DETROIT – General engines has roughly halved the size of its Buick dealer network in the U.S. through an ongoing voluntary buyout program, an executive told CNBC.
The 1,000-store reduction is intended to increase sales per location, or throughput, and profits at the remaining dealers, said Duncan Aldred, global head of GM's Buick and GMC brands. The buyouts allow dealers who do not want to invest in electric vehicles to exit the business.
“What this allows us to do is triple the throughput of the remaining dealers,” Aldred said during an online interview. “I think it's fair to say I'm very happy we've achieved this.”
Buick plans to continue offering buyouts next year, which have cost GM about $1 billion so far. According to Aldred, the average sales of the other stores lag behind that of GM's GMC brand, which largely shares showrooms with Buick.
A majority of dealers who took buyouts were smaller stores, representing only about 20% of Buick's annual sales. As part of the buyouts, the company is offering payments to the dealers to cease operations.
The voluntary buyout program with Buick's approximately 2,000 U.S. franchise dealers began last year, as the brand began investing in its transition to exclusively offering fully electric vehicles domestically by 2030.
Dealers must invest in training, tools and special equipment for the EV transition. Buick declined to disclose how much investment is required, saying specific costs may vary depending on the size and scope of the dealership.
Duncan Aldred, vice president of Buick-GMC sales for General Motors Co., speaks next to a GMC Sierra Denali HD truck on display during an event in Chula Vista, California, U.S., on Tuesday, January 22, 2019.
Sandy Huffaker | Bloomberg via Getty Images
Aldred said the company will need to reduce the size of its dealer network regardless of its all-EV plan, which he confirmed is still targeting 2030. However, he said achieving that goal will largely depend on customer demand and the adoption of EVs in the future. coming years: “We will be very responsive to market demand.”
Buick does not currently offer an electric car in the US. The brand's lineup consists of four gas-powered crossovers and SUVs, with starting prices ranging from approximately $22,400 to $43,900.
The brand offers hybrid vehicles in China, but Aldred declined to say whether Buick would offer such vehicles domestically or import them. Hybrids are increasingly seen as a potential way to help automakers meet stricter U.S. fuel economy standards, while sales of electric vehicles have been slower than expected.
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 sluggish levels a year earlier. The brand sold fewer than 104,000 vehicles in 2022. That is comparable to the pre-corona pandemic level of approximately 207,000 in both 2018 and 2019.
The brand's latest introduction — an entry-level small crossover called the Envista — and the normalization of fleet sales are expected to help Buick sales return to pre-pandemic levels, Aldred said.