Cadillac President Johan de Nysschen has a problem with the brand's dealers, specifically how many there are. According to data gathered by Autodata Corp and The Detroit News, Cadillac currently has 928 dealers in the U.S. A large number when compared to competitors in the luxury class such as Audi (281 dealers) and Mercedes-Benz (364). Factor in total sales for year and Cadillac finishes last with each dealer selling an average of 184 vehicles (170,750 vehicles sold for the year). This pales in comparison with the likes of Audi (648 vehicles sold last year per dealer) and Mercedes-Benz (978 vehicles sold last year per dealer).
"With our very large dealer network … we so fragment the available volume, that many of our stores are unable to reach critical mass in terms of volume and their profitability to afford the investment in the kind of ... facilities that is the custom and practice for the sector," said de Nysschen.
So what does de Nysschen plan to do about this? Well he isn't saying anything about cutting dealers at the moment. Instead, he is proposing smaller 'boutique' stores which will be separate facilities to have between 2 to 5 vehicles along with a virtual showroom with TV screens and 3-D images. The hope is that this will reduce a phenomenon de Nysschen calls "selling Cadillac out the back door of the Chevrolet store."
"We want to create a concept that's built around the notion of a small boutique shop. The idea is you don't have to be a large, Taj Mahal mausoleum brand store to be classy and sophisticated and premium. You can do a small two-car showroom with an investment amount that is kind of appropriate to the size of the sales opportunity in their local market, and we harness technology to supplement then what we can offer," said de Nysschen.
de Nysschen will be presenting this plan to dealers at the 2015 National Automobile Dealers Association conference in San Francisco this weekend.
IHS Automotive analyst Tom Libby tells The Detroit News that de Nysschen's plan makes some sense as it allows Cadillac to build and grow a brand by separation.
"It makes sense. It's a challenge to convince the retailer to invest a lot of money. It sounds like a compromise," Libby said of the idea.
Source: The Detroit News