Buick Dealerships Cut in Half to Boost Sales and Embrace Electric Future

General Motors Co. has implemented a significant reduction in the number of Buick brand dealerships in the United States, cutting it approximately in half through an ongoing buyout program.

Duncan Aldred, the global head of GM's Buick and GMC brands, explained that the plan to eliminate 1,000 stores is designed to enhance sales and profitability for the remaining dealerships. Furthermore, the buyout program provides an opportunity for dealers who are not interested in investing in the electric vehicle industry to exit.

Buick intends to continue offering buyout options in the following year, with GM having already spent around $1 billion on the initiative. Aldred acknowledged that the average sales figure at the remaining stores still falls behind that of General Motors' GMC brand, which, in many instances, shares showrooms with Buick models.

The majority of the dealerships accepted for acquisition are smaller establishments, accounting for only about 20% of Buick's annual sales. As part of the acquisition process, the company has offered compensation to dealerships for ceasing operations.

Buick initiated the buyout plans for approximately 2,000 franchised dealers in the United States last year as part of its effort to transition to selling exclusively electric vehicles in the country by 2030.

Dealerships will need to invest in training, tools, and specialized equipment to facilitate the transition to electric vehicles. Buick did not disclose the exact investment required, noting that the cost may vary depending on the size and scope of each dealership.

Aldred emphasized that regardless of the progress made with the company's all-electric vehicle plans, a reduction in the size of the dealer network is necessary. He confirmed the commitment to exclusively selling pure electric vehicles in the United States by 2030, although achieving this goal will rely heavily on consumer demand and the acceptance of electric vehicles in the coming years.

Buick has yet to launch an electric vehicle in the United States, with its current lineup consisting of four gas-powered crossovers and SUVs priced between $22,400 and $43,900.

Buick's U.S. sales have been recovering from the impact of the coronavirus pandemic and supply chain disruptions. Sales in the third quarter of this year showed a 63% increase compared to the previous year. However, the brand is projected to sell fewer than 104,000 vehicles in 2022. In comparison, annual sales before 2019 were approximately 207,000 vehicles.

According to Aldred, the introduction of Buick's latest model, a small entry-level crossover named the Envista, along with the normalization of vehicle sales, is expected to help drive Buick's sales back to pre-pandemic levels.