Dealers Say Goodbye to Cadillac
In a dispute over stocking electric models, About 150 Cadillac Dealers Will Exit the Brand Entirely.
About 150 General Motors Co. dealers have decided to part ways with Cadillac, rather than invest in costly upgrades required to sell electric cars, according to people familiar with the plans, indicating some retailers are skeptical about pivoting to battery-powered vehicles.
GM recently gave Cadillac dealers a choice: Accept a buyout offer to exit from the brand or spend roughly $200,000 on dealership upgrades—including charging stations and repair tools—to get their stores ready to sell electric vehicles, these people said.
Most dealers who accepted the buyout also own one or more of GM’s other brands—Chevrolet, Buick and GMC—and sell only a handful of Cadillacs a month, the people familiar with the effort said.
The skepticism from some Cadillac dealers underscores that, even as investors bid up the value of electric vehicles, questions persist about interest among consumers and the retailers who serve them.
Electric vehicles account for a mere 2% of sales.
Electric vehicles also require less service and maintenance. That’s a hit to dealer profits and another reason dealers are skeptical.
And even if electric vehicles sales jump, will Cadillac be part of it?
Finally, I wonder how long the dealership model itself will last.
Mish
Meanwhile…link to electrek.co
I think the strategy of selling electrics on the Cadillac brand makes a whole lot of sense. The people who are likely buyers of electrics are going to be using them as city/commuter cars or second vehicles, and going to have garages, ability to purchase home charing equipment and (most importantly) have another vehicle for longer trips. As for the dealerships not wanting to make the investment, where’s all that 0% interest, “pay us back whenever you want” money going?
Dealerships are so 1930s.
Please make an economic case for dealers with a 1000 cars rotting on the lot just so you can drive home today in a new car.
Where I live that is 1000 cars just waiting for a hailstorm.
the smart ones accepted the buyout and will invest in FANGMAN + BLK and make more money sitting on the beach than they could make running the dealership.
Nobody wants them, they are being forced down our throats by democrats.
You obviously don’t have much contact with human beings.
Where’s my Cadillac?
My mouth is open….
The math whizzes among us who drive a lot are snapping up electric cars because of the huge and I mean huge cost savings on fuel – gas versus the electricity. Especially in areas that have cheap hydroelectric power.
Ah!… There you go, you see? Trying to employ logic to battle ignorance. It never works!
Definitely an economic decision and not really a vote on EVs themselves. I am quite certain that there are parts of the country where Cadillac EVs will not sell well even if it is a great car (which may not be that likely). GM probably wanted to reduce dealers and some dealers obviously felt like it wasn’t worth the investment. Probably a win for both GM and the dealers. I don’t think that you will find too many BMW dealers giving up their franchise because of an investment in EVs.
….Cadillac has previously shown interest in reducing its number of dealerships several times, offering buyouts much in the same manner it is now. As it stands, Cadillac has far more dealerships as compared to other competitive brands like BMW, which had just 341 sales locations nationwide as of 2018. Mercedes-Benz, similarly, had just 363 dealerships as of 2019, a fraction of the number Cadillac’s 800 despite having greater vehicle deliveries to dealerships.
It appears that Cadillac’s electric future was unappealing to a number of dealerships, but GM really wanted them gone anyway. Fewer dealerships mean decreased costs, something that could potentially boost the brand’s profits, which Cadillac, an automaker who still offers a fair number of less-popular sedans, definitely needs….
G.M. must embrace Schumpeter’s gale or creative destruction or perish. There’s no future for them as a combustion car company. They have to evolve or die trying. There are on horse driven carriages on the road. I suspect G.M. expected dealers to opt for buy-out. I’m not sure Cadillac will make the transition but they really have no choice. Huge shame as the new Cadillac cars are quite good and priced competitively against the German competition. If I were in the market I would seriously consider a Cadillac instead of a BMW or Mercedes. I wouldn’t have said this a decade ago.
I actually think Cadillac is done for good. In order to stay competitive, keep costs low, maintain quality and constantly innovate, you need money. You need to invest money initially into R&D to keep COGS (manufacturing costs) down. All this investment must be amortized over large sales volume, but Cadillac doesn’t have it. It’s basically death at this point. They are not going to be to compete with likes of Toyota or Honda. You absolutely have to know what your competitive advantages are vs Toyota or Honda, or you’re DONE.
much of that R&D is spread across divisions so its not that bad
Maybe this is G.M. taking control of it sales
Is this a story about electric vehicles or about the Cadillac brand? As much as they keep improving the vehicle sales keep dropping. I liken this to a restaurant having to decide on upgrading the kitchen when they can barely break even with the existing clientele.
There’s no doubt that electric vehicles are the future. BMW will be there, Tesla will be there but will Ford & G.M.? That’s a guess
Ford seems to be doing it as wrong as they possibly can, slapping the Mustang brand on their EV. Yeah, its fast, but it’s not a Mustang without the smoke and noise.
I agree. The branding sucks
This strategy worked great for buggy whip dealers.
i would say 3 out of 4 people i knew here in LA would not buy an electric car until some kind of battery swap/instant charging is available, and the prices come way down. most people street park, have their garage converted into living space, live in apartments, have multiple cars, use public transportation, etc. Those that park in their garage are (sorry) boomers, or live far from the city where housing is much cheaper and those would spend less then 10k on their next used car. Of those that that you would think are likely electric car buyers, already have one
Stock it to me! and we’ll see who gets the last Laugh In.
If we have a cold winter I could use an electric sock or two.
On the other hand, dealer lobbying groups are fighting tooth and nail to prohibit Tesla from selling vehicles directly to the public in many states using arcane franchising laws from the early 1900s. It’s disgusting.
It’s not. The dealer/manufacturer is often very adversarial. The manufacturers don’t want to invest capital and overhead in building a sales/repair facility but want to direct everything the dealer does. The inventory on the lot? That’s the dealer’s borrowed money paying the manufacturer for it and absorbing the risk that it remains unsold or unsold for longer than financially viable. Manufacturers will also require the dealer to buy unpopular models and equipment levels. The manufacturer doesn’t care how long it sits because they dealer has already paid them
Agree – I don’t think it’s possible to receive the same service from the manufacturer as you get from the dealer. In addition manufacturers fight tooth and nail various safety recalls, whereas the dealers gladly perform them since the manufacturer is on the hook and the dealer gets paid.
Henry/Tele… who freakin’ cares? Let the market decide! If not using dealers makes cars from one automaker less appealing to the consumer than one who does (say because they receive less good of a service under such an arrangement) then the former will suffer. But that’s on the manufacturer though; they will have to live with the consequences of not using dealers. It shouldn’t be up to the government to decide.
I’m guessing most Texas “regular” Cadillac customers won’t be crazy to buy an electric vehicle. There is the issue of limited range and a lack of fast charging stations.
I’ve owned two Chevy Volts….I enjoy the versatility…I know the new all-electric models will probably have lots of range….but I still wouldn’t want to take a cross country trip in one as of yet.
The last of the Volts, like the 2018 I have now…..has 50 miles of electric range…..so I only burn gas on road trips…commuting is all electric. It’s such a good car. I’m pissed at GM for abandoning it.
This town is full of Teslas…my neighbor has one…..I see lots of them on my daily commute…..and now Elon Musk is said to be moving here…..probably to Austin, he’s been seen here a lot….and they’re well in their way on building the new Tesla campus.
The most popular Caddie here is the Escalade…lots of those on the road…I don’t see the people who buy those going for an electric sedan.