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.