DETROIT — Nearly 1 in 5 Cadillac dealers in the U.S. reportedly have decided to quit the brand rather than make costly upgrades to sell and service electric vehicles.
A Cadillac spokesman would not confirm how many of the brand’s 880 dealers accepted the buyout offers first reported by Automotive News last month. Dealers had until Nov. 30 to decide on the offers, which generally ranged from $300,000 to more than $500,000.
About 17 percent, or roughly 150 dealers, are taking the buyouts, The Wall Street Journal reported Friday, citing sources it didn’t identify.
Cadillac has prohibited dealers who accepted a buyout from discussing it publicly as a condition of the payment.
General Motors is requiring dealers who stay with Cadillac to spend at least $200,000 on chargers, tooling and training in order to sell the EVs being rolled out starting in 2022. Cadillac expects to sell only EVs by 2030 if it feels the market is ready. GM recently said it would launch Cadillac’s first full EV, the Lyriq, in early 2022, nine months sooner than previously planned.
“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 last month. “This is purely an option for those dealers who feel the EV journey is not suitable for them.”
All of Cadillac’s U.S. dealers were eligible for a buyout, but Cadillac management made formal offers mainly to dealers who were reluctant to sell EVs as soon as the Lyriq and other vehicles reach the market.
Cadillac worked with its national dealer council to form the deals, and the brand wasn’t aiming for a particular number of dealers to take buyouts, Samara said.
Dealer lawyers and consultants said dealers who take the buyout can sell new Cadillacs through 2021 and can access the brand’s used-vehicle auction through 2024, unless other arrangements have been made.
Cadillac has long been trying to shrink its dealer footprint. In 2016, when rolling out its Project Pinnacle incentive program, Cadillac offered to pay low-volume dealers $100,000 to $180,000 to quit. Dealers weren’t pressured to take the deals, and few accepted.
This time around, Cadillac was more aggressive and willing to negotiate more generous buyouts with dealers, consultants and lawyers told Automotive News last month.