AM Online

End of road for Cadillac deal

Pendragon’s exclusive UK sales rights for Cadillac and Corvette have ended two years before its contract was due for renegotiation.

General Motors UK expects to appoint more dealers, including independents, for the specialist franchises within the next few months. The first is due to be announced for the north of England within a few weeks.

GMUK wants seven to eight sales points operating by the end of the year, of which five will remain within Pendragon’s premium Stratstone division.

Jonathan Nash, UK managing director of a new GMUK group of Saab, Cadillac, Corvette and Hummer, said the new dealers may include experienced motor retailers who have not previously held any franchise, but who can sell the brands effectively.

He added: “We’re looking for demonstrable skill from the retailer, and want enthusiasts rather than figures-led businessmen.”

Dealers will not necessarily sell all three brands if their market area is not suitable. And asked if Cadillac, Corvette or Hummer could be added to Saab or Vauxhall showrooms, Nash replied: “Nothing is ruled in or out”.

Key is profitable, sustainable businesses that can deliver premium-brand levels of service. Nash wants to establish Cadillac as a premium rival to Audi, Mercedes-Benz, BMW and Lexus, but said the service and ownership experience to date has been lacking.

He expects retailers to begin seeing a return on investment in the second year with the franchise. GMUK’s own ambition is more longer term. Nash expects it to take six or seven years to become established, although new products will drive volume growth in three years, after which the carmaker should also see a return from the brands.

New Europe-orientated products arriving in 2009, including diesel-powered CTS and STS saloons, will help Cadillac’s sales break into four figures. Almost half of those sales will come from the fleet sector, an extremely important market for premium brand sales and one which has so far accounted for just 5% of its registrations.

Until then, said Nash, annual sales will remain around 400-500 units, bolstered by around 80 units of Corvette and small numbers of Hummer.

“We want a ‘pull model’ that creates demand for these products before we start to fill the order books,” he added.

“We’ll build it slowly and establish the reputation, let people experience the products and make them confident and loyal owners.”

The AM view

Cadillac has underperformed and by removing exclusive supply rights two years early, GM clearly feels part of the blame can be laid at Pendragon’s door. But, product has been slow to market and the brand has not been given enough publicity – too few people know that Cadillac is on sale in the UK and that must be addressed.

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