GM to cut Cadillac dealers

By LARRY RINGLER Tribune Chronicle

WARREN - Competition in the luxury auto market promises to change the landscape for Cadillac, General Motors Corp.'s premium brand, a company spokeswoman said Tuesday.

GM, which filed for Chapter 11 bankruptcy protection June 1, wants to significantly reduce the number of Cadillac dealers from 1,400 to a level closer to that of rivals BMW, Mercedes and Lexus, Susan Garontakos said.

She said Toyota-owned Lexus has 228 dealers nationally, with 84 percent of those in metropolitan markets where many buyers of high-end vehicles live.

BMW has about 360 dealers, with 69 percent of those in metro markets, while Mercedes has 350 dealers, 68 percent in metro markets, Garontakos said.

Only about 24 percent of Cadillac dealers are in metro markets, she said, adding GM is ''looking to significantly reduce Cadillac representation where it makes sense, just like we are with other brands. We're looking at ways to make our dealers more effective with greater profitability.''

Gaining more ''throughput,'' or sales per dealer, is one reason for the consolidation, helping to stabilize prices and improve dealer effectiveness, Garontakos said.

She noted that GM built its dealer network before foreign automakers arrived in the market, ''and now we're bloated. It makes it tough when you have dealers competing against one another. We're trying to get our footprint in line with other luxury brands.''

Besides looking to polish the Cadillac brand, GM wants to reduce the number of overall dealers partly as a cost-saving tactic, Garontakos said.

She said having fewer dealers allows GM to save money by cutting the cost of dealer infrastructure, including information technology systems, financial incentives for buyers, training for sales and service employees, advertising and GM's own support staff for dealer sales and service.

''It costs GM roughly $1,000 per vehicle for support costs,'' she said.

Garontakos wouldn't talk about the future of any Warren-area Cadillac dealers, such as Cole Valley Pontiac Cadillac, Trumbull County's only Cadillac dealer.

She said, however, that a dealership that only sells 10 Cadillacs a year ''tells you the customers aren't there for their products.''

Cole Valley has sold 33 Cadillacs this year through May, 43 percent below the 58 it sold in the same five months of 2008.

No one could be reached for comment Tuesday at Cole Valley, which also faces GM's decision to phase out its Pontiac brand by the end of 2010.