Cadillac's Dealer Transformation Is Nearly Complete

Luxury / Comments

Not all dealers survived.

Cadillac has big plans. As General Motor's luxury brand, it'll be setting the stage for the automaker's all-electric future with new models like the Lyriq, Celestiq and a battery-powered Escalade, the latter due mid-decade. But the company's major shift from combustion-engined vehicles to EVs didn't sit well with all of its US dealers. They either had to invest between $200,000 and $500,000 in infrastructure upgrades or accept corporate buyouts.

Per Reuters, Cadillac's global brand chief, Rory Harvey, confirmed that its US dealer network will drop from about 920 dealers three years ago to 560 by the end of this year. The reason for this nearly 40% reduction was a combination of factors, including the hefty investment and a general concern, mostly among rural dealers, of longtime and aging customers with little interest in EVs. Think of it as a generational shift.

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That's fine with Cadillac as it wants to position itself as a serious Tesla rival and a player in the luxury segment. Instead of those rural locations, new Cadillac dealers have opened in key cities like New York, San Francisco, Atlanta, and Beverly Hills. Cadillac's largest market is still China, which didn't have to undergo the same retail operations restructure.

Another challenge Cadillac faces is the franchised dealership model. Tesla, Lucid, and Rivian, conversely, sell directly to consumers online. Having fewer showrooms allows for more streamlined operations. Cadillac reducing its dealer count is a step in the right direction, but it's a legacy luxury brand. It still is placing a high priority on its strengths, one of which being the showroom experience.

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Customers have the option of utilizing the new virtual showroom, dubbed Cadillac Live. There, they can make general inquiries and Harvey confirmed online traffic here continues to increase. But dealers will continue to serve as the go-between. Sales and general services will continue to be done through dealers. And so far, this new approach appears to be working. Harvey says Cadillac has so far received around 216,000 inquiries from potential Lyriq buyers. "It far exceeded our expectations," Harvey said.

The challenge now for dealers is to turn those inquiries into actual sales. In general, roughly 10 to 15 percent of those who show interest in a new vehicle end up buying one. But Harvey pointed out those figures are for combustion-engined vehicles. EVs are different as they appeal not only to luxury buyers but also to early adopters and those seeking something different from their neighbor's Tesla Model Y.

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Source Credits: Reuters

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