LAS VEGAS - About 200 Cadillac dealerships that are dualed with Oldsmobile face an uncertain future now that GM will kill Oldsmobile.
Michael O'Malley, marketing general manager of Cadillac, wants some of the Cadillac-Oldsmobile duals to become stand-alone Cadillac stores. But many of the duals have too much competition and insufficient sales to cover overhead without another franchise.
'We've got too many points here for us to be a stand-alone Cadillac store,' said Marc Helmick, general manager of Claude Noland Cadillac-Oldsmobile in Jacksonville, Fla. 'Look at Mercedes with 300 dealers, Lexus with a few hundred and Cadillac with 1,500. I've probably got three in my area. They'd have to get rid of some stores for a stand-alone store to work here.'
The phaseout of Oldsmobile, expected in a few years, has prompted GM to review its dualing patterns, also known as its channel strategy. Cadillac will be grouped with Saab when possible, GM executives said here last week at the National Automobile Dealers Association convention. In addition, Cadillac dealers will have first dibs on Alfa Romeo when it arrives in about 2005. GM last year purchased 20 percent of Alfa's parent, Fiat Auto S.p.A.
The company also is reviewing how the brands of its foreign partners, such as Subaru, Suzuki and Isuzu, could be dualed with GM brands.
The channel strategy, developed in 1995, established preferred dualing patterns in cases where stand-alone dealerships were not thought to be feasible. Cadillac and Oldsmobile, along with Chevrolet in some markets, were grouped together when the market was not large enough to support individual stores for each brand. Buick, Pontiac and GMC were grouped together. Saturn was excluded.
'(The channel strategy) did a lot for us,' said GM CEO Rick Wagoner at a press briefing during the NADA convention.
'We paired up brands that made sense where it wasn't possible to have a single-line store. As a result, we only have 63 stand-alone Oldsmobile stores.
'The channel strategy also helps us to address product planning in the future by not forcing us to build product across all brands just for dealer viability.'
About 200 Cadillac dealerships are dualed with Oldsmobile. They account for about 20 percent of Cadillac's sales, said Cadillac's O'Malley.
'The impact of Oldsmobile stores transitioning is hard for me to get my arms around because every situation is different,' O'Malley said. He added that he hopes some of them choose to be stand-alone Cadillac stores when Oldsmobile is gone.
After GM's Dec. 12 announcement that it would eliminate Oldsmobile, O'Malley visited a Cadillac-Oldsmobile dealer in the San Fernando Valley in southern California who also has a Lexus store and has a Hummer franchise in the works. Initially the dealer had planned to add another franchise to his Cadillac showroom once Oldsmobile was gone.
However, O'Malley laid out Cadillac's plans, after which the dealer said he would go it alone with Cadillac. 'Now, I can't say every one of our dealers is going to be like that,' O'Malley said.
Indeed, some Cadillac-Oldsmobile dealers can't go it alone with just Cadillac because their markets already are saturated with Cadillac dealers.
Looking at Saab
Marc Helmick and his father, Jack, the dealer principal at Claude Noland Cadillac-Oldsmobile, are considering their options carefully.
Typically the Helmicks sell more Cadillacs than Oldsmobiles, except during the recent period of hefty Oldsmobile incentives.
Oldsmobile gives them a wider breadth in product, so they may add another franchise.
They'll look at Saab, as GM would like in its channeling strategy, but they aren't sure Saab is right for their market.
Marc Helmick said with a smile: 'Ferrari of Jacksonville sounds good.'