Drive through a major city and you might see multiple car dealerships selling divisions of the same brand located near one another -- thus bleeding each other's business. Chances are these stores sell domestics, and in recent years Detroit's makers have tried to reduce the number of franchises that offer their wares. GM has had some success recently consolidating Pontiac, Buick, and GMC dealers, and now they're hoping to create a one-stop shop for their high-end brands, too.
A new plan aims to combine Cadillac, Saab, and Hummer dealerships into single "luxury superstores" where affluent customers can easily compare the similarly-priced cars under one roof. To achieve this, many competing dealerships will have to be joined, typically by one purchasing the other or closing down the less profitable operation. GM stresses that no stores will be forced to close, but the company is offering dealers assistance to move consolidation forward. In the case of one dealer in Providence, RI, GM put up 25 to 30 percent of the capital he needed to buy a nearby Saab franchise and combine it with his Hummer store.
There is a problem with GM's consolidation plan: the number of dealerships. While there are 1,400 Cadillac franchises nationwide, Saab has only 238 and Hummer a mere 170. In addition, some owners are concerned about how to integrate the brands. Back when Hummer was a force to be reckoned with, many stand-alone dealers were required to build new facilities that resembled Quonset-Huts. Now that they will also feature Saabs and Cadillacs, selling the 9-3 or CTS in a rugged, imitation military structure seems out of place. GM feels this obstacle can be overcome, and offered the Rhode Island dealer the services of their architectural firm, Infrastructure, Inc., to help with a redesign.
Hummer, Cadillac, and Saab all have very distinct identities -- about the only thing they have in common are their prices. Though it may be practical to put the brands under a single roof, these new mega-dealers might have trouble appealing to three very different types of customer.
Source: Automotive News (Registration Required)