Buick and GMC say they will continue offering strong support to their franchised dealerships in spite of emerging online sales methods, as recently reported by Automotive News. The individual brands’ commitment to franchised dealers apparently echoes an overall policy by GM itself to continue sustaining its existing business model.
Several executives confirmed the intentions of Buick, GMC, and GM for their franchised dealer network. The Buick-GMC National Dealer Council’s Chairman, Bo Mandal, stated neither Buick nor GMC aim to switch over to “direct sales,” the term used to describe direct-to-customer online vehicle sales that has its roots in electric vehicles.
According to Mandal, GM believes that its 4,034 franchised dealerships are a “strategic advantage,” placing convenient physical locations close to nearly every buyer or potential buyer across the United States. Note that the 4,034 dealerships is the total for all GM brands, not just Buick and GMC.
A GM executive affirmed Mandal’s claims. GM “believes dealers are critical to our success by generating demand and providing ongoing support,” GM Chief Digital Officer, Edward Kummer, was quoted as saying. Kummer also went on to say that dealers would be strongly involved in EV sales and GM’s upcoming subscription services.
History suggests the number of franchised GM dealers will probably still drop in the near future, as Buick dealers will need to invest between $300,000 and $400,000 to update their operations in order to support the sale of electric vehicles, GM disclosed last December. The costs will include training, new equipment, EV chargers, and other EV-related outlays.
Dealers who don’t want to pay for the EV update will receive a buyout offer from GM. Buick dealerships will have 30 days after notification to choose between the two options.
GM’s network of Cadillac dealerships already underwent a similar process in 2020. Paving the way for the eventual rollout of the 2023 Cadillac Lyriq, GM offered Cadillac dealers the choice of updates costing at least $200,000 to prepare their dealerships for EV sales, or a buyout. Approximately a third opted for the buyout, reducing Cadillac dealer count from 921 to 564 “EV ready” locations in the United States.
For its part, Buick may consider the choice between investment or buyout as an opportunity to prune the deadwood from its dealer network. As it currently stands, Buick says it has too many dealerships as sales are spread thin over a network of about 2,000 stores. Duncan Aldred, global VP of Buick and GMC, said cutting back dealership numbers would increase individual dealers’ profits and available funds, ultimately enabling them to offer better customer service.
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Comments
GM has too many dealers and they are ok losing a number of them if they are the same markets as other weaker dealers.
The key is to have them around the country far enough apart that they do not compete with each other. This is a practice with most dealers of other brands. GM in the past needed all these dealers but today they end up hurting each other by competing in the same cities and market.
Compare GM dealer numbers to the others and it will show the problem.
This is absolutely true. I sell Buicks and GMCs. We have sister Honda and Nissan stores on this street. They each have a small handful of competing stores within hundreds of miles. If we include Cadillac and Chevy (which we do compete with as there are many models that share platforms) we have more competition within one county. It forces price wars. When dealers have to slash prices to compete with their own brand it should come as no surprise that some dealerships resort to bad business tactics that give all of us a bad name. Honda has no such price wars, and a much better reputation. That’s not the only factor there, but it is a significant one.
Things have changed between auto manufacturers and the car buying public ever since Tesla successfully chose a direct sales approach with their customers. Even GM – with the Celestiq – has ever so slightly begun to move in that direction.
For sales, Tesla’s direct sales model works because they have no-haggle pricing. When buying, most consumers are so price-focused and research cars online, there’s little to differentiate different dealers beyond price. The salesperson becomes a paperwork and 1-hour rental agent. If GM’s going to copy Tesla, they need to copy the whole package.
For service, I wouldn’t call Tesla’s direct model a success by any means.
I don’t believe in no-haggle pricing, its either a discount or no sale.
Dump the dealership model
I’m in it and don’t like it much myself but I can tell you the manufacturers will be a disaster. They are clueless when it comes to the retail business. It’s amazing how stupid they believe the consumer is. GM believes you will pay $100 or so a month in subscription fees. Really???
Buick’s key to success is opening a Chinese restaurant in each location. Also dropping the $1500 mandatory OnStar to every car(SUV) would help.
1500 is way too much. i now pay less than that for two cars. i like the choice of having onstar or not.
I find this amusing, since many Buick-GMC dealers also sell Cadillacs and/or Chevrolets. In fact, at least one dealer in the St. Louis area sells all four GM makes. It made sense (?) maybe when Pontiac, Buick and GMC merged in 2008, but that was the prelude for the phasing out of Pontiac. Frankly, there’s still a good deal of badge engineering among the four makes. Buick, for example, can either be a “super Chevy” or “GMC/Cadillac Lite” (here’s hoping that will change before Buick or GMC go down the tubes
Buick/GMC to many trucks and nothing else to offer bound to collapse.
I have a 2021 GMC engine light came on in October, a fuel problem, here it is almost February 2023 still not fixed light still on. They can’t get parts to fix! they tell me they don’t know when they will. I have always bought Gm products , really thinking of changing brands don’t want to but they are giving me no choice. No Mr good wrench any more !!