GM has cut its Buick dealership network in half through buyouts

DETROIT – General Motors has cut the size of its Buick dealership network roughly in half in the U.S. through an ongoing voluntary buyout program, an executive told CNBC.

The 1,000-store reduction aims to increase the amount of sales per location, or throughput, and profits at the remaining dealers, according to Duncan Aldred, global head of GM’s Buick and GMC brands. The buyouts also allow dealers who don’t want to invest in electric vehicles to get out of the business.

“What this is enabling us to do that is triple the throughput of the remaining dealers,” Aldred said during an online interview. “I think it’s fair to say that I’m really pleased that we achieved it.”

Buick plans to continue to offer buyouts, which have cost GM about $1 billion thus far, into next year. The average sales of the remaining stores still trail those of GM’s GMC brand, which largely shares showrooms with Buick, according to Aldred.

A majority of the dealers who took buyouts were smaller stores, which represented only about 20% of Buick’s annual sales. As part of the buyouts, the company offers payments for the dealers to cease operating their businesses.

The voluntary buyout program with Buick’s roughly 2,000 U.S. franchise dealers started last year, as the brand began investments in its transition to exclusively offering all-electric vehicles domestically by 2030.

Dealers need to invest in training, tools, and special equipment for the EV transition. Buick declined to disclose how much investment is needed, saying specific costs may vary depending on the size and scope of the dealership.

Aldred said the company need to reduce the size of the dealer network regardless of the all-EV plan, which he confirmed it is still targeting for 2030. However, he said meeting that goal will largely depend on customer demand and acceptance of EVs in the years ahead, “We will very much play to the market demand.”

Buick does not currently offer an EV in the U.S. The brand’s lineup consists of four gas-powered crossovers and SUVs, with starting prices ranging from about $22,400 to $43,900.

The brand offers hybrid vehicles in China, but Aldred declined to say whether Buick would offer or import such vehicles domestically. Hybrids are increasingly viewed as a potential way to help automakers meet more stringent U.S. fuel economy standards amid slower-than-expected EV sales.

Buick’s U.S. sales are recovering from the coronavirus pandemic and supply chain issues. The brand’s sales through the third quarter had climbed 63% from their sluggish levels a year earlier. The brand sold less than 104,000 vehicles in 2022. That compares with pre-coronavirus pandemic levels of roughly 207,000 in both 2018 and 2019.

The brand’s newest entry – a small entry-level crossover called the Envista – and normalizing fleet sales are expected to help boost Buick’s sales back to pre-pandemic levels, Aldred said.