Dealer gambles on riding out slump with Cadillacs

The great grey cloud of the global recession does have a silver lining - for petrolheads at least.

The latest luxury model of Cadillac, the CTS, has dropped in price from $100,000 to around $63,000 after the collapse of General Motors. More than 80 of the cars have been snapped up by a Hamilton dealer but whether they are a good deal or not is a question dividing some in the motor industry.

Walter van den Engel, dealer principal of Ebbett Cadillac, said his Hamilton showroom had been "completely swamped" with prospective buyers since buying up the stock.

But one car expert is warning buyers against getting "an obscure brand from a bankrupt company in the middle of a recession".

The 2009 Cadillac CTS has a 3.6 litre, V6 engine, air-conditioning, leather seats and a Bose 5.1 surround sound system with touch screen.

General Motors' premium brand was to be relaunched in New Zealand and Australia this year.

But because of the global economic crisis and the company's bankruptcy woes its re-entry has been delayed indefinitely.

Mr van den Engel's dealership won the deal to sell the cars after they became surplus to requirements and were offered in one lot to Australian and New Zealand GM Holden dealers.

He said the gamble to buy virtually all the stock had so far paid off and 14 of the cars, which were to retail at $100,000 but were now going for an "extremely competitive" $63,000, had sold in less than two weeks.

"We were banking on them all being sold within six months but they could all go within eight weeks the way things are going. It could be the whole romance with the brand that people have."

Mr van den Engel admitted there were a few nerves after the cars were bought.

GM's United States sales were down 45 per cent during May and sales are likely to suffer more in the bankruptcy.

But despite GM's problems, which include the shelving of the Saturn, Pontiac and Saab brands and other measures to reduce its debt and labour costs, Mr van den Engel was confident New Zealanders would not be caught out.

"It's a good thing, it gets rid of all the uncertainties with General Motors and people can now move forward."

Dog and Lemon Guide editor Clive Matthew-Wilson agreed the cars were "definitely priced to sell" and from a consumer point of view the price tag was an "acceptable purchase".

But he said he probably would not buy one himself.

"It's an obscure brand from a bankrupt company in the middle of a recession," he said. "American cars would never personally be anywhere near the top of my list in terms of reliable vehicles. That was one of the reasons why GM went broke in the first place."

He said the Cadillacs were likely to struggle against high-quality Japanese imports which sold for less as well as the traditional high-end BMW and Mercedes.

Luxury cars were also likely to depreciate markedly in their first year, he said.

"This is what kills luxury cars, the depreciation - you're talking about 40 per cent in the first year so as an investment it's not an investment but more a way of burning money."