OK, back before the last Ice Age I was general manager of a Honda dealership, so I'm slightly conversant.
A dealer has a franchise contract with a manufacturer. Most dealerships have franchises for numerous lines, so there's no exclusivity involved unless the dealer himself wants it that way. (The dealership I ran WAS exclusively Honda, but the owner had other stores that sold other makes. We didn't advertise it.)
The one thing that dealers DREAD is having cars on the lot that aren't selling. He has a line of credit called a "floor plan" that pays the mfgr. for the cars, and he's paying interest on that loan. The mfgr. dictates his minimum inventory, so a model that isn't selling is an albatross around the neck of a dealer. We had a couple in my time.
If a dealer decides to give up a franchise, the mfgr. will buy back any cars he has in stock, ditto any spare parts, accept return of any leased service equipment, point-of-sale display materials, and other minor stuff. He will no longer be allowed to advertise himself as a dealer, but he COULD continue to service the brand if he chose. This isn't minor - a large part of the profit is in the service department. The dealers' markup on the cars is actually rather small.
Occasionally the mfgrs. engage in a nasty tactic called "pipeline stuffing". Basically forcing the franchise dealers to take more inventory than they want, to make the corporate sales figures look better. I don't doubt that GM and probably Ford are engaged in this to get rid of the EVs they committed to build but the dealers can't sell. If I were still in the racket, I'd be telling my owner that it's time to pack it in and put his money into real estate.
So, the "buy-out" mentioned in the title is actually a "buy-back?" The dealership divests itself of all of its showroom stock (plus incidentals)?! Wow!
That puts everything in an entirely different light for me!
Thanks for your detailed and understandable explanation!
Regards,
Lot’s of interest piling up on all those un-sellable pieces of plastic, metal, and lithium.
I suspect the dealerships are rightfully worried that the Buick brand is going the way of Oldsmobile (d. 2004) and Pontiac (d. 2010), and don’t want to invest a bunch of money on equipment for it.