A dealer association in California is the latest group to go after Cadillac, demanding the automaker make changes to its controversial “Project Pinnacle” sales incentive program.
The California New Car Dealers Association, acting at the request of 52 dealers in that state, has sent a letter to General Motors CEO Mary Barra in a bid to delay (and alter) the project, Automotive News reports.
Unveiled in early June, the program is the brainchild of brand president Johan de Nysschen. It aims to split U.S. dealers into five tiers based on expected sales. The dealers must then offer an enhanced sales experience and more customer niceties — the higher the tier, the more luxurious the sales experience. Compensation from the automaker would be tied to sales performance.
Many dealers take issue with the program, which begins on January 1. Earlier this summer, dealer groups in seven U.S. states slammed the plan in a letter to de Nysschen, claiming the project would funnel most of the cash to large urban dealers, endangering smaller dealers.
The California association claims the program saddles dealers with “unreasonable” performance standards and facility upgrades, and violates eight state franchise laws. Project Pinnacle also discriminates against smaller dealers, the group claims.
In response to dealer protests, Cadillac has reportedly extended the deadline for entry into the voluntary program until September 30 and made some minor changes to the program itself. de Nysschen previously told Automotive News that many of the criticisms of the program are caused by misunderstandings, and maintains that Project Pinnacle is legal.
[Image: © 2016 Matthew Guy/The Truth About Cars]
I looked at an ATS in 2014 at the local Cadillac/Chevy dealer. I was surprised to see both brands sharing the same show room. But, they only had one show room!
I wonder what tier this dealership falls into?
Our local Chevy/Cadillac dealer lost his Cadillac franchise during the GM Bankruptcy. After reading this article, he’s probably OK with that.
Funny, Lexus dealers in smaller cities don’t whine about having to build a first class dealership.
I liked this comment so I researched it a little bit. There are only 237 Lexus dealerships in the U.S. but there are over 1600 Cadillac dealerships. This leads me to believe that GM is “discriminating” against less profitable dealerships. That being said, discrimination isn’t automatically bad, it is being done to stay competitive with Lexus. For example, there are no Lexus dealers in the Saginaw MI area, but there are several Cadillac dealers.
Well, people in Michigan buy Cadillacs. There are plenty of GM loyalists and retirees in mid-Michigan, even if the city of Saginaw is a post-industrial apocalypse.
Interestingly, there’s only 1 here in Toledo. We’ve got plenty of geezers and GM employees/retirees. Lost one in bankruptcy, at least a 3o minute drive to the next closest dealer. Still closer than the next Lexus dealer, and no Infinity or Mini here at all. Best part about it is the Caddy dealer here is also the screaming Kia dealer. We’ll see how this goes.
Which dealer was that? I thought Taylor’s always been the only game in town.
(And the principal of the HyundKia franchises just screams “used car salesman!” Practically have to drive to Cleveland to avoid him, as I thought he owns the Monroe, MI dealers, plus Findlay.)
“Best part about it is the Caddy dealer here is also the screaming Kia dealer.”
Whats the difference? :D
Lexus doesn’t have dealerships in the smaller, more rural markets where Cadillac does (usually a small Cadillac store attached to a much larger Chevy dealer).
These smaller Cadillac stores don’t do much in volume and what they do sell is mostly the Escalade and maybe the XT5.
Lexus dealers in smaller cities don’t whine because there aren’t any Lexus dealers in small cities. The last time I looked into it, Toyota had no U.S. dealerships in cities with populations of less than 100,000 people and I assume they’d have the same policy with their Lexus stores.
I personally think that small city dealerships are a strategic advantage the domestic automakers have.
@Lexus dealers in smaller cities don’t whine because there aren’t any Lexus dealers in small cities.
Portland Maines population is 66,194.
http://www.berlincitylexus.com/AboutUs
Ronnie:
Escanaba, Michigan. Population 13,000.
Eau Claire, Wisconsin. Population 67,000.
Missoula, Montana. Population 69,000.
ALL of them have vibrant Toyota dealerships. I have done business at all three, over the years.
You may need to explain to domestic automakers how small city (and rural) dealerships are a strategic advantage. I agree with you, but the automakers don’t have a clue that it’s an advantage, or how to cash in on it.
Many Cadillac dealers in smaller cities are twinned with other GM brands and do not offer the same level of customer experience as found in dealers for M-B, BMW, or Lexus, among other luxury brands. The move by Cadillac to try to upgrade the experience is necessary, but it is not surprising that some of the smaller dealers would object. It needs to happen though.
Maybe Cadillac needs to recognize it’s not in the same class as MB, Audi, BMW, etc. and offer quality cars at reasonable prices. Cadillac threw away its cachet and needs to rebuild its reputation for building quality cars first.
Cadillac seems to have made that conscious decision to not be “special” any more a while ago.
The edgy styling separated them from the herd but failed to suggest they had any cachet over the rest of GM products.
It’s yet another symptom of De Nysschen Disease.
Cadillac isn’t a luxury brand, and never will be at this rate.Fact is that Cadillac vehicles belong next to Chevy cars given their current build and overall quality.
Upping the “brand experience” for dealerships is a waste of time when the iron isn’t up to snuff. If a consumer looks at a loaded Impala and sees equivalent build quality to a Cadillac costing a lot more money, no “dealer experience” upgrade will change that perception.
No reason to sit on their hands while waiting for product. A better dealership experience is part of the deal with a luxury brand, and Cadillac apparently needs to make improvements there. It isn’t like this effort requires engineering resources that could be better spent elsewhere.
Yes, there are engineering and marketing expenses to be made elsewhere. You don’t offer an ATS with a base 2.5 four in a rear wheel drive car, and the only option, a 3.5 V6, puts out maximum torque at over 5000 RPM. Luxury car drivers want effortless power, not pedal-to-the-metal rocketry. And if GM won’t hire a marketing chief, Cadillac should hire its own, to tell the brass what people expect from a “luxury” brnd, and it’s more than free lattes, comfy chairs, and wi-fi in the showroom.
^This!
I can get that at my HONDA dealer!
(The coffee’s from a Keurig, but whatever!)
Seems to me one can make a good argument that Cadillac is more of a “luxury” brand than Lexus, much less Infiniti or Acura.
Last month, Cadillac sold far more non-entry level sedans than Lexus.
CTS, XTS and CT6 – 4,932
Compare that to what Lexus sold.
GS and LS – 1,685
Infiniti and Acura are not even in the picture.
Q70 – 439
RLX – 118
And it’s not just the Japanese, Cadillac also sold far more non-entry level sedans than Audi or Jaguar.
A6, A7 and A8 – 2,882
XF and XJ – 789
In fact, Cadillac even outsold BMW.
5 Series, 6 Series and 7 Series – 4,133
Cadillac’s ATP for the month was $53k.
The ATP for Lexus has been a good bit lower – in the low-mid $40k range.
That’s what happens when are too reliant on “tarted up” FWD Toyota based models for sales (RX, ES and NX).
By this logic, Chevy is a luxury brand because of Suburban and Silverado.
This year, Ford may sell 200K F-Series trucks with transaction prices over $50K. F-Series is the most luxury.
Don’t see much of any logic in your argument.
By all accounts, the XTS, CTS and CT6 are all luxury sedans and not only that, non-entry level luxury sedans.
As for the Suburban, while it probably isn’t regarded as a luxury vehicle even in top level trim, it is a luxury purchase as it tops out close to $70k.
Not only would that be more a of a luxury purchase than something like the CLA, but even the C Class.
Same would apply to something like the Toyota Land Cruiser.
bd2,
You cherry picked a few models from Cadillac and compared their sales against a set of cherry picked models from other brands to show that because the Cadillac models you picked outsell the other models that it proved that Cadillac is more of a luxury brand.
No one is buying that.
Whether you like it or not, there is a Big 3 of luxury brands in the US: MB, BMW and Lexus. Everyone else is trying to catch up. Some are succeeding (Audi, Volvo recently) and others are not (Infiniti, Acura, Cadillac). It really is that simple.
Hasn’t Cadillac been reliant on a “tarted up” FWD Chevy CUV and a “blinged out” Silverado wagon? There is nothing wrong with that, but let’s not pretend that Cadillac is more of a luxury brand than Lexus.
Except, Lexus is even more reliant on tarted upToyotas.
ES, RX, NX, CT, GX and LX.
And it is at the entry-level price-point where the vast bulk of Lexus sales exist.
And while Cadillac has no trouble selling the higher priced Escalade ESV, Lexus does relatively few LX sales.
Is it possible that bd2 is DW’s evil twin?
PS:
-Escalade – tarted up Suburban
-XT5 – tarted up Enclave
-ATS, CTS – tarted up Camaro
-XTS – tarted up Impala
It’s fun to say tarted up! I just wish I could say it about the LS, GS and IS.
That would make him the angel twin, dw is clearly the evil one.
The Camaro is based off premium architecture, not the other way around where the premium cars are based off a lowly F-body or something, the way you make it seem, but you do get an ‘a’ for effort for dancing around his points.
@JohnTaurus
The Alpha is essentially a tarted up Pontiac.
Lexus sells tarted-up Corollas and Camrys. So there. ;)
Excluding CUVs/SUVs and counting the Impala Brougham in your numbers is some impressive cherry-picking.
Not linking to your ATP data is a nice touch too.
Just talking about luxury sedan sales is hardly “cherry-picking.”
Despite the popularity of crossovers, the luxury sedan is still the hallmark of a luxury brand.
And if you add the CUVs/SUVs, the disparity in favor of Cadillac INCREASES due to the immense amount of Escalades, including the ESV, Cadillac moves relative to the amount of the GX and LX that Lexus sells.
It makes no sense to include the XTS and exclude the ES. The two are direct competitors and each is based on a heavily modified version of a mass-market platform — where the mass market cars (Avalon, Impala) are also direct competitors.
But including ES figures would destroy the point he failed to make.
Really?
Since when are the ES and XTS direct competitors?
The XTS, like the Continental, S80 and RLX, are full-size FWD sedans priced in the mid-size, luxury price-point.
The XTS is priced alongside the CTS and starts at $45.3k
The ES350, otoh, is not priced alongside the GS, but instead is priced alongside the IS at $38.1k.
While the IS200t starts at $37.3k, the IS350, despite being a compact, is priced HIGHER than the full-size ES350 at $40.8k.
When Toyota moved the ES from the Camry to the Avalon platform, they could have moved the ES up a price segment (like where the XTS, RLX, etc. were) but decided not to do so.
Pretty basic stuff.
bd2,
If you look at transaction prices, you’ll see that the ES is a lot closer to the XTS than MSRP would indicate. Most people I know don’t buy a new Cadillac with less than $10K on the hood. Whereas Lexus tends to sell much closer to MSRP.
Now that the ES is on the “Avalon platform”, it is dimensionally within an inch of the XTS by most measures.
Leave the RLX and S80 out of any comparison. No one is trying to compete with them – they are essentially dead.
Vogo –
OK, let’s see the data.
The XTS starts at $45.3k and goes up to $72.4k for the XTS V-Sport.
The ES350 doesn’t get anywhere close to price-point of the XTS in higher trims – starting at $38.1k with any increase in price due to the option packages.
And sales has zero impact on whether a particular model fits in a segment.
Guess which GM model that auto pubs repeatedly pit against the ES in comparison tests>
Not the XTS, but the LaCrosse.
BD2,
Show ATP.
Look, it’s great that you love the home team. But the idea that Cadillac is more of a luxury player than Lexus just isn’t supported by fact. Not by sales, not by consumer opinion, not by brand value and not by customer experience.
Let’s play a word association game. I’ll say a word, and you tell me what pops into your head.
Me: Lexus
Anyone: The relentless pursuit of perfection. A December to Remember. That older but still hot realtor who sold us our house.
Me: Cadillac
Anyone: Northstar. Cimarron. V-8-6-4. A duck.
It’s not Lexus’s fault if the MSRP for the XTS is higher than warranted. The RLX, another direct ES competitor in terms of function, has the same problem.
Leaving aside the XTS VSport which doesn’t have a Lexus equivalent, the XTS and ES do nearly the same thing. They have similar size, features, materials, power, quiet, driving dynamics (i.e., lack thereof), and customers. They are direct competitors in any sense of the word. And, as VoGo pointed out, real-world pricing reflects it.
Lexus doesn’t have the ES compete with the XTS V-sport because Lexus has actual RWD-based cars to base its sporty models on.
Because….luxury car brand.
LOL!
Like Cadillac doesn’t have the CTS-V which leaves the GS-F behind in a trail of dust. (What a weak and totally misleading claim!)
So much so that auto pubs have pitted the CTS V-Sport (and not the CTS-V) against the GS-F.
And Cadillac has long sold its run of 2016MY CTS-V whereas the GS-F is languishing on the lots.
Face it, you (and others) were totally WRONG when you claimed that the ES was a competitor to the XTS, despite being a whole price segment down and not coming close to the mid, much less top spec XTS in price.
And I never claimed that Cadillac doesn’t have a mix of FWD and RWD platforms, but compare the sales #s for Cadillac and Lexus at the mid-upper price segments (models starting at $45k+).
7,969 for Cadillac
4,581 for Lexus (of which the LX570 only made up 403 of the 4,581 in sales)
Sales of RWD models for Lexus (esp. above the entry-level segment) have been dwindling for years and an increasing % of Lexus sales have been made up by models in the entry-level price-point.
There’s a reason why Cadillac’s ATP is on par with the Germans whereas Lexus’ ATP is closer to that of Infiniti, Acura and Lincoln (so it’s hardly “cherry-picking”).
I lol when I read comments like this. I find luxury cars in general to be vastly overhyped. I’ve sat everything BMW, Merc, Cadillac, Audi, etc make at auto shows and I’ve driven or ridden in a few as well. I find nothing about the materials used to be notably better than what’s in my Silverado. I distinctly remember going along for a Q7 test drive and lo and behold the dash is hard plastic… Maybe GM brings their A game to the full-size truck or maybe there just isn’t that much difference between a “basic” and “luxury” brand anymore. Certainly not the gulf that people imply it is. Reality is that that Impala also has equivalent build quality to a 5-series or E350 as well.
Technology equalizes all and has a tendency to destroy value in luxury products. “Luxury” watches are a farce. Attempts to make a “luxury” smartphone have failed. Technology has taken what once required precision manufacturing and made it dirt cheap. Cars are next. With all the electronic tools available to design and actually build a car it isn’t a massive gulf in cost required to build a Toyota/Chevy versus a Lexus/Cadillac. Infotainment is already being democratized with CarPlay and AndroidAuto. Electric drivetrains will equalize performance. When the cost of building more powerful motors is trivial and the expense of operating them is so insignificant that nobody is really worried about miles per kWh then a cheap commuterbox can have a 0-60 that matches an expensive luxury car.
“Electric drivetrains will equalize performance.”
However, that time is not the present. If there was a Toyota version of the GS-F or a Chevy sedan version of a CTS-V I’d be all over that and enjoy the cash savings. But they don’t exist.
“Cadillac isn’t a luxury brand”. Yes, not really.
Ironically, there is a Cadillac dealer in Toronto that advertises itself as “the Cadillac of Cadillac dealers”. I smile when I hear the line, wondering what they think has happened over the last 40 years.
F.F.S. How does Johan get these jobs? Why the hell would you want different tiers of luxury service for you supposedly tier-one luxury mark? How does that make any sense? Johan wants to actually designate different quality levels of service at its dealerships? Wake the fxck up Mary and can this fool before any more stupid ideas like this get put into motion. I can’t get over how stupid this is and how it’ll damage brand perception to have certified, low-level service Cadillac dealerships. It’s baffling that this guy has a job.
He’s trying to coax an unnecessarily large dealership network to start acting like actual luxury dealerships. There are limits to what a carmaker can actually force dealers to do, under current state laws.
Too bad GM does not see fit to change the dealership laws, like Tesla is trying to do.
@VoGo
+1
Oh, I totally agree that they need to get many of their dealerships to start acting like they give a crap about the brand and the customers. I dealt with 2 of them for a year before I rid myself of that damn car and the whole ownership experience in general. The number of Cadillac dealers compared to Lexus dealers stated above is eye opening. Lexus is outselling Cadillac handily with just a small fraction of the dealerships, and there aren’t a whole lot GS’s and GX’s on the rental lots either…
I’m not up on all the legal issues at play here, but Cadillac desperately needs to halve its dealers. I just don’t see this shaming-scheme as the way to do it. There will be plenty of dealerships content to operate at the lowest tier while making their money on Silverados and suburbans. This seems like Cadillac is just going to end up with a small amount of good dealerships, and then a crapshoot for the rest, all at different Johan-certified levels of crap.
I assume the laws involved are extremely prohibitive of making real changes, though. So as you say, it’s a shame GM is content to just play the game.
I see the whole exercise as a way to reduce the small dealerships. They can’t survive on Escalades if their performance gives Cadillac a justification for shifting deliveries of the most desirable models to the better performing dealerships.
I think you’re right about franchise laws forcing automakers into such indirect schemes to cull “excess” dealerships. But if Ronnie Schreiber is correct that small town and rural dealerships can be a strategic advantage, Cadillac et al. don’t know it yet.
Johan is on to something here but is being ham-handed (German) going about it. I don’t have the exact stats but I believe that 80 % of sales is achieved by 20% of the dealers and that is where the resources should go. If Cadillac is to be recognized as a true luxury brand then it has to offer the luxury experience that customers expect, especially if they are expected to pay luxury prices. Lincoln has upped its game, the Germans offer top notch service as do Jaguar, Lexus, Infiniti and now Genesis. Cadillac is playing catch up.
Johan isn’t German, he’s South African.
I’ll be honest: I have a real hard time being sympathetic towards any dealer complaints, as long as there are laws on the books forbidding direct car sales, and making it darn near impossible to terminate a franchise relationship. These laws did not appear by magic. The dealers lobbied to get them on the books, and still lobby to keep them there.
GM and all other manufacturers should be permitted to get a franchise divorce pretty much whenever they want, or at least once a contract expires. Why should they be saddled with bad middlemen? If GM could purge the weak sisters, you wouldn’t have this problem so much in the first place.
I’m surprised more attention here at TTAC isn’t devoted to the underlying cause of all this. Car dealer state franchise laws really need an overhaul. This story is more a symptom of that.
If TTAC really focused attention on that, the site would implode from the sheer weight of Ruggles’ outraged comments.
this is really a dead brand going nowhere. Put a bullet thru its brain. No person with any brains or self respect would even consider one of there products anyway…just pimps, drug pushers and overpaid athletes will miss them anyway. I don’t know of any person that actually owns one of these so called luxury cars so i guess that proves how smart and enlightened my friends are.
Nobody with brains would buy a luxury car period.
I’m sure GM has a bunch of surveys stating customers have better experiences at MB,Lexus,BMW than they do at Cadillac.So GM decided to throw money at dealers so they would improve their customer experience. The more the dealer does for the customer,the more they get. Problem is,there’s probably a customer satisfaction score that the dealers have a problem with.
But Cadillacs bigger issue is they threw away 70 years of being America’s Luxury Car/Brand to try and become America’s BMW.
Last week read a Cadillac ad and it was all about performance. Why? Who the heck thinks of Cadillac as a performance brand?
I surprise a lot of folks with the FE3 3.6 CTS……. the six has good bark in passing situations. Anything substantially faster is a dedicated sportscar…
The number of dealers is a very interesting phenom. I don’t doubt that Caddy wants to dump a lot of them.
When I went looking for BMW dealers in my area, there are four, each reasonably separated.
Acura ? Two in my area, one a bit further away.
MB ? Like BMW, four in the area.
Caddy ? Lots more than the others…maybe a result of the age of the brand and reflecting back when GM had 50% of the market.
Infiniti ? There’s one where the mother ship doled them out sparingly. Far enough apart even in NYC to make cross shopping inconvenient. If I’m going to have a franchise, I want AREA.
We have two caddy shops nearby. The one in the City of White Plains tries to go whole hog, with marble, wood grain, very pretty greeter at the door. Looks like the BMW dealer but with less “ikea”. No other brands to sully things.
My local-local Caddy shop pairs with Chevy and GMC. They look way more old school. Whoever hires the salespeople hires on looks..practically models. Even the slightly chubby girl in accounting is a knockout.
This dealer has been there forever, but even though both shops are cordial and such, I agree that the experience would be different-one is the BMW/MB new showroom experience and the other looks like when you went with your dad as a teen to car shop.
Upstate, and where I got my car, is a mixed Cad/Buick shop, and I get the idea Buick is kinda the ignored stepchild in that place. Still, there are LOTS more Caddy shops per sq mile than any other.
I am SO happy I didn’t get that job I interviewed for in the 90’s as “Dealership Performance Manager”.
“I don’t doubt that Caddy wants to dump a lot of them.”
Woulda, shoulda, coulda.