GM’s newly-permanent Chairman/CEO Ed Whitacre balked visibly when asked following his self-coronation if the dealer cull arbitration process would hurt GM’s chances of success this year. “I’m not sure it will weaken us,” was his half-hearted response. Whitacre’s hesitation was a bit of a surprise, considering that GM is taking a far more tolerant attitude to the arbitration process than Chrysler. But, as Automotive News [sub] reveals, GM’s downsizing was highly focused on its Cadillac brand, and if arbitration results in widespread reinstatement, Cadillac could find itself stuck with a number of small-town dealers it doesn’t want.
A year ago, when Cadillac had 1,422 dealerships, GM announced that it would be cutting the brand to 500 dealers, bringing the sales network closer in line with its European competitors (Mercedes and BMW each have fewer than 400 dealers). The 900 Cadillac dealers cut in the dealership cull made up nearly half of all GM’s bankruptcy-era dealer shutdowns.
According to a lawyer representing culled dealers, GM cited “networking viability and throughput issues,”as the reason for closing most Cadillac dealers. “It means GM wanted to sell more cars through fewer dealers,” says Anthony Giardini, general counsel of the Committee to Restore Dealer Rights “It has nothing to do with performance. GM is saying we just don’t want to be in that market.”