There are around 150 General Motors Co dealers that have decided to split with Cadillac. It is taken due to the higher cost for upgrading the car into electricity. It indicates that the skeptical views about replacing them to be battery-powered vehicles.
Then, GM gives an option to Cadillac dealers. They have to take a buyout offer so that they can be out of the brand. Otherwise, they should spend approximately $200,000 for upgrades.
The upgrades include the charging stations as well as the repair tools. Those things are necessary to prepare their stores in selling electric vehicles.
The buyout offer ranges are varied, starting from $300,000 to over than $1 million. Because of that, around 17% of Cadillac U.S. dealerships accept the offer. They stop the franchise agreements for Cadillac as the luxury brand.
According to the survey, most dealers who accept it have other brands. They own more than one brand, such as Buick and GMC, or Chevrolet. Besides, they only sell a few Cadillacs in a month.
Although some Cadillac dealers have skepticism due to investors valuing the electric vehicles, it may bear interest from the consumers. Yet, it can endure questions from the retailers who assist the customers as well.
Tesla Inc. becomes the leading electric-vehicle as they can sell it directly to customers. They require no franchise dealers. This method should be a sample model that has to be followed by several startups.
Meanwhile, many traditional auto producers are forced to cover their electric-car projects on dealer networks. So, they can make their money by selling vehicles with gasoline-powered cars.
Many dealers say that they are considering the expensive facility investment. They will require electrical-system upgrades and make them compare with the needs in the market. It is approximately 2% of vehicle sales in the U.S.
This small amount makes the retailers worry about selling. They suspend the electric vehicle model orders because they don’t want to keep it too long in their shop.
Furthermore, the pandemic causes more decrease in vehicle selling demand. This issue can be seen from the popular area with electric vehicles like San Francisco.
The Cadillac buyout offers to the dealers are confirmed by Rory Harvey. He is the chief of Cadillac global brand. However, he denied mentioning how many they have valued the offer to dealers.
He added that future dealers require the same vision as them. They have to be logical and able to follow a similar path toward electrification. For those who are not able to commit, they can exit the brand and receive compensation from Cadillac.
A plug-in car will need more space in the showrooms. They would like to re-establish the economics of operating a dealership as the electric vehicle has simpler components.
Aside from its fewer components, it also needs less regular maintenance. This reason may cause a slight threat to the dealers’ components parts.
The dealer will sell an electric one differently if you compare it with the vehicles having combustion engines. Thus, it becomes a great opportunity. The automakers can rethink the franchise models.
Cadillac becomes the central role in pushing the electric vehicle. It happens because it becomes the most energetic company in producing legacy automakers.
It can boost electric vehicle sales, including the development of driverless-car. The plan is bigger than the previous one as it takes up to $27 billion in sales by mid-decade.
The above amount signifies the majority of GM’s planned. From that, we know that it is only 2% of electric car global sales recently.
Cadillac prepares electric designs that will be available in showrooms for the coming years. Mr. Havey adds that Cadillac will be able to broaden its network and become competitive in the market.
This statement is supported by one of Minnesota Cadillac dealers, Todd Snell. He sees electric cars as a future investment due to the costs, although he can not be sure how fast the market will respond, especially for those who live in the farming area.
An electric car may not be 100% effective in the automaker industry. However, it will be an essential part of the vehicle business. They are looking forward to growing it bigger and wider.
The dealers do not have many options for this change. Moreover, the state’s government supports the development of electric cars. Take, for example, California will ban the sales of gas-powered vehicles in 2035.
Thus, this regulation forces the dealership to accept the offer. The dealerships have to electrify those vehicles and shops by not considering the dealership owners’ feelings.