GM Offers To Buy Out 40% Of Cadillac Dealers

Image courtesy of Van Swearington

If there are fewer places around where you can buy a Cadillac, will that make the brand seem more luxurious and precious? That’s not really why General Motors has offered to buy out the franchises of 400 of its dealers that sell Cadillacs, but maybe it will help make the brand seem more exclusive, like its weird brand experience café/art gallery in Manhattan.

According to Automotive News, there were 1,422 Cadillac dealerships in 2008, before the brand’s parent company filed for bankruptcy. Now there are 925, and the brand is offering dealers up to $180,000 to drop the franchise and focus on selling other vehicles instead.

The 400 are Cadillac’s lowest-volume dealerships, and almost all of them sell multiple GM brands, not just Cadillac. It’s not that they’re underperforming, exactly, but the imported brands that GM sees as Cadillac’s peers, like Lexus and Mercedes-Benz, have fewer dealerships while selling more cars.

The buyouts are part of an overhaul of Cadillac’s dealership business that sorts dealers into “tiers” based on their sales volume, turning the lowest performers into showrooms that aren’t allowed to keep an inventory of cars in their lots, instead having customers order their vehicles.

Some state dealers’ associations object to these changes, and Cadillac insists that they aren’t mandatory: it’s just that dealers who agree to the new program will have different incentives from the manufacturer and

If all 400 dealerships took the buyouts, based on the median payout figure given to the media, Automotive News estimates that the program could cost Cadillac up to $50 million.

Cadillac offering buyouts to 400 smaller U.S. dealers [Automotive News]