More Dealer Drama from Cadillac and the China Connection [Updated: Cadillac Responds]

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Cadillac told U.S. and Chinese dealers they will each need to invest at least $200,000 on electric vehicle chargers and staff training to continue selling the brand’s products after 2022. The message was communicated to dealerships on Wednesday via video messages from Rory Harvey, the luxury brand’s vice president of sales, service and marketing. Cadillac is moving on electrification (seriously this time) and plans to launch the Lyriq EV within the next two years, with more battery-driven models to follow. Update: Cadillac PR has responded, saying that what was communicated yesterday is for U.S. dealers only.

The brand says dealers must be ready for the transition, giving us flashbacks to Project Pinnacle  the Johan de Nysschen strategy that forced stores to spend money to provide a more premium sales experience that differentiated Cadillac as special. At the time of its implementation, many dealers wondered why they should bother taking on more overhead under the assumption that they’ll make extra money over time. While luxury-specific outlets don’t have much choice in the matter, those selling GM’s other brands in conjunction with Cadillac seem to be substantially less eager to implement the changes.

This has especially been true in rural areas where customers may not have the option of visiting a Cadillac-specific storefront. When they go to pick up a new vehicle, they’re likely to have to walk past a couple rows of GMC or Chevrolet products. Shop owners are wondering if its worth bothering footing the bill for the upgrades, especially since EV sales are likely to be substantially lower in areas without a comprehensive charging network and that’ll be all Cadillac is offering.

Perhaps more telling is GMC confessing earlier this week that only about half of its 1,700 dealers have decided to sell the upcoming Hummer EV.

General Motors may be running the risk of segregating its market. Cadillac will have urban areas with customers that can make its luxury EVs work for them while GMC handles truck-obsessed rural areas without charging networks. It sounds a little dumb but the automaker may just be leaning into existing trends in the hopes of getting ahead of them in the United States. The Detroit News helped illustrate this by interviewing a few Caddy dealers to get their take on the mandatory upgrades.

“It’s a game changer for us,” Inder Dosanjh, a Cadillac dealer with four dealerships in the San Francisco Bay Area, told the outlet. “The current product is very hot. Electrification just really fits in our profile.”

From The Detroit News:

David Butler, chairman of the dealer council and executive manager for Suburban Cadillac, which has three Cadillac dealerships in Michigan and one in California, said the investment might be a lot for a small dealer who makes few sales in a year. But there are investments, like redoing showrooms, that are “substantially more” than $200,000.

“I have no problem investing in the brand as long as we’re going to bring buy-in behind it,” he said. “Generally $200,000 is not a number that scares most dealers, but at some point you have to start making financial decisions about whether or not this additional investment is going to be worth it for you.”

While there are “core elements” required to serve future Cadillac customers, the changes can vary by dealership, Harvey said, noting that a smaller dealership might only need one charging station. Every dealer will be contacted by a field person at GM about the transition.

Though GM’s entire decision probably has more to do with Asian sales than anything else. The People’s Republic of China has more home and work chargers than anywhere in the world. It likewise has the biggest public charging network currently in existence and has been pretty good to Cadillac vs most other American imports.

Going electric is a clear play at the PRC and ensuring the brand has continued access to Chinese customers. The Chinese Communist Party has prioritized EV adoption and has been working with global regulators on establishing deadlines for the banning of internal combustion vehicles for years. While this is being done under the auspices of environmentalism, China is also one of the biggest dogs in the yard when it comes to battery production and knows an EV-only world would it a massive trade advantage over the West. Automakers are well aware of this, which is one reason you see global brands doing a lot of business within the country (e.g. Volkswagen and GM) focusing on electric cars a little harder than their peers.

More from Cadillac: “While we do see great opportunity for EV’s in China, this is not the reason for the new standards. We also see great potential in U.S. but we need to get the network prepared. This is the logical next step on our path toward EVs.”

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