An earlier Cadillac dealer buyout was proposed that year, though the highest figured quoted was $180,000 when the offer was made to only the brand’s 400 lowest-performing dealers.
Few dealers were tempted by the 2016 offer, but with more money now potentially being on the table, it’s easy to see that there might be a greater uptake this time round. Dealers have until November 30th to make their decision. Those who decide to take the buyout will still be able to sell new, non-EV Cadillac models until the end of 2021, and pull from the brand’s used vehicle auction stock until 2024.
Cadillac’s first battery electric vehicle, the Lyriq crossover, was initially projected to go on sale at the end of the the 2022 calendar year. The launch has since been pulled ahead to the first quarter of 2022. It will be followed by two more crossovers – one larger and one smaller, as well as the Celestiq luxury sedan and the Escalade EV, which will be based on the same platform used for the Hummer EV. These models are among the 30 new EVs that GM intends to have on sale worldwide before the end of 2025.
This post was created in collaboration with our sister publication, Cadillac Society.