Over 40% Of Cadillac Dealers Opt Out Of Selling The ELR Due To Low Return On Investment

FEB 17 2014 BY JAY COLE 29

2014 Cadillac ELR At The NAIAS

2014 Cadillac ELR At The NAIAS

Last April, Cadillac sent out a letter to their dealer body describing the requirements to be an ELR dealer.

And Here Is The Cadillac ELR At The Los Angeles Auto Show

And Here Is The Cadillac ELR At The Los Angeles Auto Show

ELR-certified dealerships are required to provide:

  • at least two charging stations on site – with one in the service area and the other outside of the building
  • at least one salesperson must be trained in the features that make the ELR unique
  •  about $15,000 in total costs to be “ELR certified”

At the time Cadillac’s global marketing boss, Jim Vurpillat knew those criteria would mean that some Cadillac dealers who didn’t figure to sell a lot of ELRs would opt out saying:

“…when you are a small dealer you have to look at that and say, ‘how many am I going to sell over the life of the car versus the initial investment.’ So we will see.”

Now, via a report from Edmunds at the Chicago Auto Show, we can put a number on how many Caddy dealers are out – 410.  And Mr. Vurpillat has an updated statement on the matter:

“We  have a pretty good representation in rural markets because we are dualed up with  other (General Motors) brands. It  is a great service advantage.” said the Caddy manager to Edmunds.  But  those dealers “might look at (ELR) and say, ‘Ok, if I sell one of these, I  got to have service charging stations, special training, a sales area. I have  to buy special tools.”

“If  they don’t think they will sell more than one or two units a year, they would  do the numbers, and it is probably not worth it.”  Mr. Vurpillat added, “They  are not selling a lot of electric vehicles in Iowa.”

 

The Cadillac ELR starts at $75,995 (full specs and performance figures can be found here) and it has the ability to travel 37 miles on just electricity.

In the vehicle’s first 6 weeks on the market (through the end of January), GM sold 47 copies on little supply, but numbers look to improve from here on out as the Caddy boss said that deliveries will start in earnest this month.”

Just as a reminder, the first 1,000 purchasers of an ELR also get a “free” snazzy charging station to go with the luxury coupe.

Edmunds

Categories: Cadillac

Tags:

Leave a Reply

29 Comments on "Over 40% Of Cadillac Dealers Opt Out Of Selling The ELR Due To Low Return On Investment"

newest oldest most voted
Mark H

I would not begin to understand the legal relationship between dealers and manufacturers, but refusing to market a product would appear to me the beginning of the opportunity to make the case to function without them.

David Murray

+1

Anon

Just proves Elon was right in how he chose to completely avoid the dealership model selling his EVs…

Aaron

I like how only one person is required to be knowledgeable in how the ELR is different than regular cars. And if that person is sick or off that day? Oh well. No ELR sale.

I can understand this when I got my i-MiEV. They only had one salesperson certified on the i-MiEV. It is a low volume car… not a lot of sales are expected… oh wait… 😉

pjwood

True, Aaron. The Volt is very much this way. Nobody steers to something they don’t know, unless asked.

If dealers do make it on the service bays, not the floor, and GM makes it on the opposite, we have another reason they are opting out.

SIvad

Perfect example of how the dealer franchise model stifles innovation. And I’m not blaming the dealers. If an individual dealer believes that this specific model isn’t going to sell in that price point then they have a legitimate concern in investing in the infrastructure. But it does prove the point that the direct sales model is better when it comes to allowing risk and innovation. It allows the manufacturer to freely reap the rewards of innovation or take the hit for failure for not meeting the needs of their customers. The dealers shouldn’t be in the way clouding that relationship.

Nix

Even if 100% of the dealerships across the nation were owned by GM, I wouldn’t automatically assume that GM themselves would invest the money to make every single dealership all ELR Certified Sales & Service dealerships.

Heck, the decision to sell the Spark EV in limited markets is right now purely the decision of GM, and they aren’t selling those in every dealership.

I would expect GM to be driven by the same profit math that each dealership is driven by. I would expect GM to sell the ELR in just the markets they thought would make them money after the investment on training and tools was accounted for.

SIvad

That may be true but as it is right now if GM has a plan to sell the ELR in just the markets they thought would make them money it doesn’t mean the dealers in that market have to or will cooperate with that plan if they feel it’s too risky for their dealership. GM’s math may not be the same as the dealerships’ math in that market. GM might be willing to take a slightly bigger risk in a market that is controlled by dealerships that are more conservative and aren’t willing to take a chance on new technology.

Big Solar

They can easily function without them. All car makers should own their respective dealers…Of course there would be tons of red tape and backlash if they tried to force it at this point but…. Reminds me of Nikola Tesla and JP Morgan….

Bonaire
Another case of GM hurting themselves through dealership requirements. A few years ago, it was forcing dealers to remodel Chevy shops to get the “blue arch” design and not paying for all of it. Then Volt dealers had to buy tools. Now Cadillac dealers need to spend $15K to sell 1-2 per year. Many will (and are) saying no thank you. The story didn’t even speculate if they also have to buy the same Volt tools ($10k or so) for battery separation in the case of warranty-claim work. I live in a “prime commuting corridor” of western suburbs of Philadelphia. Many drivers do 30-40 miles a day. Perfect market for the Volt. yet, many Chevy shops have opted out of Volt sales. One that is still in the program stocks one, has a rude service department who has told me “you should take your car back where you bought it” and didn’t return calls when trying to make a warranty service appointment (which they get paid for). GM is going to need to look within themselves to see how much they really can handle new technology and if they can do it through dealerships or opt for a regional electric-shop… Read more »
Nix

You act like owning the tools that are required to work on a car, and the training to go with it, would somehow be something that a dealership could go without, and still maintain a reasonable level of customer service.

The requirements seem completely reasonable, and nobody is forcing anyone to do anything they don’t want to do.

GM also has minimum training and tool requirements to sell their gas cars also. This is pretty standard across all the industry. Along with minimum purchase requirements, branded advertising, customer satisfaction requirements, etc…

Bill Howland

Yeah but Nix, some of GM’s requirements of dealers are excessive. Training, and commonly used service tools a BIG YES, but insisting on 2 – 208 volt charger docking stations when the 120 volt unit included with the car is adequate to test whether the charging facility in the car is working?

GM dealers last complained when, having remodeled the washrooms 8 years ago, GM 2 years ago insisted they come up with a new
Tile and Color scheme for the washrooms!… Seeing as a showroom remodel for a large dealership can get upwards of several hundred thousand dollars, many dealers objected.

Since when does the buying public want every Chevy and Cadillac dealer to look exactly the same? Yet GM insists on it.

If they are SERIOUS about the ELR they will insist on the things that count, namely certification, training, and commonly used tools. 2 – 208 volt charging docking stations should be left as an optional extra for the dealers.

Nix

If a customer reports an issue with their 208 volt charging system, I as a mechanic would need access to a 208 volt charger to attempt to duplicate/troubleshoot the issue. I would want a second charger to confirm.

As a sales person, I would want to have access to a quick charger both for demonstration to customers, and to be able to demo the electric part of the drive, and be able to recharge for more demo rides in the same day.

If I were to guess, I would suspect that GM got complaints about too many dealerships having nasty bathrooms for potential buyers, and for customers waiting on service, and determined the only way to get dealerships to invest in restrooms that would satisfy GM customers would be to have washroom remodeling requirements. This is typical for how restaurant franchise requirements are done for restrooms, so I would guess they followed the same common business practice.

Bill Howland

GM isn’t the only one at fault. VW also gets bad marks in this regard, according to “Automotive News” Keeping an ‘out of date’ washroom clean is a different issue..

When I was a kid, auto dealers were not so homogenized, and some looked like they hadn’t been remodeled in 50 years, at the time.. I personally like looking at a ‘Historic’ Dealership. Apparently others do also, otherwise there wouldn’t be so many people reminising.

Unplugged

I am quite sure that the reason two charging stations are required is that the outside one is for customers. It’s not too much to expect that your customers should have the opportunity to fast charge their car when they have the opportunity. Nissan requires customer access to charging stations, so does Ford.

The inside service charging station is for charging customer cars while in service. If the Caddy dealer can’t afford a $1,000 station, the dealer has more problems than not selling a few ELR’s.

Bill Howland
Well, when Tesla comes to service my Roadster, if they don’t have the tools at hand they make arrangements to ‘borrow’ the local Goodyear service bays. I see no reason why a Caddy dealer in a small town couldn’t make arrangements with ChargePoint, or a Nissan dealer or someone else to ‘borrow’ their charger for 5 minutes, seeing as this is something that is likely to never fail anyway in this mode. In the very RARE case that the charger works fine at 120 but doesn’t at 240, the preceding accomodation is perfectly fine. If it works for Tesla I don’t see why it can’t work for a small Caddy dealership. As far as Sales go, Brochures can give adequate information. Using a 120 volt charger cord in the ELR works the same as a 240 one except there is not the 8 or 12 amp complication – otherwise the procedure is the same.. If a customer understands how to use the 120 volt cord they will understand how to use the 240 one. I only have a 30 amp docking station for my Tesla; I need no additional training to know how to use a 70 amp one.
vdiv

If I can afford two L2 chargers a multi-million dollar revenue dealership surely can too. This is a BS excuse not to sell plugins.

Bill Howland

The discussion was about small town dealerships. Obviously a HUGE establishment can afford some EVSE’s.

GeorgeS

There are some dealers in the Scottsdale/ Phx area that will carry the ELR. As I have said before it is important for this car to sell in some quantities that GM deems acceptable. It is important to the future of Voltec.

Tim

I disagree. GM shot themselves in the foot thinking they are a player in the $75k+ EV (EREV) segment with the ELR. If GM wants to leverage the investment in the Voltec, they are better off doing it where there’s more mainstream adoption like with an SUV / CUV offering.

The ELR is already showing itself to be an embarrassment of an offering, simply because of the pricing GM set. At $75k+, they need something better than the current Voltec to be competitive.

Jonathan Miller

I agree. This car is a niche car in a niche market. If they sell 200 a year I will be shocked. How an overpriced car sold in handfuls advances the state of the art I have no idea.

Dr. Kenneth Noisewater

If they drop the price $20k and there are still no takers, I’d be concerned.

ELR is just stupidly overpriced.

Spec9

Well I can’t blame them. Caddy needs to lower the price to make it more attractive. I suspect they will do this eventually, they just want to nab the big bucks from as many early adopters as possible.

Nix
I don’t see the big deal. There are all kinds of different training and tools requirements for different product lines that dealerships need to meet to be official. Special tools and training are required whether the dealership is seeking to be a ELR Certified Sales & Service dealership, or a Hummer Authorized Service Provider, or a Cadillac Professional Dealer, or a Business Elite dealership, or a Pontiac Authorized Service Provider, or a Volt Sales & Service dealership, etc… This isn’t special or odd, this is just typical stuff that every car manufacture does. I would say the take rate of 60% is likely higher than many of the other dealer specialty programs I listed. For example: 1 out of 8 Cadillac dealerships are in the Cadillac Professional Dealer program. 3 out of 21 dealers in my region have chosen to be Hummer Authorized Service Providers. 8 out of 21 are Business Elite dealerships. 60% first-year take rate on a program like this for a car that will be very limited production in the first year is pretty understandable. If I were a Cadillac dealership in a deep-red state with a strong anti-EV mentality, I’d probably make the same investment decision,… Read more »
tiburonh

I’m actually amazed that as many as 60% of Cadillac dealers agreed to make the investment required to sell the ELR. IMHO, this car — a ridiculously tarted up and overpriced Volt — is doomed to fail.

Al S

Those fees and requirements are actually a lot less than what BMW is asking for dealerships to be i certified.

In the province of Quebec, a small dealership might get by with spending as little as $30,000 for the right to sell LEAFs, but for BMW it is 100k and up and only 1/9 BMW dealers is slated to sell the i3 or i8.

Figures! I can just hear all these entrenched Cadi sales guys who poopooed EVs for decades… swearing up and down they will never sell an EV in their dealership… Cadis aren’t for hippies!

Jason

ELR will go down as another GM boner.
I think GM needs to go into another line of business.

Not that anything is built poorly. The factories and workers are top shelf. …ELR simply died on the drawing board before the first part was formed.

If chrome plate a turd, you still got a……

Hardryv

the L setting on this vehicle, like in the Volt, forces more aggressive auto-regenerative braking