GM weighs stocking its EVs at regional lots

DETROIT — General Motors is considering a page out of Amazon's playbook, with a plan to stock electric vehicles at regional hubs to ensure quick delivery to nearby dealerships.

Starting late this year, Chevrolet could test centralized inventory lots for some 2022 Bolts, with area dealers sharing a nearby pool of Bolts to pull from as needed.

Dealers would be able to receive the Bolts in a matter of days, as opposed to weeks if they were shipped from the factory. The experiment resembles Amazon's model of using regional warehouses to provide next-day or, in some cases, same-day delivery.

GM's strategy could decrease dealers' floorplan costs and allow retailers in markets that aren't ready for significant EV volume to use the lot space for bigger sellers. As customers increasingly show willingness to buy remotely without browsing in person or taking a test drive, dealers may have less need to keep a wide selection of every nameplate on-site. But some dealers worry the approach is another step toward the factory assuming too much control over retail operations.

"We evolved through the pandemic, and a lot of those services that were put into place are not going away," said Michelle Krebs, executive analyst at Autotrader. "Then we have an influx of EVs, which offers this opportunity to transform the retail experience."

GM plans to launch at least 30 EVs globally by mid-decade, including 20 in North America, and it's targeting a zero-emission lineup of light vehicles by 2035. As the automaker outlines significant EV promises, executives are calling for a change in the retail model to cut out unnecessary costs and improve customer experience.

At least initially, customers who want to purchase an electric GMC Hummer pickup or Cadillac Lyriq, both due within the next year, will make a reservation with GM before connecting with a dealership. The automaker has also launched a tool for dealers to more easily track inventory from the plant to their stores and plans to implement a Tekion-powered digital retail tool for EVs as soon as this summer.

The Bolt pools would push GM further into using its EV goals to reshape dealership operations within the limitations of state franchise laws.

The pools would be designed to provide dealers additional inventory options to meet EV demand and to increase delivery speed for the freshened Bolt EV and the new, larger Bolt EUV, both set to arrive at dealerships this summer, a Chevy spokeswoman told Automotive News. There are no firm plans for EV pools yet, she added, but GM is considering running a regional pilot with the Bolts toward the end of this year.

"EV inventory pools are just one of the ideas we're investigating, working closely with our dealer councils, to support the expansion of EVs," she said.

Chevy hinted at the idea of such pools during a dealer meeting this month to go over the details of the 2022 Bolt launches and to announce the new digital retail platform for EVs.

"They're serious. They're jumping in with both feet," said Al Corazza, general manager of Fairway Chevrolet in Hazle Township, Pa. "They want somebody to be able to buy an electric car online from a Chevy dealer."

Chevy's pilot would follow efforts by other automakers to centralize inventory, either physically or virtually. Ford Motor Co. launched Ford Blue Advantage, an online certified used-vehicle platform, last month. Volvo Cars, which plans to offer an all-electric lineup by 2030, this month said it would keep a central stock, delivering customer-ordered electric vehicles to dealerships rather than having retailers order and pay interest to carry the inventory.

GM's idea is less of a departure from convention than Volvo's. The hub of nearby inventory likely would be supplemental to vehicles on dealers' lots.

"One of the major concerns dealers have is, why [can] Tesla build a car so quick ... while GM's ordering system takes much longer?" said Inder Dosanjh, dealer principal of Dosanjh Family Auto Group in the San Francisco Bay Area. "This way it's not taking like 12 weeks to order a car."

Many dealers earned record profits last year, driven in part by tight inventory that lowered floorplan costs. The regional hubs would allow dealers to preserve a portion of that floorplan savings when stock levels normalize, Dosanjh said.

Another benefit to nearby pools is broader access to Bolts, Corazza said. In his market, about 100 miles north of Philadelphia, "currently there aren't that many Bolts around," he said.

Dealer trades would be difficult without a trailer, he added, because there typically aren't enough charging stations for a Bolt to be driven from one dealership to another.

The localized pools are "probably a good idea if [Chevy] can't get the dealer to step up and stock a bunch of Bolts. At least you'd be able to have them ready," he said.

Dealers will still need Bolts and upcoming EVs on their lots for test drives, said a Chevy dealer in Texas who asked not to be identified. "Some of these people are really going to need to touch it and drive it and feel it before making that leap from gas to electric," the dealer said.

But if managed fairly, the dealer added, regional hubs could be helpful as more EVs go on sale. "You don't really know where the demand is or how good one particular dealer is going to get their local areas to jump into EVs."

Despite the expected benefits, some dealers are concerned that centralized vehicle hubs would be a precursor to sweeping changes in how their businesses operate.

"My concern is, it's a slippery slope until we change everything," said the Texas dealer. "It's definitely going to change how dealerships market and sell to customers. I'm definitely going to have to step back and rethink what we do."

If GM eventually creates centralized pools for its entire portfolio — EVs as well as gasoline-powered vehicles — the dealer worries about competing with retailers down the street. If every dealer has access to the same inventory, the dealer said, when customers select vehicles online, "why would they pick me?"

GM has not yet explained how dealers could earn inventory from the stock pools.

Corazza doubts GM would expand the strategy to most gas-powered vehicles because that could transfer all of the carrying costs to the automaker and remove the benefit of a dealership network covering those expenses.

"I could see them targeting certain things, like electric vehicles, to try to get it off the ground so that there's more availability than would normally be allocated to a dealership," he said.

The model also could relieve some pressure for dealers in markets where EV sales volume is low or nonexistent.

"Not every dealer is going to want to sell them or be good at selling them in quantities," Krebs said. "It doesn't make sense for one dealer to have a whole bunch of EVs on the lot when maybe another dealer is able to sell them."

Corazza sold just four Bolts last year, including two that he and one of his employees purchased. But he's always eager to take on new products.

"We don't want to say we don't sell something," Corazza said. "Does it make true business sense? Not at this point. But when it starts rolling that way, we will be better prepared than most because we have the people, we'll have the expertise, we'll have the equipment. We'll know what we're doing."