For decades, American drivers have had no choice but to purchase new cars from dealerships because franchise laws prevent automakers from selling directly to customers. But for quite a long time, consumers have complained about the car-dealership experience, stating that pushy salesmen, rampant rip-offs and significant amount of wasted time, among other issues, make the dealership uniquely unpleasant. Those laws become even more problematic for consumers who want to purchase electric vehicles because most dealerships are not enthused with the idea of selling EVs because they are in direct competition with internal combustion engine (ICE) cars, which are a dealerships main offering.
Automakers such as Tesla have made it clear that they will not subscribe to the franchised dealership model, with Tesla waging all-out legal war until the company was granted permission to sell directly to customers. However, some automakers aren’t completely turned off by the idea of selling their EVs through dealerships. Buick, which falls in the latter category, is one of the many carmakers that are turning their attention to electrification.
But unlike Tesla, which has sold a significant chunk of its EVs online, Buick is still keen on selling through franchised dealers, even if it comes at the cost of a few Buick dealerships. During an interview with the “Wall Street Journal,” global vice president of Buick and GMC Duncan Alfred said that dealerships that did not want to align themselves with Buick’s future of electrification will be bought out by the Detroit-based company. As the company shifts toward electric vehicles, it will require franchised dealers to invest in electric vehicle infrastructure and upgrade its stores.
He told the WSJ that depending on factors such as location and access to capital, not every dealer will be willing to follow Buick into its electric future. If that is the case, the automaker is prepared to offer those dealers the monetary assistance they need to leave the Buick franchise, he said. According to a statement from a Buick salesman, there are an estimated 2,000 Buick dealers in the U.S; the spokesman declined to comment on the number of dealers that are expected to accept the buyout, however.
Buick may not have any all-electric cars on the roads yet, but it is planning on unveiling an entire lineup of all-electric SUVs with the moniker Electra within the decade, starting with the 2025 Buick Electra. The first Electra will begin production in 2024, with Buick completely ditching ICE cars in favor of all-electric SUVs soon after that. Given that switching to EVs will require significant investment on the dealers’ side as well, the automaker has offered to buy out those dealerships that aren’t able or willing to upgrade to EVs.
Other EV startups such as Rivian Automotive Inc. (NASDAQ: RIVN) are also working to bypass guidelines requiring them to sell through dealerships. It therefore looks like the writing is on the wall for dealerships to shape up or slide into oblivion as electric vehicles dominate the market.
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