Cadillac Expects to Lose One-Third of All U.S. Dealerships This Year

Matt Posky
by Matt Posky
cadillac expects to lose one third of all u s dealerships this year

Cadillac is expected to have lost one-third of its U.S. dealerships this year — going from nearly 900 physical locations at the start of 2021 to an estimated 560 by year’s end.

But there’s allegedly no need to worry about the brand because this is part of a planned electric offensive. Last year, Cadillac asked dealers to spend the capital necessary to install charging stations, update their service centers, and retrain staff to better tackle EVs or take a buyout before the automaker’s first battery-driven car (the Lyric crossover) hits the market early in 2022. It would seem that a meaningful portion of the whole decided to bow out, which Cadillac seems totally fine with.

This resulted in around a fifth of all U.S. dealerships leaving the market in 2020. According to Cadillac Vice President Rory Harvey, another third of the remaining 880 storefronts are expected to have vanished before the sun rises on the first day of 2022. It sounds downright brutal, especially considering the swap to EVs resulted in some owners becoming particularly vocal about how General Motors was managing its luxury arm. But Harvey said it’s for the best, as the buyout campaign was designed to retain stores that were committed to Cadillac’s plan of having an EV-only lineup by 2030.

“We never actually had a [specific] number that we were looking for,” the VP told Automotive News this week. “We believe that this will give us the foundation to be able to accelerate going forward, and we believe that it does give us the ability to be very effectively represented.”

From AN:

Cadillac had more U.S. dealerships than any other luxury brand, and even after shrinking to 560 stores would still have a retail network 60 percent larger than BMW and more than double that of Lexus, according to the Automotive News Dealer Census.

Remaining dealers are preparing to upgrade their outlets for EV sales and service by the end of the first quarter, when the Lyriq, Cadillac’s first full EV, is expected to arrive in select showrooms.

The majority of Cadillac dealerships will start getting the Lyriq in June, based on a traditional allocation process, after the midsize crossovers are initially delivered to stores with customers who reserved them, Harvey said.

This includes cars booked at pop-up shops, like the recently opened Cadillac of Manhattan. Bram Auto Group created the temporary facility to help the company sell EVs in a region where it’s expected to have the highest take rate. Based on the number of Tesla vehicles I see parked on NYC streets on any given day, this is likely a shrewd decision. GM is keenly aware of this and has done its utmost to encourage experience centers and the like anywhere it thinks it can draw an affluent, urban crowd.

However, this is technically being done at the expense of rural locations and smaller storefronts that just don’t feel like they can survive the transition to EVs. While dealers that are taking the buyout aren’t allowed to discuss the matter publicly, we’ve still heard back from staff asking to remain anonymous and they’re all basically convinced Cadillac is pulling the trigger on EVs too soon. The brand doesn’t currently have an EV in its lineup and the Lyric won’t arrive until 2022.

Harvey said those payouts range between $200,000 on the low end to well over a million dollars on the higher end. But Cadillac has officially declined to disclose the dollar amounts and other terms pertaining to the buyouts.

This has not prevented those who have decided against taking the money from expressing their concerns, however, and it’s giving us a tinge of déjà vu. Back in 2016, Cadillac was offering buyouts to its 400 lowest-volume retailers because then-President Johan de Nysschen believed the brand had too many dealerships relative to other luxury brands. Known as Project Pinnacle, the strategy really strained the automaker’s dealer relations.

Now the brand is offering another buyout with even more stores being eligible under the auspices that Cadillac is ready to dive into electrification. While true, one does wonder whether the brand’s waning market share in North America also played a factor. Cadillac had a 1.31-percent share in its home market during 2005. But that dwindled to just 0.89 percent by 2020. Despite having a retail network that’s substantially smaller, the previously mentioned BMW’s U.S. market share was 1.91 percent last year — perhaps helping to identify the less-advertised advantages of GM’s EV buyout program.

Let’s be blunt. Over the last few decades, GM’s luxury arm seems to have forgotten literally everything about being a premium American automaker. When imported luxury vehicles started flooding into the North American market and neckties had grown uncomfortably wide, Cadillac immediately became a nameplate catering to older generations that remembered how undeniably superior its vehicles were in their youth. Then it abandoned its identity to pursue European trends and basically stopped manufacturing super-premium cars, though a few gems did manage to emerge during the 21st century (e.g. CTS-V).

Today’s Cadillac doesn’t even seem all that concerned with America and with good reason. The company has seen explosive market growth in China since 2007 and can now reliably count on moving substantially more vehicles in Asia than the U.S. It’s also selling those cars predominantly to younger buyers, encouraging brand loyalty from a demographic that didn’t buy a Cadillac as their final vehicle before stepping into the grave. With GM likewise shifting its manufacturing into China, originally as a way to avoid import tariffs, the intercontinental relationship has only gotten tighter.

“In China, young buyers already dominate the luxury market. Since Cadillac is a relative newcomer … it was far easier to begin to cultivate the desired positioning for the brand from the get-go,” former-President Johan de Nysschen said back in 2016.

Conversely, the brand’s attempts to attract American youngsters haven’t gone so well. Transitioning its headquarters from Detroit to New York City turned out to be a complete disaster and its model lineup has evolved into a slew of boring crossovers with some of the least refined interiors you can expect from any luxury brand. Ironically, Cadillac’s best product before it swaps over to electric cars is probably the venerable, gigantic, expensive, and fuel-hungry Escalade SUV. But even that is a vehicle you can find for less (minus some important bells and whistles) at just about any Chevrolet or GMC dealership.

That’s not to suggest this dealer buyout isn’t about effectively setting the brand up for electrification. We’re just not so sure that’s all it’s about.

[Image: Lerner Vadim/Shutterstock]

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  • Jeff S Jeff S on Nov 10, 2021

    Reducing the number of dealerships is a good start and Cadillac has a chance if they make a competitive EV but as others have expressed their doubts about those in charge at the RenCen who seem to snatch defeat from the jaws of victory. GM needs to get their act together and take the time and the money to make Cadillac a quality luxury vehicle producer and learn from their mistakes. Would be good to use Lexus as an example on how to design and build a quality luxury vehicle.

    • 28-Cars-Later 28-Cars-Later on Nov 11, 2021

      But wouldn't a "competitive EV" sell so well you would want more points of distribution? :D

  • Jeff S Jeff S on Nov 11, 2021

    You could do like Tesla does and order directly and have the vehicle delivered either to your home or a nearby place. You don't need a dealer to buy a car if each state would change their dealer franchise laws. Also if the Government or the auto makers agreed on a standard for charging it would make it easier to charge an EV and make EVs more viable for many. Cadillac has too many dealers for the amount of their sales.

  • MaintenanceCosts We hear endlessly from the usual suspects about the scenarios where EVs don't work as well as gas cars. We never hear the opposite side of the coin. From an EV owner (since 2019) who has a second EV reserved, here are a few points the "I road trip 1000 miles every day" crowd won't tell you about:[list][*]When you have a convenient charging situation, EV fueling is more convenient than a gas car. There is no stopping at gas stations and you start every day with a full tank.[/*][*]Where there are no-idling rules (school pickup/dropoff, lines for ferries or services, city loading, whatever else) you can keep warm or cool to your heart's content in your EV.[/*][*]In the cold, EVs will give you heat from the second you turn them on.[/*][*]EVs don't care one bit if you use them for tons of very short trips. Their mechanicals don't need to boil off condensation. (Just tonight, I used my EV to drive six blocks, because it was 31 degrees and raining, and walking would have been unpleasant.)[/*][*]EVs don't stink and don't make you breathe carcinogens on cold start.[/*][*]EV maintenance is much less frequent and much cheaper, eliminating almost all items having to do with engine, transmission, or brakes in a gas car. In most EVs the maintenance schedule consists of battery coolant changes and tire maintenance.[/*][*]You can accelerate fast in EVs without noisily attracting the attention of the cops and every passerby on the street.[/*][/list]
  • MaintenanceCosts Still can't get a RAV4 Prime for love or money. Availability of normal hybrid RAV4s and Highlanders is only slightly better. At least around here I think Toyota could sell twice the number of vehicles that they are actually bringing in at the moment.
  • Tree Trunk Been in the market for a new Highlander Hybrid, it is sold out with order time of 6 months plus. Probably would have bit the bullet if it was not for the dealers the refuse to take an order but instead want to sell from allotment whether it fits or not and at thousands over MRSP.
  • AKHusky The expense argument is nonsense. My mach e was $42k after tax credit. Basically the same as similarly equipped edge. And it completely ignores that the best selling vehicles are Rams, F150s, and Silverados, all more expensive that a bolt, MAch e or ID4. As an owner, I'd say they are still in second car territory for most places in the country.
  • Johnster I live in a red state and I see quite a few EVs being purchased by conservative, upper-class Republicans (many of them Trump-supporters). I suspect that it is a way for them to flaunt their wealth and that, over time, the preference for EVs will trickle down to less well-off Republicans.