GM is Paying Cadillac Dealers to Ditch the Brand

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Cadillac dealers disinclined to spend a sackful of money on revamping their businesses to sell and service electric vehicles received some moderately good news this month. General Motors is willing to issue them fat stacks of cash for stores that cannot rationalize the sizable expense of installing charging stations, training staff, and retooling the garage.

While it smacks of the consolidation efforts headed by Caddy’s former President Johan de Nysschen in 2016 with Project Pinnacle, and makes us wonder how the brand plans on turning a profit if it keeps eliminating storefronts, GM thinks buying out dealers who don’t want to participate in the EV experience is the way to go. Though the company has expressed an interest in gradually embracing a more digitized sales model as Cadillac strives to become an exclusively electric brand by 2030.

“We wanted to move fast and make sure dealers are ready for the acceleration,” Mahmoud Samara, vice president of Cadillac North America, told Automotive News earlier this week. “This is purely an option for those dealers who feel the EV journey is not suitable for them.”

According to the outlet, many offers range from $300,000 to upward of $500,000. However, Cadillac has declined to give any official figures, and dealers who accepted the deal aren’t allowed to discuss the program publicly.

“We had discussions with all the dealers around what is our EV journey, how are we going to get there? It was a very open, transparent discussion — allowing all dealers to understand and buy in,” Samara said, noting that about 880 U.S. dealerships are currently eligible for the buyout. While she believes most will progress with Cadillac in its “EV journey,” low-volume dealerships may have no choice but to take the money and run.

From AN:

Many smaller dealers, after years of feeling like GM wanted them gone, are no longer as eager to stand firm as the costly shift to EVs looms, said Stuart McCallum, who leads the automotive consulting and accounting practice for Withum accounting firm in Princeton, N.J. Some just hope to negotiate a more lucrative deal before agreeing to give up their franchise, he said.

“They’re looking at this as a godsend almost,” McCallum said. “There is wiggle room in the offer. It’s not a take-it-or-leave-it.”

For dealers who sell few Cadillacs a month, he said, a $300,000 to $400,000 payment might be equal to five to 10 years’ worth of new-vehicle profit.

But larger storefronts might see things differently. Unless they negotiate a particularly sweet deal with GM, these aren’t favorable terms. Of course, if they believe spending $200,000 is too big a risk to take on the gamble that people will want Cadillac EVs in the years to come, there aren’t many alternatives. They have until the end of the month to make a decision and notify General Motors.

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