By HILDY MEDINA
Staff Reporter
Stepping into Lou Ehlers Cadillac in L.A.’s Miracle Mile is like going back in time. Built in the mid-’60s, the showroom features chrome-framed posters, green vinyl chairs and the glassed-in cubicles common to old-fashioned American car dealing.
One day last week, about half a dozen people were seen checking out the gleaming showroom models. Not one of them appeared to be under the age of 50.
And that, for Cadillac, is a problem.
Ehlers is among the top 10 percent of Cadillac dealerships nationwide in sales, but it’s faced with a generation gap. The Cadillac brand has failed to make much of a dent in the younger age bracket, and that’s something General Motors Corp.’s Cadillac division wants desperately to change.
Cadillac’s share of the U.S. luxury car market has been eroding over the past decade. From a market share of 20 percent in 1990, it dropped to 17 percent in 1996 and 1997.
“GM’s Cadillac image just hasn’t been that appealing to that key segment of the population,” said Bob Schnorbus, director of auto analysis for J.D. Power & Associates. “They’ve struggled to change the image.”
GM’s response is a sweeping campaign to consolidate non-performing dealers into a small group of large superstores more in tune with the trend in modern car dealing. Cadillac also plans to debut a luxury sports-utility vehicle this fall, and is redoubling efforts to sell its latest sedan, Catera, to younger buyers launching an advertising campaign featuring the tagline, “The Caddy that Zigs.”
So far, the latter strategy appears to be working. The Catera was the most successful launch of an entry-level luxury sedan ever, according to Cadillac officials. More than 25,000 Cateras were sold last year, boosting Cadillac’s total sales in 1997 to 182,624 units a 7 percent increase over 1996.
But the process of consolidating 1,600 dealerships in the United States, including a few of the 15 in L.A. County, is likely to prove a challenge.
Earlier this month, Cadillac division head John Smith said the company wants to cut its U.S. dealerships by more than half, to about 700. That’s because the top 300 dealerships account for about 80 percent of the brand’s sales, with the other 1,300 standing largely empty and in need of renovation.
But GM only owns a handful of Cadillac dealers. The difficulty lies in convincing individual dealers either to agree to sell their stores to GM, or close them down and accept part ownership of a superstore that would be jointly owned by a group of dealers.
“We’re working with each (dealer) individually,” said GM spokeswoman Debbie Frakes. “It’s beneficial to have an appropriate amount of competition.”
Traditional dealerships face increased competition from superstores like CarMax and AutoNation. Several such outlets are expected to go up in the San Fernando Valley in the next couple of years, and GM is getting worried.
To compete, it hopes to convince smaller dealers to join up and form superstores of their own.
“Retailing has changed. You’re going to start seeing bigger operations,” said Anne Marie Sylvester, GM’s media relations manager for North American dealer activities. “As far as (GM) is concerned, we’re planning on getting our dealerships to the next century.”
But so far, few dealers in L.A. County are buying into the plan.
Jim Wilson, owner of Casa de Cadillac in Sherman Oaks, was recently approached by GM to sell his 32-year-old Cadillac dealership, located on the corner of Beverly Glen and Ventura boulevards.
“I said, ‘No thank you,’ ” Wilson said. “I’m here to stay. We hold our own just fine … we’re not confused about the product we’re selling. I know the Cadillac product and I think customers like that.”
Sylvester said GM is quite familiar with that kind of attitude from dealers. But eventually, she said, the competition will wear the smaller outfits down.
“A couple of years go by, and they’ll call us and say, ‘I want to retire,’ ” said Sylvester. “They usually come around.”
Edgar Soto, general manager of Northridge Cadillac Oldsmobile, is waiting to see what happens. GM bought his dealership last year. To date, however, no one at GM has spoken to him about any plans to close or consolidate.
“Everything’s staying the same. We’re doing business and we have a lot of customers that we continue to service. They don’t want to drop the ball on that,” Soto said.
Nonetheless, Cadillac’s consolidation plans have already begun in L.A. County as evidenced by a 1996 deal by Ehlers Cadillac owner Jim Piercey.
Piercey found himself hemmed in by competition from two other Westside dealers: Martin Cadillac in West L.A. and Beverly Hills Cadillac on Olympic Boulevard. Knowing GM was interested in consolidating, he approached company officials with a plan to buy out one of his competitors.
Piercey, GM and Martin Cadillac owner Dana Martin jointly purchased Beverly Hills Cadillac and immediately closed it, with Piercey and Martin sharing the former dealership’s customer list.
“We eliminated the dealer that was in the middle,” said Piercey. “It wasn’t doing any business.”
As the consolidation continues, Cadillac this fall will take a major plunge into the baby-boom market by launching an upscale, full-sized sport-utility vehicle. Sport utilities are the fastest-growing auto line, but by now, the market is extremely crowded.
“They probably should have done it years ago,” said Schnorbus of J.D. Power. “In order to make a dent, they better have something very exceptional or it will be lost in the flood.”
