And it didn't work very well. It didn't sell much, CP/M was dying at that time and the CP/M support in the C128 was not great. "Half my class" at school had C64's, but I only ever knew one person whose family got a C128. I really wanted one when they were introduced, but ended up with an Amiga a couple of years later instead.
Too late to edit but will correct myself slightly because the above might mislead: The C128 did sell well for a 1980's 8-bit home computer - about 2.5 million sold made it one of the best selling 8-bit computers ever.
It just didn't sell well for Commodore compared to the Commodore 64 and the Amiga. As a replacement for the Commodore 64, it was a sales disappointment. Most other manufacturers would have been thrilled with a failure like that, however.
That said, perhaps more accurate would be to say that using CP/M to position the C128 that was didn't help much - even of the people who bought a C128, most never used CP/M. Though to some it might have been what allowed them to convince parents it was a "serious computer".
Yes, 1985 was really too late for CP/M. Even Kaypro (the last surviving major CP/M machine vendor) had seen the writing on the wall and began to sell MS-DOS machines by then. Still, I was still using CP/M occasionally on my Apple II clone with a Z80 card, mostly for running early versions of Turbo Pascal (which was released for CP/M but never the Apple II natively).