General Motors Co.’s (NYSE: GM) Cadillac division believes it can upgrade its dealer network and that will help sales. The plan’s description still does not say whether there is much demand for Cadillac cars and light trucks at all. Recent sales data say not.
Management announced:
Cadillac’s U.S. network today features a core of approximately 200 flagship, stand-alone dealerships. Its concept going forward is that core of roughly 200 flagship stores will be complimented by 700 smaller, boutique locations. The boutique concept would feature exclusive Cadillac consumer touch points, highly trained sales and service staff and luxury amenities.
Its dealer network is at 900 now, but presumably many of these dealerships sell other brands as well.
Cadillac President Johan de Nysschen described his initiative:
“Virtual Showroom” systems could enable shoppers to quickly configure and envision multiple models, color and interior choices using interactive digital displays, or potentially even holograms.
In other words, Cadillac plans to build a showroom of the future.
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The trouble is that Cadillac’s sales plunged in 2014, while the sales of its primary competitors rose sharply. In December, Cadillac sales dropped 11.1% to 16,150. For the entire year, sales fell 6.5% to 170,750. By contrast, Mercedes annual vehicle sales rose 6.5% in 2014 to 356,135. BMW sales rose 9.8% to 339,738. The two German car companies continue to introduce new models and upgrades at impressive speed, which Cadillac cannot possibly match in the foreseeable future. Finally, Cadillac owners are relatively old compared to those of BMW and Mercedes, which means they do not have as many years ahead of them to buy cars, against the youthful customers of rival manufacturers.
Presumably BMW, Mercedes and other competitors, including Lexus and Audi, will strengthen dealer networks, because otherwise they would be squandering opportunities. These no doubt will be “showrooms of the future” of one kind or another.
Cadillac will need to come up with much more than a new dealer system and the small number of models it has introduced recently to hope to take even the most modest market share from its formidable competition.
ALSO READ: Toyota Expects Slump in 2015 Sales
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