DETROIT -- GMC plans to limit, and in many cases eliminate, floorplan costs for the electric 2022 Hummer pickup and 2024 Hummer SUV long term to help protect dealer profits and simplify the sales process, the brand told dealers Friday.
"We're going to take the risk on that now," Duncan Aldred, vice president of global Buick-GMC, told Automotive News.
As General Motors begins to launch its EV roster this year, the automaker has emphasized a need to reform much of the retail transaction. Chevy is considering a pilot of regional EV lots dealers can pull from as needed, and GM will soon launch a new digital retail tool, powered by Tekion, to help dealers facilitate EV sales.
GMC also plans to work with dealers individually to estimate their market opportunity with Hummer. So far, more than half of GMC's dealers have signed on to sell Hummer EVs, and most must make an investment of about $200,000 in their facilities to support EV sales and service.
Aldred said GMC is still developing its long-term EV distribution strategy, but covering floorplan costs will be key.
GMC launched both Hummers with a reservation system on GMC.com. Customers sign up through GMC, choose their dealer and make a $100 deposit. Shortly after reservations opened in October for the pickup -- and this month for the SUV -- spots for the first few model years sold out.
Before dealers deliver the reserved Hummers, they'll need time to prepare the vehicle and arrange delivery with the customers. GMC will cover the floorplan cost until the vehicle leaves dealers' lots or for up to 30 days, Aldred said.
"The dealer will be whole. It's more precise than now where basically we give dealers a lump sum [of floorplan assistance] and if it's not enough, that's unlucky and if it's too much, it's lucky," he said.
Once Hummer dealers get through those reservations and regular production ramps up, GMC will implement a more traditional vehicle distribution process, and the floorplan coverage periods will vary, Aldred said.
"As we go through a full lifecycle, like every vehicle, the demand and supply balance changes. When we get into that period where dealers are stocking vehicles, we will change that number," he said. "The key thing is we'll always make a dealer whole to what we believe is a reasonable period of time whether that's 90 days, 30 days, 60 days."
Today's floorplan credit and inventory management standards industrywide can be "a bit clumsy," Aldred added. "Sometimes a dealer may get more than they need, sometimes they may get way less than they need."
Today, GM is coping with only half as much inventory as a year ago, but dealers' memories of a costly overabundance of inventory -- and pressure from automakers to buy more-- aren't easily forgotten.
"This will be dynamic and flexible and it will be a better way of doing it directly through the dealers," said Aldred.