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.
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This post was created in collaboration with our sister publication, Cadillac Society.
Comments
I think the Idea is good but also see GM selling more buicks if they keep making ICE Cadillac vehicles. Electric is going to be for a select few no matter how much they push it. It not going to pan out as well as many think. Batteries lose range and we will never have the power grid to support it. Look at California. They can’t support the people for electricity now.
Hey ‘yall, the scientists, genius investors who invest trillions to EV tech, you are just dummies for your ridiculous calculations, look here ,this random regular Joe(literally) just figured it out, listen him and stop pursuing tech advancements. You’re right Joe, of course battery tech progression will suddenly stop, and also if you have buch of electirc cars electric grid will boom, duh! It’s not like these nerds and fat cats thought about advancing and investing to electric grid in parallel like Tesla grid battery systems, so it’s impossible, it’s cuckoo land.
Like I have been saying for years now. Legacy Auto Makers will have a huge issue in front of them in the inevitable switch to EV’s and that is the Dealers.
Dealerships as I have been stating for while now want nothing to do with EV’s at all.
They know they will most likely never see that Customer again.
what is the problem?
if some dealers don’t want to sell them, fine.
thin the herd and let those that can make money with evs survive. if none can make it, let them go bankrupt and let gm do it themselves just like tesla.
The problem isn’t just slapping a few chargers down. I mean they have chargers at McDonald’s. The issue is the expensive proprietary tooling and necessary training for service. If dealers opt-out, you’ll be in a situation that when your EV needs repair, the only option, dealer or independent, will be that one overbooked place an hour away, which will lead to a very poor customer experience.
And there you have it.
Less dealers = less sales for GM. Im sure some of the import brands will snatch these dealers up.
According to the Daimler-Benz website, Mercedes had 383 dealerships in the US and sold just over 316,000 cars in 2019. Cadillac sold 156,000 during the same period with more than double the amount of dealerships. Clearly, having more dealerships doesn’t mean more sales.
The less dealers = less sales logic does not apply.
The real equation looks something like this:
Less dealers = more engaged dealer network = more focus on Cadillac = better experience (sales and service) = more sales
How about this equation:
Crap tier products and schizophrenic GM leadership is just that, crap tier products and schizophrenic GM leadership.
Dealer buyouts won’t solve that and your drivel won’t turn that around.
Don’t think you’re correct. Crappy dealers will likely still be crappy and good dealers good. Will probably lose some of both. We have a good dealer about thirty minutes away but a fairly small one. May give up caddy and keep other GM brands. Then we have to drive even further.
I’m not in market for EV so why can’t dealers keep their Caddy franchise and just not sell the electric models.
So a dealer who isn’t 100% on board with future product should be given an exception and can sell only the vehicles they choose? Talk about confusing the customer. Plus, that half-whitt dealer attitude will transfer directly to the dealership employees.
Either get on board unequivocally or move on. There should be no other choice.
Agreed Alex
MB imports (or builds here) 9 SUV models, 5 distinct sedans, a wagon, 7 coupes, and 6 convertibles, and multiple sub-models of each (AMG, et al) – 28 vehicles in all, exclusive of subs. Cadillac offers 4 SUV models and 2 cars – 6 vehicles total. That’s less than one quarter of the total models MB offers, and barely ONE TENTH of the CARS they offer (“cars” are dead, right?).
It would appear to me that offering a variety of quality, desirable products has more to do with sales success that having more retail locations from which to offer fewer products.
Oh…I forgot to mention…only ONE of those 28 models is an electric or hybrid.
I have no interest in a $75k-$100k EV who ever builds one
@Tigger
Mercedes, BMW, Lexus, all have less than half the number of dealers in the US that Cadillac has. They all out sell Cadillac.
Have you ever went to a Dealership to look at an EV?
They play every trick in the book for you to get an ICE vehicle. They make no money from EV’s as they will most likely never see that customer again
I purchased a Chevy Bolt from a dealer about a month ago. They never mentioned ICE one time and it was a cash purchase. By the way they still behaved like jerks and no I will never be back unless warranty work or recall is involved.
This isn’t just a Cadillac problem, as all dealers will have to do these kind of upgrades soon, if not already done.
Well Cadillac Dealers in crack & meth wastelands will have have no problem selling those hideous designs, but other dealers might consider the buyout!
I’d take the 500g and walk away from Cadillac – the same way GM walked away from their Cadillac base by going exclusively electric. GM will never sway Tesla buyers as the 2014 Cadillac ELR is PROOF of that. How many of them did they sell???
By 2035 it wont just be Cadillac going exclusively electric. They and all other car builders really have no choice.
“GM will never sway Tesla buyers”
Good thing that the majority of the auto buying public isn’t remotely interested in Tesla. In fact, there are big questions about whether Tesla will even exist once the big boys get into EVs like GM is doing.
“the 2014 Cadillac ELR is PROOF of that. How many of them did they sell???”
You err in assuming that a well-done but poorly-positioned legacy product like the ELR is any indication of the success of a range of well-positioned, next-generation Cadillac EVs.
I agree they are only a small part of the market and some will be loyal. But like other techies many will jump to the latest once it arrives.
As of now they have had little choice of other models and styles.
“You err in assuming that a well-done but poorly-positioned legacy product like the ELR is any indication of the success of a range of well-positioned, next-generation Cadillac EVs.”
So the problem was poor positioning? The ELR was an overpriced Volt. Cimmaron anyone? Bueller? ELR was poorly executed from top to bottom. Cadillac doesn’t know how to market cars, let alone build one. What makes you think they’ve learned the error of their ways (60 plus years) cough?
Dude, it’s GM and Cadillac. You err in giving them too much credit. Alex, you haven’t been around long enough. Soon you’ll learn young Jedi.
Biggest problem-Cadillac doesn’t know who they are. They have lost their brand ethos.
You’re wrong. Tesla is on target to sell 500,000 cars this year. People love the brand. The majority of the auto (car) buying public buys Toyotas and Hondas, not Cadillacs. Tesla buyers aren’t buying Cadillacs, save for Escalade. Cadillac owners are buying Teslas. Tesla has brand capital Cadillac could only dream of.
How many cars did Cadillac sell this year?
@Williams F1
Agree with you 100%
Tesla is on pace to sell a Million Cars next year and over 2 Million in 2022 maybe even more.
@Alex Luft
Are we supposed to take this statement seriously?
No disrespect but you think Tesla might not be around in a few years?
Why are they in breakneck speed to open as many Gigafactories as they can?
I mean they are projected to be a Trillion Plus Dollar Company.
Elon Musk has already announced they have the Formula to get to $50 at the pack level and that they will have a 25K Car in Three years.
I pray GM takes that coveted second spot (like Google compared to Apple) over VW.
How do you figure they have no choice??? You think car companies can just make EV if people are not buying them??
You need to take into context what the ELR was. It was a show car nothing more or less. It was based on a Chevy nothing more or less. The ELR was an over priced hybrid nothing more or less.
Lutz was tasked with trying to create new cars at GM with no budget. By the time he arrived GM needed a lot of work and he had little to no money to do it. This is why the GTO lacked new body work. This is why the Camaro was discontinued. Lutz pretty much tired to keep GM in the public eye with production show cars like the SSR, ELR, Camaro and HHR. To be honest only two of these did any good as they were priced right. The other two were way over priced.
Today we have a fully sorted, fully advanced EV product line that is coming out. It is designed to move GM forward in a big way. They will introduce in a short time a number of EV products more than Tesla has in their history.
They will also be able to make more money and sell most of them at better or competitive prices. They are making things cheaper and cheaper as time goes on as the scale will absorb the development cost.
Today things are much different and the future is much different. here. These vehicles will be fully functioning sorted production cars funded properly and marketed fully. That will change the whole deal here.
If we judged all Corvettes based on the issues the 68 had would that be fair. No. And you know where all the issues are if you own one. Cool car but just not sorted out till later.
What many miss here is the harsh reality GM has had for years too many dealers.
GM tried to off them at the bail out and the gov stopped them. They did cut some with killing divisions but yet GM still has too many dealers.
Just look around. I live in small market and I have one major dealer from most MFGs while I have 8 Chevy dealers and even several Cadillac dealers that all have to compete for the same share of market the lesser dealers own.
By having less Cadillac dealers they will maker more money with larger shares of the market. More money will mean better staffs, better facilities and better service can be had.
Right now some Cadillac dealers are just hung on the side of a Chevy dealer and are just considered add on sales.
GM understands they need to get the EV models right and as of now they have hit most of the goals needed to do so. There are still more but they are positioned to meet those too.
Also keep in mind Cadillac does not and should not be a major volume dealer. They should be seeing higher profit models at more money and make more doing it. They no longer should be the luxury choice of trailer parks.
Yes EV will take some time to grow but it will not be a slow growth as Tesla did. Today EV is more popular and the scales of GM will bring new and more diverse models faster.
Like EV or not they are coming. I will own ICE as long as I can but fully understand at some point the choices will be limited and I will need to make the change.
As I see this the EV cars will get lower cost to build as ICE will only get more and more expensive to develop and build. Laws will also make them more difficult to own, buy and keep.
While some may not be happy with the changes in the end I see GM will be in a place leading for once again vs slowly migrating over as they have way too many times.
Imagine if GM had moved to smaller cars sooner in the 70’s and actually hit them right?
Consumers will ultimately decide. The way they add so many safety features in newer cars limits what I buy. Once full EVs come I will stick to hybrids, ICE, and hopefully fuel cells become common place. The government cannot force people to buy an EV. Gasoline will be around for years to come. We will see many types of powertrains in the future. People are not going to rush out to buy EVs when the “mandated” switch happens. It will be gradual as not everyone buys a new car every year. I’m in my 20s and if I make it to my 90s, i’d wager it will be possible to see more EVs on the road. But even then people will discover that having an onboard generator is superior to the potential energy only method.
Unfortunately the automotive industry is getting grilled for all of this EV nonsense. When in reality governments need to be planning for future grids. More nuclear plants like the fusion nuclear reactor being created in the ITER project.
Laws and economic reasons can limit your choices.
Hybrids will face tighter emissions just as ICE. Fuel Cells face high prices and they also face the time consuming fueling.
To fuel Equinox Fuel Cell and other vehicles it takes over 30 Min and the locations are even more limited and restricted vs chargers.
As it is now EV is getting the most investment and will be the cheapest choice anytime soon. The market will default to it mostly due to price.
I will be around till 2050 per the MFG engineers. But expect with who is in office now the price of fuel will begin to climb and with higher prices many will be forced to consider other means.
I agree the government is a fickled one. Many of those passing laws on this can even check their own oil. But many of them have this global agenda and part of that is to bring America in line with globalization I am sad to say. We have Kerry in charge of Climate now and he is all about elimination of Fossils.
I deal with the performance aftermarket In the Obama Admin the EPA appointees took it upon them selves to redefine the laws to suit their agenda. These were laws passed in Congress. They were caught and stopped. I expect this kind of thinking will come around again.
Globally cities are charging high taxes on ICE models if they drive in the limits. Others have plans to not permit them in the future. California is raising taxes on fuel to make it more expensive. The fact is even if they permit ICE they will do things to try to make it too expensive to own.
In Japan the older a car gets the higher the tax. They remove most old cars this way so only the rich have classic or older vehicles. Most there can not even afford parking in a city. This is a force to get people on their mass transit.
The reality is GM and most other MFG understand they have to move to EV. But they have learned the up side is they will be able to build and develop more new models cheaper after the start up models. They will be cheaper to build, cheaper design and develop. Less people in plants and most will be build under the skin with similar parts just with different number of motors and configurations of the same batteries.
As it is now with all they have to do to meet regulations car prices are nearly $40K for an average car. The wages in this country have not kept up.. Few people buy new every year but the truth is many are not able to afford a new vehicle at all and MFGs want to change that.
GM should just rid itself of the dealership way of selling cars once EVs take off. The dealership model is so arcaic in so many ways. What worked in 1920 isn’t going to work in 2040. Tesla’s distribution of cars is the gold standard for moving cars.
You got money to loan them to do that?
Trust me GM and every other MFGs would love to buy out the franchise system but it is just too expensive.
With fewer Cadillac dealers it is easier but still expensive. Many will hold out for 7 figures.
@jwl:
Won’t happen while we’re alive. Franchise laws are written by Legislatures to protect the dealers in their State. And as for buying out dealers, C8.R put it best. GM, nor any other Legacy OEM has enough money to buy out enough to make a meaningful dent in the problem.
One way is the Nuclear option. Stop making product for the brand in question. Like Pontiac, Oldsmobile, Mercury, etc. That isn’t happening. But what Cadillac will be doing is building ever fewer ICEs going forward. Those hold out dealers will have fewer models to sell. Even fewer sales for them. If a dealer does not have the equipment etc. to sell EVs, they may simply give up eventually. They may wish they’d taken the money.
Dealers aren’t 100% worthless. They do not really add any value for small cars/SUVs, where they do have value though is trucks and commercial vehicles where most are customized. The dealer can install aftermarket wheels, flat beds, service bodies, lifts, etc etc. It’s a more seamless experience for the customer then when it’s a one stop shop. However, for everything else I agree it would be easier if it just came straight through GM. Huge barriers to that though as others have said.
I also think it’s a bargain at 2-300k to upgrade because of new propulsion being offered rather than a new ICE vehicle.
That’s an interesting perspective, specific to California. I’ve been curious what the impact would be, generally, on the capacity to generate and distribute electricity. But California is another animal altogether. They can’t meet current demands, and their communist leadership prohibiting any capacity increase in the foreseeable future effectively secures the future of that which they hate second-most: the other ICE.
Chevy dealer I worked at had 1 tech for any EV. He was close to retirement age, too. Wonder if all the tech schools that teach auto have funds to start teaching EV? How much will dealers need to invest in all equipment and chargers ?
Quite frankly the dealership model is rather outdated. Especially for people in my age group. My peers would rather go online and get something quick. I think GM will loose big money and so will the dealers if other EV makers sell direct. Not a fan on EV automaker Tesla but selling direct is the way to go for EVs. There is also virtually no demand for EVs except artificial demand as mandated by governments. Money would be better spent placing a few showrooms in key cities across the nation for these EVs, similar to what Tesla does. Cadillac also needs to focus on making their dealership experience top notch since it is a luxury brand. As that is what their customer base expects. Their ICE vehicle still print the big bucks at the moment and once the blackwings come that will excite people on a dealership floor, and also an Escalade V Blackwing. Not seeing something plugged in. Hell they ought to put gas pumps everywhere since EV owners will not be responsible.
GM should really slow their role as once the world nears 2030 or 2035 in other places, I do not think it is going to be how Politicians say it will be.
As a former Cadillac owner, my opinion is Cadillac has got to thin the herd of dealers and work with them to improve the customer experience at every dealer. I came from Atlanta, 4 Cadillac only dealers all with great facilities and decent but not extraordinary service. Moved to a smaller community where the Cadillac dealer is also a Buick and GMC store. The trucks clearly are the bread and butter, they cared little about the Cadillac customer. Appointments required for oil changes, 3-5 days for repairs like tire pressure lights and charging problems. No courtesy cars, even a ride back home 5 minutes away was an ordeal. The car (‘16 XTS) wasn’t great anyway and the dealer was a pain. I dumped the caddy before the warranty ran out and wouldn’t consider another from this dealer. Take a page from Lexus and invest in the customer experience. My dad bought 5 Lexus in 15 years simply because the service experience was so good. Fewer, more profitable dealers would likely help but GM will need to insist on uniform levels of service if they ever want to rebuild a loyal clientele.
Service these days is on “Island Time”. Everybody drags their feet. Less dealers will make it worse. I have 2 new Chevys and I dreaded taking them in for the first free oil and filter change. Service advisors seem un friendly and non personal. I pray I don’t have to go there for any other repairs. My friend’s new F250 had a major electrical issue, he got the truck home and called the dealer. 4 days before they could even look at it. Nobody cares.
There’s a reason fat girls have “great” personalities…who wants to be with someone who’s both physically and emotionally unattractive.
I had an 8+ week wait to get the *incorrect* fluid replaced in my 8L90, which ultimately had to be replaced (on my dime – or my 45,000 dimes, to be more specific), presumably due to damage caused by prolonged use with the wrong fluid. GM has more than one problem. If their service experience was better, maybe the quality issues I’ve experienced lately wouldn’t be such a turnoff. Consequently, if their quality was better, maybe the service experience wouldn’t be such a turnoff. I’m probably done with them. At the very least I’m shopping next year, not just picking my next GM product.
Did a cost comparison on electric versus gas, unless their giving me an electric vehicle as a test model, there’s no way for the amount of driving I do to justify dealing with installing a charging station at home plus I always worry about being electrocuted getting stuck in high water. Electric is not for everyone.
I wouldn’t mind having to plug in my vehicle regularly and would be easier in a lot of ways than going to a gas station. I am no Engineer, but in my way of thinking I would not be interested in spending a large amount of money for my main vehicle and basically can’t go on a trip and drive over 400 miles without spending the night or a few hours to stop and charge my vehicle.
In my way of thinking since there are 4 wheels turning which is what it takes to make electricity,
WHY can’t there be a way to charge the batteries and keep them charged so no stopping to charge is necessary. This would be the only way I would be interested in buying a EV vehicle.
Whatever manufacture figures this out first will be the big winner.
Seems the statistics show that the average American home has 2 to 3 cars in service.
So how will that impact home based EV charging?
They’ll need to employ a car jockey (remember them) to move their cars around to
get near the charge station each night.
What a pain!
Or you could just drive them up to the charger instead.
I cannot wait for the inevitable Disruption S-Curve for EV’s that is coming soon. Happens to every single Disruption Technology. Governments around the World have already spoken and they will NOT allow new ICE sales soon.
Some people here will not understand what happened HAHA
Dealer networks invented because gas cars are trash , they constantly need servicing, and EVs don’t, so just turn to online only sales like Tesla and get rid of all the dealers along with their percentages and markups, whether take the whole profit yourself as manufacturer or bring prices down and get more competitive.