Cadillac will have a third fewer stores for EV shift

DETROIT — More than one-third of Cadillac's U.S. dealerships are disappearing this year as the brand begins its transition to an all-electric vehicle portfolio, but the remaining stores accounted for more than 90 percent of Cadillac's sales, a top executive told Automotive News.

The General Motors luxury brand will have about 560 dealerships going into 2022, down from 875 at the beginning of this year, Rory Harvey, vice president of global Cadillac, said last week. The decline was driven by buyout agreements Cadillac began offering to dealers a year ago. Those offers to walk away from the franchise ranged from $200,000 to seven digits, Harvey said.

The final number of dealerships that accepted is up significantly from the end of last year, when about a fifth of the brand's U.S. network had decided to quit.

The majority of dealers who took a buyout owned low-volume stores, Harvey said.

Cadillac will lead GM's transition to EVs, planning to offer a full-electric portfolio in North America by 2030. The brand's buyout strategy was designed to ensure that the dealership network was committed to selling and servicing EVs, Harvey said.

"We never actually had a number that we were looking for," Harvey said, referring to the percentage of dealers leaving the franchise. "We believe that this will give us the foundation to be able to accelerate going forward, and we believe that it does give us the ability to be very effectively represented."

Cadillac had more U.S. dealerships than any other luxury brand, and even after shrinking to 560 stores would still have a retail network 60 percent larger than BMW and more than double that of Lexus, according to the Automotive News Dealer Census.

Remaining dealers are preparing to upgrade their outlets for EV sales and service by the end of the first quarter, when the Lyriq, Cadillac's first full EV, is expected to arrive in select showrooms.

The majority of Cadillac dealerships will start getting the Lyriq in June, based on a traditional allocation process, after the midsize crossovers are initially delivered to stores with customers who reserved them, Harvey said.

As hundreds of dealers wind down their businesses, a few others are opening their first Cadillac stores.

Bram Auto Group opened Cadillac of Manhattan in a temporary facility last week and planned to start preselling vehicles that were in transit, co-President John Iacono said. Iacono expects Cadillac of Manhattan to sell 700 to 1,000 vehicles annually. Bram Auto Group has 17 stores representing 10 brands in New York and New Jersey.

Cadillac of Manhattan fills the void left when, after nearly five decades, Potamkin Automotive Group closed the brand's only New York City store in April 2020. Cadillac was headquartered in Manhattan from 2015 to 2018.

Cadillac has recently entered new luxury markets and reestablished itself in key areas that it had ceded to rivals, including Beverly Hills, Calif., where it hadn't been since the 1980s. Some established Cadillac dealers have acquired stores while others are getting involved with the brand for the first time.

"Manhattan is pivotal and a great opportunity," Harvey said. "It's somewhere we want to be represented. It's somewhere that we believe is a significant business opportunity, and it's somewhere if you are going to be a global luxury brand, we believe that you need to have effective representation."

Bram is developing a mixed-use building to house the Cadillac store, located a block from its Toyota-Lexus showroom. The dealership will be on the ground floor, with residential units above. The building is slated for completion in the second half of 2022, Iacono said.

Manhattan customers are "very well-heeled, high-income earners," Iacono said. "And it seems to be that an EV is on their shopping list."

Timing was a major part of Iacono's decision to add Cadillac to the portfolio, with the redesigned Escalade now on sale and Cadillac beginning its EV push.

Despite the global microchip shortage that has hampered production industrywide, Cadillac's global sales were on pace for a record high this year through September. Its U.S. sales rose 11 percent during the same period.

"One thing that we have that I think gives us the edge over many other Cadillac dealers is that we know nothing about Cadillac of yesterday. We just know everything about Cadillac of today and tomorrow," Iacono said.

"We're certainly, as a family, very excited to see what the future will hold for us with this new endeavor at this dealership."