Cadillac Wants 400 Small Stores To No Longer Carry Inventory - Fill Orders Virtually Instead

Lets see - 925 total US Cadillac dealers, 400 low volume ones that are being asked to go "virtual" with no inventory - shared parts with other GM lines, let the low volume dealers keep a demo or two on hand for a farmer who just got a higher than expected farm bureau subsidy check (ever hear the farm-belt term "subsidy Cadillac"?)- that leaves 525 volume Cadillac dealers that GM can whittle down over time (or convert to virtual) to about 400 - and DeNysschen will have earned his signing bonus.

Half of GM's battle is a cleanup of the dealer network - which would do a couple of things - (a) Most important, it would take "inventory" out of the network which improves working capital; (b) Second - it would improve the ability of dealers to sell closer to retail price; and (c) it should improve customer service and customer satisfaction.

Good idea - especially if this gets them around the state-level dealer franchise laws so that they don't have to write a check to the dealers, which is what they'd have to do if they closed their stores.

It is interesting idea. The profits are in the details of customization. And it's easier to get customers to add various options when they're ordering the vehicle altogether...instead of just selecting a particular model that's on a lot which as pre-selected options installed. The "halo" of individualization will definitely blind a lot of potential buyers.

Don't dealers "buy" the on-lot inventory? I never thought automakers just send an alotment of vehicles to dealerships. Dealers order those cars & pay the dealer price for them (under MSRP).

So wouldn't the virtual stores basically hurt Cadillac overall sales initially? And that would hurt working capital. These virtual shops will need to have demo models available though. Very few customers will purchase without a test drive. They ain't Bentley or Rolls Royce or Ferrari.

The way a dealer works - a manufacturer, say Cadillac, sells "inventory" (i.e. new cars) to independent dealers who pay for the cars. Cadillac counts the vehicle as "sold" for accounting purposes as soon as they sell it to the dealer.

The vehicle is now in the dealer's inventory and ALL dealers will finance that inventory, thru a "floor plan" loan (i.e. inventory financing, i.e. financing what's on their showroom "floor"). The loans are item by item and if the dealer can't sell the car and can't pay back the lender, the lender can seize the unsold car as collateral and pay themselves back. In practice, a dealer is supposed to pay the lender the instant the new car is sold.

New car inventory, if the model is slow-moving, then piles up at the dealer level, which results in dealer push back (i.e. refusing to buy any more from the manufacturer, Cadillac), which slows the manufacturer's sales. Any dealer inventory problems ultimately flow back to Cadillac - which is why its better to get unsold cars out of the system.

This "virtual dealer" plan is a way for Cadillac to SLOWLY get the inventory under control at the dealer level without a dramatic "hit".

I would want to buy a car without driving it why exactly?

Cadillac wants 'stores' to just take orders without stooge customers seeing or driving the rebadged Chevrolet Cadillac cars.
What a brilliant scam!

GM = Great Mistanke

I'd think that all the automakers will like to setup boutique shops like Tesla. Customers can come in to complete orders or go online to do the same. Then the customer will only need to visit the shop when they receive notice that the vehicle has been delivered.

An Amazon-like experience. Read reviews, ask questions, select options, confirm delivery location, add to cart & pay.

not all dealerships let you test drive all cars anyway.
trying getting a test drive in a bmw m3-6 or i8 - very small chance thats happening or any AMG benz or any audi RS car.. only question is why have dealerships at all then ? might as well just use the internet to build and price then call some 800 number straight and speak to a rep and place the order.

JD Powers result places Cadillac at bottom of list for reliability.