Cadillac Put Out of Some European Markets by Distributor's Woes
By Michelle Krebs March 27, 2009The future of General Motors' Cadillac division in Europe is becoming increasingly cloudy,
with the automaker reportedly withdrawing its luxury brand from half of Europe's 25 markets due to the financial struggles of its distributor, the Netherlands-based Kroymans Corp.
In another blow to its European aspirations, Cadillac confirmed to AutoObserver earlier this week that it has shelved plans for a new long-needed diesel engine for its rear-drive cars, like the CTS and STS, sold in Europe, where diesels are a must-have for luxury cars.
Automotive News, quoting an unnamed source, reports that GM is withdrawing Cadillac from a dozen of 25 European markets where Cadillacs are now sold. Instead, Cadillac will focus on only certain ones, including Russia, the United Kingdom and Switzerland where the luxury brand has a better chance to compete against BMW, Mercedes-Benz and Audi premium brands than in countries like their home market of Germany, the trade journal said.
GM's decision apparently comes as its distributor for Cadillac, as well as the Chevrolet Corvette and Hummer, is in financial trouble. Netherlands-based Kroymans Corp., filed the equivalent of Chapter 11 protection from its creditors in Dutch courts recently. Last week, the courts granted Kroymans approval to suspend debt payments on four of its business units, including Kroymans Import Europe, which distributes the Cadillac, Corvette and Hummer brands in Europe.
A Kroymans spokesman told the trade journal the court-appointed administrators will take possession of the 3,500 unsold Cadillacs, Corvettes and Hummers at its 165 dealerships on Monday. Meantime, a GM Europe spokesman said the carmaker is working with Kroymans on a new strategy for distributing the brands.
Kroymans, which was Europe's 12th largest dealer group by revenue in 2007, blames its acute liquidity problems on the recession, which has caused a dramatic drop in new and used vehicle sales.
GM has been crowing about its aspirations for Cadillac in Europe every since signing Kroymans on in 2003. Then it said it was shooting for 20,000 sales by 2010. And though Cadillac sales got off to a slow start, Cadillac executives as recently as spring 2007 had the same goal in mind.
But in 2008, they lowered their expectation to 7,500 vehicles, and still came up short, selling only 4,556, even less than the 4,759 they sold in 2007. In the fourth quarter of 2008, Cadillac sold a scant 619 cars in Europe.
Photo by GM
Cadillacs like the CTS Wagon shown here Paris will no longer be sold in some European markets.
GM aimed to sell 7,500 Cadillacs in Europe by 2008 when it appointed Kroymans as the brand's distributor in 2003.
The loss of the diesel engine -- currently a virtual requirement to successfully compete in Europe, particularly in premium-vehicle segments -- is another blow to Cadillac's European aspirations and is certain to cause a serious setback and realignment of Cadillac's strategy. Or even an outright surrender in Europe.
Cadillac's future in Europe is further clouded by the fact that it has
Kroymans had filed the U.S. equivalent of Chapter 11 protection from creditors while it reorganized and last week Dutch courts. On March 20, Kroymans Corp., GM's European distributor for Cadillac cars, won court approval to suspend debt payments for four of its business units including Kroymans Import Europe, which distributes the Cadillac, Corvette and Hummer brands in Europe.
Kroymans dealerships sell Cadillacs, Chevrolet Corvette and Hummer vehicles. The company will turn over to the court the 3,500 unsold GM vehicles from its 165 European dealerships next week.
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