Cadillac has a dealer problem. It has three times as many of them as Mercedes or BMW but sells less than half as many cars as either one. About 400 of Cadillac’s more then 950 dealers sell 50 cars or less a year. Their Cadillac operations are combined with selling Chevrolets, Buicks, and GMC trucks. In many cases, the sales staff is poorly trained to sell Cadillacs and Caddy owners are forced to rub elbows in the service department lounge with people who have just finished hauling a load of manure in their Jimmies.
Cadillac President Johan de Nysschen has a better idea. According to Automotive News, he wants those small dealers to shut down their regular sales operations entirely and transition to a “virtual showroom” model. Instead of stocking Cadillacs on site, new cars would be delivered from regional inventory centers. Trained salespeople would routinely visit prospective buyers at their homes or workplaces. They would bring with them touch screen vehicle configurators or virtual reality units supplied by Cadillac.
“We want to work with those small dealers to give Cadillac a competitive advantage in terms of reach into their local communities,” de Nysschen said in an interview last week, “but do so in a way that’s more closely aligned with what we think the Cadillac luxury brand experience should be.”
One advantage De Nysschen sees it that many of the lowest volume dealers are located in small towns, places where Mercedes, BMW, and Audi usually have no presence at all. De Nysschen wants to leverage that local aspect while dramatically improving the sales experience. He doesn’t like the idea of selling Cadillacs as an afterthought out the back door while more popular GM brands are featured up front.
It’s a way to “immerse customers in a virtual brand experience, so that our dealers need not concern themselves with investing in showrooms and brand-element requirements, which clearly are cumbersome if you’re such a small dealer,” de Nysschen says. He believes customers will appreciate the personal and high-tech treatment and dealers will like not paying local property taxes and floor plan interest on a dozen of more slow selling cars.
Not all dealers are thrilled with the idea. Some see the plan as yet another nefarious scheme to prune dealers from GM’s bloated sales distribution network, just as it tried to do when the company went bankrupt in 2009. “How does having fewer Cadillacs on display at dealerships in all of these communities help sales?” asked Byron Hansen. His dealership in Brigham City, Utah sold about 30 Cadillacs last year, along with a few hundred Chevys, Buicks and GMCs. “It makes you wonder what they’re trying to accomplish.”
Jim Stutzman, owner of a Chevrolet and Cadillac dealership in Winchester, Va., is more upbeat but still has questions. He is leery of being left with no inventory and the prospect of having to tell his high end customers they have to wait. “In this day and age, with customers’ propensity to want immediate gratification,” Stutzman said, “I don’t know how you can compete if you don’t have product available.”
Apparently, Stutzman has not heard of Tesla Motors, whose customers are happy to order cars online and wait months for them to be manufactured and delivered. The problem with De Nyssschen’s plan may not be that it goes too far but rather that it doesn’t go far enough.