Cadillac Considers 'Boutique' Stores for Small Dealers

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Ed753

Discussion Starter · Jan 22, 2015

Cadillac Considers 'Boutique' Stores for Small Dealers

Melissa Burden, The Detroit News 12:24 a.m. EST January 22, 2015

Cadillac President Johan de Nysschen says the brand has "too many" U.S. dealers, and he hopes to convince smaller Cadillac dealers to create downsized, standalone "boutique" stores to improve the luxury make's image.

While he has no plans to reduce their ranks, De Nysschen, who joined Cadillac in the fall, said the brand's dealer organization is the "single biggest deficiency that Cadillac has" when compared to luxury competitors.

GM's luxury brand has 928 dealer franchises in the United States, which is down from 1,422 at the end of 2008 before GM's 2009 bankruptcy. But Cadillac's main luxury rivals in the U.S. — BMW, Mercedes-Benz, Audi and Lexus — all have hundreds fewer U.S. dealers and all sold more vehicles than Cadillac last year.

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Ed753

Discussion Starter · #2 · Jan 22, 2015

I know this isn't a "new" news story for us, but it was on the front page / top of the fold in the Detroit News today.

TuffG929

· #3 · Jan 22, 2015

One takeaway for me....Cadillac would have to sell nearly a million vehicles per year to match the per dealer franchise selling rate of BMW. That is astonishing.

nadepalma

· #4 · Jan 22, 2015 (Edited)

His idea behind the boutique stores — which has not been pitched to dealers yet — is to encourage some to invest in smaller, standalone showrooms featuring maybe two to five cars instead of Cadillac's entire lineup, de Nysschen said last week during an interview with The Detroit News. That would help bolster the brand and dealer profitability, he said.

Interesting idea to be sure. I agree that to be seen as luxurious, upscale, and different from GM's other brands, they do need separate showrooms. In small markets where they aren't pushing a whole lot of metal, a small 3 car showroom may make a lot of sense. However, in what the dealer doesn't shell out in materials and taxes for a larger showroom, they'll have to put out in technology and the "dealership" experience. If I go to a luxury store, I want to feel pampered, attended to, and waited on. Whatever they decide to do brick-n-mortar wise, that part of the equation can't fall between the cracks.

De Nysschen said many Cadillac dealers have high-quality "benchmark" stores, and he wants to boost the number of big standalone stores from about 200 today to 300. The rest would fall into the boutique stores idea. He said Cadillac would encourage dealers to make investments in their facilities, now that Cadillac has announced plans to invest $12 billion in eight new vehicles by the end of the decade.

That's surprising to me. I would have thought that, if the number of stores carrying the Cadillac banner was 900+, that more than 200 would have been standalone.

This has to get fixed. IMHO, all Caddy stores should be stand alone so as to create both a mental and physical perception that Cadillac is an elevated brand and different from "old GM". What's more, in having stand alone stores, those customers can be catered to and get the dealership experience they'd expect from a luxury marque. If I were GM, I'd look to many of those small market stores and start setting aside money to buy out those franchises. The article says that if the price was right, many would fold. I'd concentrate on those while also pushing for the boutique-store angle.

Just my opinion, of course.

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Envoy4Life

· #5 · Jan 22, 2015

This says it all:

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roy219

· #6 · Jan 22, 2015

The fallacies of "too many dealerships" and "dealerships represent a major problem for the Cadillac brand" just refuse to die.

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Zydzik

· #7 · Jan 22, 2015 (Edited)

I would gamble that at least 300 have Chevy Showroom next store as a dual dealership. Then another another 300 are Auto-malls that have Buick/GMC Cadillac and Chevy.
So that gives about 328 stand alone Cadillac dealers which is around average for the big 3. Maybe a 25% reduction in faculties selling both or all 4 of the GM brands should be axed or combined.

Actually run the math add BMW, MERC & AUDI / 3 and you get an average of 328 dealers weird.

TuffG929

· #8 · Jan 22, 2015 (Edited)

roy219 said:
The fallacies of "too many dealerships" and "dealerships represent a major problem for the Cadillac brand" just refuse to die.

Even a cursory understanding of arithmetic would suggest that the dealer network is a bit bloated.

IMO they may be able to eventually turn their larger distribution network in to a strength, but it remains a weakness at this point. They need stronger more focused and luxury oriented dealers.

CarFreak77

· #9 · Jan 22, 2015

Ed753 said:
I know this isn't a "new" news story for us, but it was on the front page / top of the fold in the Detroit News today.

well, I knew I heard it long before Johan de Nysschen (ca.2011). Typical GM, another old, interesting concept that never finds it's place in reality.

“I almost look at it like a boutique approach, almost like Aston Martin or a Bentley in the U.S. Not huge volume but everywhere the consumer experiences and touches that brand, it is done with the utmost level of class, a very high level of sophistication. That is the same kind of approach that we would look to take in Europe.”

http://www.autonews.com/article/20111201/BLOG15/312019999/cadillac-develops-new-strategy-in-europe

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DealerGuyAtl

· #10 · Jan 22, 2015

roy219 said:
The fallacies of "too many dealerships" and "dealerships represent a major problem for the Cadillac brand" just refuse to die.

Totally agree. Cadillac's issue isn't the Dealers, it the lack of PRODUCT. Get the product and prices right and the volume will come.

Reactions: 5

Frank Nitty

· #11 · Jan 22, 2015

TuffG929 said:
Even a cursory understanding of arithmetic would suggest that the dealer network is a bit bloated.

IMO they may be able to eventually turn their larger distribution network in to a strength, but it remains a weakness at this point. They need stronger more focused and luxury oriented dealers.

I agree that the dealer network may be a bit too big. However, Cadillac main problem IMO is Product, Product, Product!!!

Reactions: 3

Al465

· #12 · Jan 22, 2015

TuffG929 said:
One takeaway for me....Cadillac would have to sell nearly a million vehicles per year to match the per dealer franchise selling rate of BMW. That is astonishing.

Didn't GM almost sell that amount last year?

wallus13

· #13 · Jan 22, 2015 (Edited)

The Cadillac dealerships I have been to aren't too bad but I do see one problem. The problem is that there is no difference between sales people/service/etc. I go in and could be working with the same person that sold a Spark. There should be dedicated Cadillac salespeople and service. The Cadillac salespeople need to be dressed in a more professional way and act the part.

Reactions: 4

Ed753

Discussion Starter · #14 · Jan 22, 2015

nadepalma said:
........................That's surprising to me. I would have thought that, if the number of stores carrying the Cadillac banner was 900+, that more than 200 would have been standalone.

This has to get fixed. IMHO, all Caddy stores should be stand alone so as to create both a mental and physical perception that Cadillac is an elevated brand and different from "old GM". What's more, in having stand alone stores, those customers can be catered to and get the dealership experience they'd expect from a luxury marque. If I were GM, I'd look to many of those small market stores and start setting aside money to buy out those franchises. The article says that if the price was right, many would fold. I'd concentrate on those while also pushing for the boutique-store angle.

Just my opinion, of course.

It's not the number of locations, its the product and volume of the product; just yesturday we were digging into ATS coupe sales, all indications, they haven't sold a 1,000 units in 6 month!

Granted, some dealers need to go, but do you think if Cadillac goes from 928 to 328 they are magically going to sell twice as many cars as they do today? I bet GM couldn't close 100 stores without negatively impacting the measly 170K units per year number.

It says they cut +/- 500 since/during BK, but I'd love to see the "tail" on the sales curve, I bet there is still many dealers that don't even sell 100 Cadillac's a year.

DealerGuyAtl said:
Totally agree. Cadillac's issue isn't the Dealers, it the lack of PRODUCT. Get the product and prices right and the volume will come.

It's not just breadth of product; it needs to be the right product (and at market moveable prices). The ELR and ATS Coupe are perfect FAIL examples.

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draco_m

· #15 · Jan 22, 2015

Frank Nitty said:
I agree that the dealer network may be a bit too big. However, Cadillac main problem IMO is Product, Product, Product!!!

The ATS is a good product. But there are huge numbers of 2014s on dealer lots as of January 2015. Are the dealers at fault? I don't know. But something is wrong. Because the product is good and the economy in the area is extremely good. So something else needs to be fixed.

member12

· #16 · Jan 22, 2015 (Edited)

Smaller stores would be especially helpful in new markets, urban centers, and parts of Europe.

Cadillac needs to show up every day and compete. I understand that they are oversaturated especially in small towns, but they have to maintain a level of service in all viable markets even if it means downsizing the dealerships.

dratnol

· #17 · Jan 22, 2015

roy219 said:
The fallacies of "too many dealerships" and "dealerships represent a major problem for the Cadillac brand" just refuse to die.

So then why is Cadillac in last place? If this was a fallacy, they should be at least in the top three. To say that there isn't a problem is to put one's head in the sand.

RedSkyBlackDream

· #18 · Jan 22, 2015

Automotive parking light Car Wheel Tire Vehicle

This is my favorite Cadillac dealer here in the Chicago area! Steve Foley Cadillac Bentley Rolls!!! The experience is amazing! Even if you aren't in the market to buy! I wonder if this is considered a "stand alone" Cadillac dealer. It's connected to Bently and Rolls but those others aren't GM products.

Anyhow, if you are ever in the Chicagoland area stop by! I don't care if I'm half way around the globe, if I am ever purchasing a Cadillac at any time it will be from this amazing staff/team.

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dratnol

· #19 · Jan 22, 2015

Al465 said:
Didn't GM almost sell that amount last year?

No, they sold 170,750 Cadillacs last year.

member12

· #20 · Jan 22, 2015

DealerGuyAtl said:
Totally agree. Cadillac's issue isn't the Dealers, it the lack of PRODUCT. Get the product and prices right and the volume will come.

This is another true story.

Their crossover offerings are crap. The SRX is all they have, and it is just not what a Cadillac should be. They desperately need a new SRX and another crossover to slot above the SRX. They have to actually be good products, too.

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