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Cadillac President Johan de Nysschen has a problem with the brand's dealers, specifically how many there are. According to data gathered by Autodata Corp and The Detroit News, Cadillac currently has 928 dealers in the U.S. A large number when compared to competitors in the luxury class such as Audi (281 dealers) and Mercedes-Benz (364). Factor in total sales for year and Cadillac finishes last with each dealer selling an average of 184 vehicles (170,750 vehicles sold for the year). This pales in comparison with the likes of Audi (648 vehicles sold last year per dealer) and Mercedes-Benz (978 vehicles sold last year per dealer). "With our very large dealer network … we so fragment the available volume, that many of our stores are unable to reach critical mass in terms of volume and their profitability to afford the investment in the kind of ... facilities that is the custom and practice for the sector," said de Nysschen. So what does de Nysschen plan to do about this? Well he isn't saying anything about cutting dealers at the moment. Instead, he is proposing smaller 'boutique' stores which will be separate facilities to have between 2 to 5 vehicles along with a virtual showroom with TV screens and 3-D images. The hope is that this will reduce a phenomenon de Nysschen calls "selling Cadillac out the back door of the Chevrolet store." "We want to create a concept that's built around the notion of a small boutique shop. The idea is you don't have to be a large, Taj Mahal mausoleum brand store to be classy and sophisticated and premium. You can do a small two-car showroom with an investment amount that is kind of appropriate to the size of the sales opportunity in their local market, and we harness technology to supplement then what we can offer," said de Nysschen. de Nysschen will be presenting this plan to dealers at the 2015 National Automobile Dealers Association conference in San Francisco this weekend. IHS Automotive analyst Tom Libby tells The Detroit News that de Nysschen's plan makes some sense as it allows Cadillac to build and grow a brand by separation. "It makes sense. It's a challenge to convince the retailer to invest a lot of money. It sounds like a compromise," Libby said of the idea. Source: The Detroit News -
Cadillac President Johan de Nysschen has a problem with the brand's dealers, specifically how many there are. According to data gathered by Autodata Corp and The Detroit News, Cadillac currently has 928 dealers in the U.S. A large number when compared to competitors in the luxury class such as Audi (281 dealers) and Mercedes-Benz (364). Factor in total sales for year and Cadillac finishes last with each dealer selling an average of 184 vehicles (170,750 vehicles sold for the year). This pales in comparison with the likes of Audi (648 vehicles sold last year per dealer) and Mercedes-Benz (978 vehicles sold last year per dealer). "With our very large dealer network … we so fragment the available volume, that many of our stores are unable to reach critical mass in terms of volume and their profitability to afford the investment in the kind of ... facilities that is the custom and practice for the sector," said de Nysschen. So what does de Nysschen plan to do about this? Well he isn't saying anything about cutting dealers at the moment. Instead, he is proposing smaller 'boutique' stores which will be separate facilities to have between 2 to 5 vehicles along with a virtual showroom with TV screens and 3-D images. The hope is that this will reduce a phenomenon de Nysschen calls "selling Cadillac out the back door of the Chevrolet store." "We want to create a concept that's built around the notion of a small boutique shop. The idea is you don't have to be a large, Taj Mahal mausoleum brand store to be classy and sophisticated and premium. You can do a small two-car showroom with an investment amount that is kind of appropriate to the size of the sales opportunity in their local market, and we harness technology to supplement then what we can offer," said de Nysschen. de Nysschen will be presenting this plan to dealers at the 2015 National Automobile Dealers Association conference in San Francisco this weekend. IHS Automotive analyst Tom Libby tells The Detroit News that de Nysschen's plan makes some sense as it allows Cadillac to build and grow a brand by separation. "It makes sense. It's a challenge to convince the retailer to invest a lot of money. It sounds like a compromise," Libby said of the idea. Source: The Detroit News View full article
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Have you gone out and shopped for new vehicle recently? Are you overwhelmed by the variety of vehicles on offer? For example, if you decide to get a Porsche 911, you have the choice of 22 models. No, that isn't a misprint. Meanwhile other automakers have an array of models that carve out new niches and and mix existing body styles. Consider this, Audi sells 50 different variants around the world, a five-fold increase from the 90's when the German luxury automaker only sold 10 different variants. There has to be a point where automakers reach the point of too much and begin cutting back on their lineups, right? PwC, a consulting firm tells Bloomberg that by 2018, some automakers will begin to level off their lineups. The reason for automakers leveling off their is increased costs in development and production, and better differentiate their offerings to consumers. How bad is a large lineup for automakers? Detlef Kuhlmey, sales manager at Autohaus Kramm in Berlin tells Bloomberg that not many consumers get to see the full lineup because of how many choices there are. “Carmakers look for something special to present,” Kuhlmey said. “To most customers it doesn’t really matter.” Also trying to explain the small differences between the models adds a level confusion for dealers. A case of automaker shrinking their lineup is PSA Peugeot Citroen. Europe's second-largest automaker is planning to cut back their global lineup from 45 to 26 vehicles by 2024 in a effort to return to profitability. Others are going the opposite way. Mercedes-Benz is planning to add 11 new models by 2020. “All these options reduce the likelihood that people will choose any, and reduce satisfaction when people do choose,” Lots of choices are helpful when people know what they’re looking for, but “in general, people don’t know exactly what they want,” said Barry Schwartz, the Swarthmore College social theory professor who wrote “The Paradox of Choice.” Source: Bloomberg William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster. -
Have you gone out and shopped for new vehicle recently? Are you overwhelmed by the variety of vehicles on offer? For example, if you decide to get a Porsche 911, you have the choice of 22 models. No, that isn't a misprint. Meanwhile other automakers have an array of models that carve out new niches and and mix existing body styles. Consider this, Audi sells 50 different variants around the world, a five-fold increase from the 90's when the German luxury automaker only sold 10 different variants. There has to be a point where automakers reach the point of too much and begin cutting back on their lineups, right? PwC, a consulting firm tells Bloomberg that by 2018, some automakers will begin to level off their lineups. The reason for automakers leveling off their is increased costs in development and production, and better differentiate their offerings to consumers. How bad is a large lineup for automakers? Detlef Kuhlmey, sales manager at Autohaus Kramm in Berlin tells Bloomberg that not many consumers get to see the full lineup because of how many choices there are. “Carmakers look for something special to present,” Kuhlmey said. “To most customers it doesn’t really matter.” Also trying to explain the small differences between the models adds a level confusion for dealers. A case of automaker shrinking their lineup is PSA Peugeot Citroen. Europe's second-largest automaker is planning to cut back their global lineup from 45 to 26 vehicles by 2024 in a effort to return to profitability. Others are going the opposite way. Mercedes-Benz is planning to add 11 new models by 2020. “All these options reduce the likelihood that people will choose any, and reduce satisfaction when people do choose,” Lots of choices are helpful when people know what they’re looking for, but “in general, people don’t know exactly what they want,” said Barry Schwartz, the Swarthmore College social theory professor who wrote “The Paradox of Choice.” Source: Bloomberg William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster. View full article
