Emphasis will be on high-tech showrooms, high level of customer service
January 22, 2015 - 9:37 am ET
DETROIT -- Cadillac plans to ask about 700 of its dealerships to invest in small "boutique" stores that would offer "high technology showrooms" and a higher level of service than they offer today.
Cadillac President Johan de Nysschen plans to outline the plan in an appearance at the Washington, D.C., auto show today and at the National Automobile Dealers Association convention in San Francisco this weekend.
Cadillac's network of slightly more than 900 dealerships includes about 200 "flagship" standalone stores. Another 700, many of which are paired with Chevrolet or other brands, will be asked to convert to "smaller, boutique locations," the brand said in a statement today.
"The boutique concept would feature exclusive Cadillac consumer touch points, highly trained sales and service staff and luxury amenities," the statement says, citing interactive digital displays that would allow customers to configure their vehicles, for example.
In an interview last week, de Nysschen said he has no plans to cut the number of dealerships, saying the network's market coverage can be an advantage over competitors. But he said dealerships that don't have Cadillac as their focal point will be expected to invest.
"I am definitely going to be in disagreement with dealers who think they can sustain the business for Cadillac by selling Cadillac out the backdoor of a Chevy store," de Nysschen said.
Work in progress
In the interview, de Nysschen stopped short of insisting that every Cadillac dealership would need to have a standalone store. It's unclear whether the boutique concept -- which he said still is a work in progress -- would allow for a separate Cadillac showroom that is attached to a dealership that sells other brands.
"I want wherever it is feasible to have dedicated, standalone Cadillac stores," he said. "In those areas where it is not feasible -- and there will be many -- we want to come up with a concept where we can have a small footprint, boutique-like store that is very premium in its expression and size-appropriate, also in terms of its investment."
In Cadillac's statement today, de Nysschen cited the $12 billion in product investments that he announced last week, planned over the next several years. He said dealers must be willing to make their own investment in facilities and "upgrades to the customer experience" in return.
Cadillac envisions "virtual showroom" technology that would allow customers to configure their vehicles, such as color and interior choices, through interactive digital displays, possibly even holograms.
De Nysschen conceded in the interview that the size of Cadillac's dealer network is larger than he would like if he was starting from scratch. But, contrary to recent rumors among Cadillac dealers that he wants to cut hundreds of stores, de Nysschen insisted: "I have no plans to cut the network."
He said Cadillac's reach into non-urban markets where BMW, Mercedes and Audi don't have stores can be an advantage, especially in giving customers access to service. But he said the customer experience must improve across Cadillac’s retail network.
"We are going to have to work with our dealers and also invest a little bit in getting our people on the showroom floor trained up for a new approach to selling the cars," he said. "It's not a matter of, as the customer walks in, to explain to him how fortunate his is, because today we've got a good deal going."
Improve dealer profits
De Nysschen also has said that he wants to improve Cadillac dealers' profitability. He is exploring "a revised dealer margin and bonus system that encourages and rewards the right behaviors, which also includes investment in facilities and people."
He said he would like to improve new-vehicle margins and "do more indirect holdback support" to reward dealers who invest in facilities, boost marketing and expand their courtesy transportation fleets, for example.
Many Cadillac dealers have renovated or rebuilt their stores in recent years through a similar General Motors incentive program, Essential Brand Elements, which pays dealers for each new car they order from the factory. De Nysschen said that model won’t work for Cadillac. He has been slashing production in a bid to boost the exclusivity of Cadillac’s vehicles and reduce the incentives required to sell them.