Cadillac is trying to reinvent itself for the 64th time having announced it will become the all-electric GM brand. In the end, we don’t know how that will be any different than the last 40 years of Cadillac disappointment. Half of its dealers have bailed on the brand and now they’re trash-talking Cadillac and explaining why they bailed.
With the news Cadillac is going electric it demanded dealers either spend $200,000 on upgrades in preparation for the changeover or be bought out for $500,000. Many are taking the buyout, bailing on Cadillac while the going is good. Many of these are in smaller markets that would need to sell a larger percentage of their overall yearly sales just to pay for the upgrade.
Half a year’s profit would go toward Cadillac dealers upgrades
If the average dealer profit is $2,500 per car then it would take the sale of 80 Cadillacs to get to $200,000. An average Cadillac dealer in the US sells under 180 cars a year. So half of a year’s profit would go toward the EV upgrades mandated by GM.
Instead, dealers like Dick Nourse in Marietta, Ohio, decided to save the $200,000 and take the $500,000 buyout and drop Cadillac. According to the Detroit News Nourse will invest that GM money back into his gang of dealerships. He says that he doesn’t think there are that many people in Marietta that want an EV-at least, not a luxury EV.
“It just made more sense than trying to trudge along with Cadillac”
“It’s not that big of an investment,” Nourse says. “We spend a lot more money on image campaigns for the different franchises that we’re involved with. But the $200,000 plus the termination money that they threw onto the table, the combination of the two of them … being in rural Ohio it just made more sense than trying to trudge along with Cadillac wondering whether they got it right this time or not.”
There’s another downside for dealers in this deal. There will be less maintenance and servicing for EVs so less money coming back to the dealers down the road. “There’s significantly less opportunity for revenue after the sale,” Jeff Laethem, owner of Ray Laethem Buick GMC in Detroit told Detroit News. “So that is going to be probably the biggest disruption.”
Cadillac has been trying to shed dealerships for decades
Interestingly, the GMC brand is also asking dealers to make upgrades for the all-electric Hummer. Only half of them have agreed to do it. But GM is not telling the other half of dealers they can’t sell GMC products or is otherwise giving ultimatums. But Cadillac has been trying to shed dealerships for decades. This is just its latest attempt at achieving that goal.
Cadillac wants to be all-electric by 2025, so a lot of really great new products will hit the dustbin soon. It’s a bad consequence of trying to make a major shift in products and philosophy. It’s a shame that the bad products and decisions of the 1970s and beyond still haunt what was once the “Standard of the World.”