GM severs ties with North Bay Cadillac dealers

<p>Cadillac's got some sharp new vehicles in its 2010 lineup, including the sleek SRX crossover and the sexy XLR roadster. </p><p>Good luck buying one anywhere on the North Coast for the foreseeable future. </p><p>All four Cadillac dealers in the region will be losing their franchises in 2010, a consequence of the drastic efforts underway to streamline the way General Motors sells vehicles in the United States. </p><p>Cadillac dealers in Santa Rosa, Petaluma, Ukiah and Napa all received secret “wind down” letters from GM over the summer, informing them that their relationships would end by October 2010, possibly sooner, according to several North Bay auto dealers and an industry trade journal.</p><p>“There is not going to be a Cadillac dealer, to my knowledge, from the Golden Gate Bridge north,” said Henry Hansel, owner of Hansel Cadillac-Pontiac-Mazda in Santa Rosa.</p><p>For the moment, the closest Cadillac dealer after October 2010 will be in Vallejo, though it remains unclear if GM will try to establish some kind of Cadillac presence in Sonoma County in the future. </p><p>The changes are the latest local fallout of the near collapse of the U.S. auto industry and its government-backed efforts to rebuild carmakers' shattered business models and reputations. </p><p>Hansel, like other dealers, got word mid-summer from GM that it had two choices — close the dealership immediately, or “wind down” operations over time. Under the second option, Hansel agreed to liquidate existing inventory while continuing to service vehicles through 2010 in exchange for a one-time payment to help offset losses.</p><p>If either side wanted to terminate the relationship after Jan. 1, they could do so with 90 days' notice. </p><p>Those dealerships that entered into the wind-down agreement with GM also stopped receiving new vehicles. As a result, the supply of new Cadillacs on the North Coast has been steadily dwindling for months. </p><p>Hansel and Jenson Motors Center in Napa are sold out of new Cadillacs. Hansel has just one used Cadillac, a 2007 CTS sedan, for sale. Victory Autoworld in Petaluma and Ken Fowler Auto Plaza in Ukiah have just two new Cadillacs each, according to their Web sites. </p><p>“The availability of Cadillac products in the market right now is very slim,” Hansel said.</p><p>Victory and Fowler did not return several calls for comment over the past week.</p><p>GM is trying to reduce the number of Cadillac dealerships around the nation to make the ones that remain more competitive with luxury carmakers like Mercedes Benz and Lexus, said GM spokesman John McDonald. </p><p>The luxury brand was “drastically overdealered” when compared to its plunging sales volumes, McDonald said. </p><p>Last year, Cadillac sold about 161,000 cars and SUVs, down from 214,000 the year before and 300,000 in prior years, said GM spokesman Tom Wilkinson. </p><p>Those lower sales left many rural dealers selling fewer vehicles, hurting profitability and their ability to re-invest in their dealerships, Wilkinson said. </p><p>“It really pulls the brand down and ultimately you get in this death spiral and it hurts dealers' ability to compete with other luxury brands,” he said. </p><p>GM is severing ties with almost two-thirds of the Cadillac dealers in the United States, shrinking its network of dealers from around 1,300 to around 450, McDonald said.</p><p>He declined to say which dealers received wind-down letters, or which did not. </p><p>“We will have dealerships established where there are customers and where we can be competitive,” McDonald said. </p><p>The Cadillac dealer in Vallejo did not receive a wind-down letter and expects to expand by attracting loyal Cadillac customers from defunct North Bay dealers.</p><p>“I'm ecstatic and grateful that we are going to be the only Cadillac dealer available in this part of the Bay Area,” said Michael Drinker, general manager of Team Chevrolet Cadillac near the intersection of Highway 37 and 80. </p><p>The dealership's state-of-the-art, 4-year-old facility is one of the key reasons GM opted to keep that one open, Drinker said.</p><p>The dealers that received wind-down letters were all selling Cadillacs alongside other non-GM brands, something GM wants to get away from, Drinker said. </p><p>While the smaller dealers may feel snubbed by the move and some customers will be inconvenienced, it was an important step toward helping GM compete and ultimately survive, Drinker said. </p><p>“To end up with a healthier dealer base, they had to sacrifice some of what they had,” he said.</p><p>Scott Jenson, owner of Jenson Motor Center in Napa, isn't buying it. He thinks GM's decision makes no sense. His dealership sold 150 Cadillacs and Buicks last year, and axing him means losing those that much market share, he said. </p><p>“I think they are making a mistake because we are a profit center for them,” Jenson said. </p><p>Jay DeMeo, sales manager at Hansel Cadillac, thinks the GM leadership made a geographic decision but ignored an important demographic reality. While it may be a relatively short distance between Vallejo and Sonoma County, there is a cultural chasm between the two areas, he said. </p><p>“People around here don't want to go to Vallejo to buy a car,” DeMeo said. </p><p>It's possible, however, that one day they won't have to. </p><p>GM is eliminating dealerships first and asking the tough questions later, Hansel said. </p><p>“They're clearing the market, then they'll study the market, then they'll say ‘Ideally, to cover the Golden Gate Bridge to Ukiah, here's what we think we should do,” Hansel said.</p><p>That could involve some presence in Sonoma County in the future, Hansel said.</p><p>All of Cadillac's luxury competitors have successful dealerships in Sonoma County. Luxury imports, however, have long been stronger than domestic ones, so it's unclear whether GM will opt for a future dealership here, he said. </p><p>“The likelihood of a stand-alone Cadillac dealership succeeding in Santa Rosa is very, very remote,” Hansel said. </p><p>It is possible GM could seek to pair Cadillac up with a Chevrolet or GMC dealer in the region, Hansel said. But the landscape for those other divisions is shifting so quickly that it's impossible to guess where Cadillac might land down the road.</p><p>Cadillac owners will continue to be able to get their vehicles serviced at Chevrolet dealers in the area, McDonald said. </p><p>When the time comes, GM will directly communicate with Cadillac owners about their other service and sales options. That could happen fairly soon in 2010, as some dealers choose to just shut down instead of waiting it out until 2010. </p><p>“I'm guessing that we'll see some of them close down after the beginning of the year,” Drinker said.</p>