Cadillac, with hundreds of small dealers, focuses on big-city service

Chrissie Thompson
Automotive News -- June 13, 2010 - 12:01 am ET

DETROIT -- Cadillac is preparing to welcome back hundreds of franchisees, many in small towns. That will end its post-bankruptcy plan to rebuild sales with only about 500 dealerships in large metro markets.

But new sales chief Kurt McNeil is keeping a key part of the original plan. In an interview this week, he said he wants all dealerships, big and small, to provide the customer service of a glitzy big-city store.

Once arbitrations and settlements finish this summer, the brand will reabsorb 400 to 500 franchises cast off during General Motors ’ 2009 bankruptcy, mostly at small dealerships, McNeil said.

"We were going to make drastic changes, but now, we’re going to have to go back and continue to improve our network," said McNeil, who took over as Cadillac’s U.S. sales chief during GM’s sales and marketing shake-up in March.

The brand had about 1,400 stores at the beginning of 2009, so it has still trimmed its dealer network, even with the reinstatements. More reductions are possible, McNeil said.

"Where we might have one or two too many stores in a metro area, we’re going to have to work on that," he said.

No more No. 2

In the meantime, McNeil said he’s trying to rally dealers around the goal of customer-service supremacy.

Cadillac finished second in J.D. Power and Associates’ most recent surveys that rank customer satisfaction with dealerships’ sales and service departments.

"Number two for Cadillac is never going to be good enough," McNeil said.

Cadillac will relaunch its dealership programs this summer for roadside service and for Cadillac-only loaners for Cadillac owners, McNeil said. Only 10 to 30 percent of dealers currently use those programs. In addition, Cadillac dealers just completed Ritz-Carlton customer-service training, first reported in April by Automotive News.

The brand is continuing the plan it unveiled last fall for metropolitan stores to remodel with limestone exteriors and black-tile interiors. McNeil wants metro stores to compete with stores selling German luxury makes.

But Cadillac also will ask smaller dealerships with multibrand buildings to install the brand’s preferred signs and to place Cadillac’s hotel-style greeter desk in the luxury brand’s section of the showrooms, McNeil said.

As before, if a dealership complies with GM’s recommendations, GM will pay most of the costs.

More dealers, more inventory

Adding up to 500 franchises complicates one other part of Cadillac’s plan: lean inventory.

The smaller dealerships rejoining the fold have to restock empty lots since they have been unable to order new inventory for about a year. Getting them suitable product lineups may cause Cadillac to carry a higher days’ supply than its targeted German competitors, which don’t have hundreds of rural dealerships, McNeil said.

Cadillac started June with a 75-day supply in the United States, according to the Automotive News Data Center. Most products are readily available for dealers, McNeil said, but the popular SRX crossover is an exception. SRX inventory has been below the ideal 60-day supply since September and had a 57-day supply on June 1.

So GM is planning to increase SRX production in Ramos Arizpe, Mexico, McNeil said, "but probably not till the fourth quarter."