Toys4RJill

I would relax on the comments about resale value. GM cars have never really excelled at resale. GM has a higher average transaction rate than the industry and some of their vehicles are nicer than what Lexus and Toyota are offering. I was looking at some of the GM vehicles, the Sierra Denali is selling for a much higher MSRP than Toyota has ever been able to achieve with Tundra, the Escalade is far more successful than the LX570 and they both sell for about the same price.

So it is not all doom and gloom for GM. I personally would not buy a GM product, but I would lease one if the time was right.

pbm317

But this is exactly the point... to offer competitive leases, GM needs strong resale/residual values so that they're not spending an arm and a leg in marketing support to bring the lease payment to a competitive monthly level.

Everyone knows that GM trucks are vastly more competitive within their segments than their cars have been, so yes the Sierra Denali and Escalade can command strong premiums and still achieve good sales results.

Cadillac is making a pretty big move in terms of repositioning the pricing of the ATS downward while adding more content at the same time. As to whether its enough to make the market notice? That's to be determined. It's likely a bit too late for this generation of ATS. Hopefully they don't rebump the price with the next gen CT(insert new number here) with the same hubris and start the cycle all over again.

DreamGS4

Don't count Caddy out yet! The ELR while clearly a watered down Cadillac Cien, its still definitely a head turner in my opinion, but should have offered a gas engine variant.. A price tag of $57,000 is also a deterrent.. A 2.0T model with about 230hp and a 3.6L V6 model with about 330hp would have been a superb addition to the lineup maybe even an ELR-V ?? dump that ATS-V twin-turbo 3.6L V6 engine in there and BAM a whole new sports car, coupled with that 6 speed manual option and BOOM you got yourself an enthusiasts car. Sporty yet elegant and different from anything else on the market.

tex2670

...Not sure if serious....

BrownPride

Fair enough point, I should have been more specific because their trucks have high resale values. The rest of the lot...not so much.

BrownPride

Cadillac is trying to create inroads into a saturated market where they are late to the party. Alfa Romeo made a really great driver's car with the Giulia but I and many automotive analysts guarantee it won't be that hot of a seller, because like the ATS (which is a decent car to drive) the Giulia falls short in all other criteria that buyers look for. That's exactly what happened with the ATS, GM built a car that automotive journalists would like but not that consumers like. I am an avid BMW guy and am disappointed by the F30s I've driven (although the refreshed ones are better), but there's no denying that BMW knows this market as they practically invented it and have set the bar for generations. GM didn't think about ergonomics, interior design and quality, infotainment, or rear seat passenger room when building the car. They thought they could out BMW BMW by just focusing on driving dynamics. They forgot that people don't just buy BMWs because they drive better than competitors, but because they are excellent all-rounders. Aside from reliability concerns, BMWs are arguably some of the most well-rounded luxury cars year after year.

So yeah, on paper what you're saying sounds nice but I (a) don't trust GM one bit to pull off a good all-around car and (b) Cadillac does not have the brand equity to lure buyers from German brands and Lexus. in fact, I read yesterday that the overwhelming majority of ATS customers previously owned another GM product or a Ford. It hasn't attracted any buyers from the German brands, Lexus or Infiniti. Things are only looking worse for the ATS with a refreshed 3er and IS out, new C-class, new A4, and a solid offering in the Q50. They raised the price like $1,500 on their "base" model now (which I believe is the 270 hp engine), making it like $3,000 more expensive than the anemic 320i BMW. Guess which one your average consumer is going to buy? I bet it will still be the Bimmer despite the power discrepancy.

gymratter

http://www.carscoops.com/2016/09/cad...r-cent-of.html

Toys4RJill

Good move on Cadillacs part. They have way to many dealers. It's a tough decision to do something like this but in the long run it will benefit the brand.

mmarshall

I'm not are that there really are too many Caddy dealers. Even here in Northern Virginia, one of the most lucrative new-car markets in the country outside of Southern California, there are only two Caddy dealerships within reasonable driving distance. If they DO decide to downsize the number, though, maybe the best thing for some of them would be to convert to Lincoln. Lincoln's current dealer system, IMO, is a joke.....selling out of only selected Ford/Lincoln shops. Lincoln could use some stand-alone dealerships.

Toys4RJill

Cadillac has 925 dealers. That is 3.5 times as many as Lexus and they sell roughly half as many cars.

smualum11

I wonder how many of those dealers they are asking to close are in rural areas that are already selling other GM brands. First dealer that comes to mind as my parents hometown dealer and they live in an extremely rural area. The local dealership sells all GM brands, but looking at their website today they have a whopping 4 Cadillacs on the lot. It would have been 5, but my mom purchased their one and only SRX when GM had inventory cleanout incentives (walked away with brand new luxury collection SRX with 10 miles, 20% off MSRP and 0% interest for 72 months). Their lone Escalade has been on the lot for months. I almost actually bought it at a steal of a price but we could not get an early exit to my RX lease to make any financial sense.

But point being, in these rural areas - they very rarely have options outside of Cadillac or Lincoln. My parents could purchase a Lexus of course, but then they are driving a minimum 1 hour to service or have anything done to the vehicle. But I get that is not really the strategy that Cadillac wants to try and bank on long-term, it obviously has not worked well outside of a couple of models for them.

SW17LS

Those are exactly the dealers they're targeting, as the article said dealers that sell less than 50 Cadillacs a year.

The reason for this is they're about to require big upgrades to dealers and they're trying to create an easy exit path for small dealers who won't be able to afford the improvements. This is not that uncommon for franchises, McDonalds did this when they rolled out their new renovations, hotel chains do this a lot when they do big network wide changes and improvements.

mmarshall

Frankly, for the volume they do, and the comparison ratio that you state (at least here in the D.C. area), I don't think it's a question of Caddy having too many dealerships as Lexus simply not having enough. Of course, I also realize that this D.C. area, with its immense wealth, is not indicative of what car sales (especially luxury-car-sales) are like nationwide. Indeed, not many miles west and southwest of here, in the Appalachians, many people are driving rusted old pickups.

Also, before we try and gauge the number of dealerships Caddy will need in the future, let's wait and see how the CT6 and XT5 sell (along with the upcoming compact XT3 CUV, which is likely to be a hit). Both, IMO, are substantially better products than the unimpressive XTS and SRX they they replaced...and probably deserve to sell more.

LexBob2

Not many old rusted cars and trucks in th DC area, eh?

SW17LS

1. Lexus does just fine, and Lexus dealerships have the highest profitability per store in the industry, so I doubt owners of Lexus dealers agree they don't have enough dealers.

2. Cadillac is not doing this to benefit Cadillac. They get franchise fees from these dealers, and they DO sell cars however few. They are doing this for their franchisees so that they don't get stuck having to pay for the huge improvement package Cadillac is going to place on their franchise owners down the line.

Like I said, this is not uncommon in franchises. I know someone who owns a hotel, it was a Sheraton forever. Well, about 15 years ago Sheraton came to him and said look, were going to launch a huge companywide remodeling, new looks for hotels, minimum amenity levels. Your hotel doesn't meet those new requirements at all. If you aren't willing to Or capable of investing the millions of dollars into the hotel we're going to require we will offer an early termination of your franchise agreement and pay you a termination payout. He took it and the hotel since then has been a Clarion.