Cadillac sounds the alarm

Author | Chai Xuchen

Editor | Zhou Zhiyu

The once close relationship between car manufacturers and dealers is facing significant challenges in the current turbulent market.

Recently, the withdrawal of a Cadillac dealer in Henan has once again put this American luxury brand in the spotlight. Many car owners who purchased maintenance packages at this store are unable to redeem them, and some consumers have not received refunds for the tens of thousands of yuan deposit they applied for in vehicle purchase tax subsidies.

According to sources close to SAIC-GM-Wuling, the dealer had a dispute with the brand, leading to the revocation of its sales qualification. Informed sources revealed that Cadillac has nearly a million yuan in deposits that have not been returned to this 4S store, and the latter also has outstanding car payments. The dealer's decision to withdraw from the network store indicates a tendency to limit losses.

Cadillac has not yet commented on this matter. However, the conflict between it and the dealers has become a reflection of its current survival situation.

This year, Cadillac's vehicle prices have continued to hit new lows. For example, the CT4, originally priced at RMB 220,000 to 260,000, now has bare car prices dropping to around RMB 130,000 in some stores. Although the final price after adding vehicle purchase tax, insurance, and installment interest may increase, buying a Cadillac for just over a hundred thousand yuan has indeed struck a chord with many consumers.

Cadillac's "self-reduction in price" is because it is really difficult to sell.

Looking back at Cadillac's development over the past decade, after reaching its peak of 233,100 units in 2021 following several years of rapid growth, it has gradually declined. In the first half of this year, its total sales were only 62,000 units, a nearly 30% decrease compared to the same period last year, making it the mainstream second-tier luxury brand with the largest decline.

Currently, Cadillac has nine models on sale, but its overall monthly sales volume hovers around the "tens of thousands" mark. In the environment where first-tier luxury brands like BBA and Porsche are "lowering prices to survive" in the first half of the year, Cadillac, which is under extreme pressure, can only gain a momentary respite by cutting prices to increase sales volume.

However, as an intermediary buffer, dealers bear the pressure of "selling cars at a loss" for Cadillac.

Sources close to the distribution channel revealed that the loss-making 4S stores mainly aim to achieve target tasks in order to obtain quarterly or annual rebates from the manufacturer, following a "small profit, high sales" model. However, some dealers indicated that Cadillac's subsidies last year did not meet expectations.

As a result, the enthusiasm of 4S stores has been frustrated, and the relationship between the two sides has gradually become distant. In addition to the dealers who voluntarily withdrew from the network store this time, some Cadillac 4S stores are also planning to switch brands and enter the domestic market such as Hongmeng Zhixing.

In fact, the conflict between manufacturers and dealers is also a common issue for luxury brands such as Porsche and BMW at present. Amid the price war, Porsche experienced a wave of dealer "rebellion" in the first half of the year, while brands like BMW and Mercedes-Benz subsequently introduced support policies for their dealers to alleviate their financial pressure and avoid following in Porsche's footsteps.

Compared to the direct sales model of new forces, in the traditional distribution model of traditional car manufacturers, dealers play a crucial role in reaching the end customers, providing maintenance services, and providing frontline market feedback Obviously, how to repair the relationship with dealers next has become Cadillac's must-answer question. Otherwise, once the trend spreads, its brand strength will face even greater challenges.

Channel insiders point out that Cadillac's product strength is actually not bad. Backed by SAIC Group and General Motors, Cadillac has its own capabilities such as the Ultium electric platform, Super Cruise, etc., still holding certain cards. If it can provide timely and sufficient subsidies to mobilize the initiative of its frontline dealers, perhaps this year's total sales volume can rise again.

However, correcting marketing on the surface is just the beginning. Faced with the rapid progress of high-end domestic brands in recent years, Cadillac needs to consider how to accelerate integration into the new market environment and reshape its high-end brand image, which is crucial for its ability to reshape its glory in China. This requires Cadillac to create more popular models and reduce its reliance on existing flagship products.

According to data from the China Passenger Car Association, in the first half of this year, out of Cadillac's sales of 62,000 units, the CT5 in the 200,000 yuan price range contributed 56%, which has brought uncertainty to the brand.

Some sales personnel have indicated that currently, besides the CT5 which sells well, other products struggle to alleviate sales pressure. For example, in June, besides the CT5 with monthly sales of 4,817 units and the XT5 with monthly sales of 1,617 units, Cadillac has not had any other single product with monthly sales exceeding a thousand units.

Launching several market-competitive products is the biggest expectation of frontline sales for Cadillac.

Fortunately, Cadillac has already taken action. According to the plan, the new XT5 is expected to be launched at the Chengdu Auto Show at the end of August, followed by the introduction of the all-new XT6 and a large six-seater new energy model. Together with the already launched electric SUV Lyriq, a total of four new vehicles are planned for this year.

However, with Aito, Xpeng, Nio, Li Auto, and others continuously strengthening their positions in the high-end market segment, Cadillac has limited time and space left for maneuvering. Clarifying its own advantages, mobilizing group resources to launch an offensive, may be the last hope for this American luxury brand to break through