By Christina Rogers And Yoko Kubota
San Francisco--The head of General Motors' Cadillac unit, Johan
de Nysschen, on Saturday clarified his vision for the luxury
brand's roll out of smaller boutique stores, saying dealers who
have upgraded their showrooms won't immediately have to build new
outlets.
"It would be our expectation to allow them time to amortize
those investments," Mr. de Nysschen said, speaking at dealer
conference in San Francisco. "We will not immediately demand new
investments. We have to be fair."
Earlier this week, Cadillac rolled out a new plan for
transforming its U.S. dealer network, announcing it would ask about
700 dealers to build separate boutique-style showrooms to help
better distinguish the luxury brand from its mass-market Chevrolet
badge.
"We have no plans to actively reduce the number of outlets at
all," Mr. de Nysschen said.
Currently, Cadillac has about 200 stand-alone showrooms. The
remaining 700 dealers sell Cadillacs out of the same showroom or
building as other General Motors Co. brands.
Many Cadillac dealers recently have rebuilt or renovated
showrooms to comply with GM's image requirements, causing some to
worry they will be on the hook again for another costly
remodeling.
Mr. de Nysschen, who was recruited from Nissan Motor Corp.'s
luxury brand Infiniti earlier this year, is in the midst of putting
a plan in place to expand Cadillac's lineup and boost its standing
among other premium-car players.
Cadillac's U.S. sales have been languishing amid intense
competition, causing unsold cars to stack up on dealership lots.
Cadillac recently said it would invest $12 billion over the next
five years to add eight new models.
Howard Drake, a Cadillac dealer and chairman for the brand's
dealership council, said Mr. de Nysschen admitted to dealers during
a presentation on Saturday that the plan for the boutique showrooms
was still in its early stages and details needed to be worked out.
"Guys have to be confident that volumes are going to stabilize and
margins are going to go up, then you'll have an easier sell," Mr.
Drake said.
Despite robust demand for luxury cars and SUVs, Cadillac's U.S.
sales fell 16% in 2014 in a market that grew 6% overall.
Mr. Drake said dealers were told to expect less than 1% sales
growth this year as Cadillac works to whittle down unsold-car
inventories and gears up for the launch early next year of a
redesigned SRX crossover. Compared to other top-line, luxury-car
makers, Mr. Drake said, "we're the ones off the reservation."
"All he's trying to do is get us back into the center," he
added.
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