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1,310 views Jun 8, 2009

In its original restructuring plan GM announced it will reduce its 6,200 dealers to around 4,600 by 2010

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General Motors has already announced plans to slash hundreds of dealerships across its brand portfolio, and now it appears even high-end Cadillac dealers won’t be spared from the latest cull. Most of the cuts are expected to occur in metro areas and affected dealers will be informed by October 31, 2010 - the same day most franchise agreements between GM and its dealers expire.

The reasoning behind GM's decision to cut back on Cadillac dealerships comes from examining the brand’s place in the luxury segment and comparing how its rivals sell their retail vehicles. Companies such as BMW, Lexus and Mercedes Benz have far fewer dealerships selling more cars, and this is a strategy GM would like to emulate. For example, while Lexus has just 226 franchises the average sales per store for 2008 was 1,158 units. Compare this to Cadillac, which has over 1,400 stores, yet each store only manages to sell around 110 units on average.

Similar stories are found when comparing Cadillac's dealer sales to that of BMW and Mercedes - a situation that GM's sales chief Mark LaNeve explained to Automotive News is "out of sync with modern luxury automotive retail". LaNeve believes that cutting down Cadillac dealerships and getting "large Cadillac dealers to do more volume" will be the key to sustaining the Cadillac brand and reducing costs in the short term.

LaNeve has not announced exactly how many dealers will be axed but to achieve similar per dealer sales numbers as its foreign luxury rivals Gm will need to get rid of hundreds of Cadillac dealerships by 2010.