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Some Cadillac dealers choose not to invest for EV future

Kalea Hall Breana Noble
The Detroit News

Detroit — About 150 Cadillac dealers are choosing to take buyouts from General Motors Co. rather than invest thousands to support electric vehicles, the Wall Street Journal reported Friday. 

Cadillac's 880 U.S. dealers were told in September they needed to invest $200,000 to transition dealerships for coming electric vehicles. The dealer network had until Nov. 30 to make the decision if they wanted to take a buyout. About 17% of Cadillac dealers took the buyout offer, the Journal reported Friday citing anonymous sources.

The upcoming all-electric Cadillac Lyriq.

Cadillac, GM's flagship electric brand, is aiming to sell more vehicles powered by electricity than by fossil fuels by the end of the decade. The electric Lyriq crossover will kick off the transition for the luxury brand, arriving in the first quarter of 2022, nine months ahead of schedule.

"Cadillac will have a very exciting and comprehensive EV portfolio moving forward as demonstrated by the initial reveal of the LYRIQ," Rory Harvey, vice president, Cadillac sales, service and marketing, said in a statement. "This forward product offering needs to be combined with exceptional customer experience. The future dealer requirements are a logical and necessary next step on our path towards electrification to ensure our dealers are prepared to provide customers an exceptional experience. We see Cadillac’s dealer network as a business advantage, and they will remain a critical part of the retail and relationship chain with customers.”

Many of the buyouts offered ranged from $300,000 to $500,000, the Automotive News reported first in November. 

Most of the dealers opting for the buyout are smaller-volume operations. There are still discussions taking place with some dealers, but Cadillac spokesman Michael Albano said: "We hope to wrapped up by the end of the year."

David Butler, chairman of the Cadillac National Dealer Council and executive manager at four Cadillac dealers, says the organization approached GM about the transition to electric vehicles.

“We said you have 900 Cadillac dealers, some of whom are in more rural areas that may not share the vision with you,” Butler said. “We asked that they meet with dealers, explain what the future looks like, and if they chose not to be on board, be able to exit the business gracefully.”

Cadillac reached out to every dealer to talk about the buyout, Butler said. He did not know what exactly the offer was, though he said it was well north of the roughly $100,000 the company offered a number of years ago in a similar offer.

The investment GM is asking for would cover charging stations, training of employees and lifts that can carry the heavy batteries powering the vehicles.

“Electric vehicles are really a part of the future,” Butler said. “It’s just a question of how quickly the adoption rate is. Regardless, it’s still coming. We’re prepared to jump on the future.”

The company called Inder Dosanjh, dealer principal at the California Automotive Retailing Group that owns four Cadillac retailers, about the offer, but he’s opting in for the brand’s profitability because of its full lineup of SUVs — and because California is requiring dealers only sell new zero-emission vehicles by 2035 anyway.

“For small dealers who are selling under 75, under 50 cars a year, it won’t make sense to them,” he said about making the tens of thousands of dollars in investments.  “It’s not anything that other manufacturers aren’t requiring. They did the same thing. Volkswagen, Infiniti, they all are requiring the same. It’s nothing crazy. You have to change."

khall@detroitnews.com

Twitter: @bykaleahall