“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. “This is purely an option for those dealers who feel the EV journey is not suitable for them.”
Many offers range from $300,000 to upward of $500,000, according to people familiar with the terms. Cadillac declined to disclose the dollar amounts and other terms, and dealers who accept a buyout must agree not to discuss it publicly.
The payment range marks a big increase from the packages Cadillac offered to its 400 lowest-volume retailers in 2016 under then-President Johan de Nysschen, who bluntly said the brand had “too many dealers” relative to competitors.
This time around, all 880 U.S. Cadillac dealers are eligible, though management made formal offers mainly to dealers who expressed hesitation about selling EVs as soon as GM wants them to. Samara said he expects most dealers to go forward with EV sales.
“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.
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.
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.
