According to news on December 20, General Motors has cut the size of its Buick brand dealership network in the United States by approximately half through an ongoing buyout plan. Duncan Aldred, global head of GM's Buick and GMC brands, said the plan to cut 1,000 stores is aimed at increasing sales at each store and profits for remaining dealers. In addition, buyout acquisitions also allow dealers who do not want to invest in the electric vehicle industry to exit.
"It allowed us to triple the volume at the remaining dealers. To be fair, I'm glad we achieved that," Aldred said in an interview.
Buick plans to continue offering buyout options next year, on which GM has spent about $1 billion so far. Aldred said average sales at remaining stores still lag behind GM's GMC brand, which in many cases shares showrooms with Buick models.
Most of the dealers accepted for acquisition are smaller dealers, which account for only about 20% of Buick's annual sales. As part of the acquisition, the company offered dealers compensation for ceasing operations.
Buick began offering buyout plans to about 2,000 U.S. franchised dealers last year as the brand began investing to achieve its goal of selling exclusively all-electric vehicles in the U.S. by 2030.
Dealers will need to invest in training, tools and special equipment to make the transition to electric vehicles. Buick declined to say how much investment it would require, saying the exact cost could vary depending on the size and scope of the dealership.
Aldred said that regardless of how the company's all-electric vehicle plans progress, it will need to reduce the size of its dealer network. He also confirmed that the goal of exclusively selling pure electric vehicles in the United States will still be achieved by 2030.
However, he said that achieving this goal will largely depend on consumer demand and acceptance of electric vehicles in the coming years. "We will largely play the role of market demand."
Buick has not yet launched an electric vehicle in the United States, and the brand's lineup includes four gas-powered crossovers and SUVs with starting prices from $22,400 to $43,900.
Buick has introduced hybrid vehicles in China, but Aldred declined to say whether the company would offer or import such vehicles in the United States. Hybrid vehicles are increasingly seen as a potential way to help automakers meet tougher U.S. fuel economy standards amid lower-than-expected sales of electric vehicles.
Buick's U.S. sales are recovering from the coronavirus pandemic and supply chain issues. The brand's third-quarter sales were up 63% from a year earlier, and it will sell fewer than 104,000 vehicles in 2022. By comparison, annual sales in 2018 and before 2019 were approximately 207,000 vehicles.
Aldred said the brand's latest model, a small entry-level crossover called the Envista, and normalization of vehicle sales are expected to help push Buick's sales back to pre-pandemic levels.