A large-scale culling of Cadillac dealers won’t come to pass, but that doesn’t mean franchise owners are giddy about joining the automaker’s controversial Project Pinnacle.
An overwhelming majority of the brand’s 925 U.S. dealers have opted to sign on to the program, ignoring company president Johan de Nysschen’s last-minute buyout offer to 400 low-volume locations.
According to Automotive News, the automaker’s September 30 enrollment deadline passed with few buyout takers. In total, the dealers signed on to Project Pinnacle represent 98.7 percent of the brand’s sales volume.
Dan Creed, Cadillac’s vice president of sales operations, told AN the remaining dealers are “very small stores” with a total volume of 150 units per month.
Project Pinnacle rolls out on January 1 and aims to reshape how Cadillac sells its vehicles. Dealers would be slotted into five tiers based on sales volume, each offering different levels of customer perks. Compensation from the automaker would be tied to sales performance. de Nysschen believes the new approach will bring Cadillac in line with its luxury competitors.
Naturally, dealers would need to spend more to offer the perks, with fewer guarantees of stable funding from the automaker. This sparked a backlash from some dealer groups, including the California New Car Dealers Association, which wrote to GM CEO Mary Barra in the hopes of delaying the roll-out.
That association’s president claims dealers felt strong-armed into joining the program out of fear for their businesses.
Brain Maas told AN that the situation felt “like a Soviet election,” claiming that most dealers likely signed up “under protest.”
Under the program, the brand’s lowest-volume dealers (less than 100 units per year) can choose fifth-tier status. While it means less money spent on customer perks, the dealers would lose the ability to stock vehicles on site.
[Image: © 2016 Matthew Guy/The Truth About Cars]
Sad as it may be, the selling dealer is a vital part of one’s experience with a purchased vehicle. Where the vehicle is largely an appliance, the “selling” is similar to an appliance store. When the vehicle is offering a “lifestyle”, as is the case with premium cars, the dealer must match competing dealers. Saw a new Alfa-Romeo Guilia recently and while it’s an amazing car, it’s going to be sold through Chrysler dealerships. It seems unlikely these dealers will be able to offer the same kind of service buyers can get from a BMW or MB shop.
Selling dealership doesn’t matter at all for my used Cadillac purchases. I used to have a CTS-V, now have ATS and XTS VSport, all purchased out of state or at a non-Cadillac dealership.
Though free oil changes were nice at the local dealership which has brand new, stand alone Cadillac building, that’s all I go in there for.
They’re not doing this to capture used car buyers.
It should tell you something when not even Norm is willing to buy a new Cadillac.
Oh my, yes I fear you are right.
Yet another example of shit for brains from GM. Instead of understanding that selling Cadillacs in Boise is different than Miami, they attempt to rule by diktat. Many “analysts” make the same mistake, usually trotting out stats that back them up – kind of. This is beginning to develop a smell.
A miles of granite countertops, billion of free cups of coffee, 10 Tb/s of wifi won’t change the fact that their cars are performance bargains at best. Does anyone sit in an ATS and think “Wow, this blows away the Audi/BMW/Mercedes I sat in this morning”?
It would take multiple billions and many dedicated individuals to truly “fix” the problem, and even then there is no guarantee it will sell. Might be a million per dealership to put in all of the niceties and pretend the product is up to snuff.
For 2017 GM is restricting availability of the V6 on the ATS sedan to only the top trim so if you want that engine it is priced deep into WTF territory. Well over a comparable six cylinder from Lexus, Infiniti, or Jaguar.
Dealers need do be culled, but they need to be bought off at the 2016 market price of a Cadillac franchise fee. Having product that wasn’t sh*t might help too but I don’t see this being in the cards.
“very small stores” with a total volume of 150 units per month.
Ummmm I think you mean per year. Anybody who is selling approximately 5 Cadillacs per day ought to be tickled $hitless.
Lol, good catch.
The referenced article said:
“Creed wouldn’t reveal exactly how many dealerships didn’t enroll but said nearly all of them are “very small stores.” Cadillac sold 106,180 retail units in the first nine months of 2016, so the holdouts collectively account for only about 150 vehicles a month.”
This is what happens when amateurs playing journalist rewrite articles.
Dan, I think they meant that several dealers whose combined sales, acrossed all those dealers, added up to 150 per month.
Dan, I think they meant that several dealers whose combined sales, across all those dealers, added up to 150 per month.
i would reread that.. he is referring to a group to dealers that sell only 150 cars per month. In this case there are 925 dealers total, and 98.7 signed up, so he referring to a group of ~12 dealers which move that many cars per month.
“Dan Creed, Cadillac’s vice president of sales operations, told AN the remaining dealers are “very small stores” with a total volume of 150 units per month.”
” “very small stores” with a total volume of 150 units per month.”
He’s talking about the total volume from all the stores that didn’t sign up. That’s not one dealer selling 150 cars a month.
They didn’t say how many dealers that figure included but the 150 units is 1.3% of Cadillac sales. 1.3% of 925 is nine or ten dealers – now there’s nothing to say that the numbers are proportional, I’m just spitballing but if things are proportional, it’d be more like selling a car every other day, not five a day.
It’s not clearly worded at any rate and data without a frame of reference (meaning how many damn dealers combined only sell 150 Cadillacs per month – 150, 200, 50?) doesn’t mean anything.
AN is reported as saying that 98.7% of the dealers have signed up. On 925 total dealers, that gets us to 913, suggesting that 12 dealers have not committed to the program.
On average, they would be selling about 12-13 Cadillacs per month.
This is like having to join a company-controlled union! I think it’ll see the eventual closure of some of the low-volume dealerships anyway – once they realize the costs involved are not going to net them greater sales figures.
Yup. Plus, the tier five dealers “lose the ability to stock vehicles on site”. I think that means no help from Cadillac with floorplan expense. They can only take orders for cars and prep them for delivery, with no examples for sale on the lot. For dealers selling one or two a month, that may be okay, but those selling more than ten-fifteen per month, that’s a ‘going out of business’ sign waiting to happen.
So at level 5 you aren’t allowed to order vehicles for stock? Seems like a dirty way to put them out of business in today’s market where the majority of customers want to take their new vehicle home right now.
I’m thinking the level 5 stores are in smaller cities where they’d be stocking fewer vehicles anyhow.
Yeah they may not have had large stocks because of their low volume but that is a far cry from not having any units in stock for immediate delivery. In today’s world there aren’t that many people willing to wait for an ordered vehicle.
I really don’t think the dealer experience has much of anything to do with Cadillac having hard time selling their cars.
You nailed it whitworth! Lipstick on a pig.
What!
The manufacture wants the dealer to spend some money to make some money?
Outrageous
Project Pinnacle sounds like the name of an evil plot from a James Bond movie
It reminds me of Norm Crosby.
Hey, I remember his sexist comedy routines:
“Women are inconsiderate. You see those signs in hotels, ‘please put the shower curtain in the tub’. Women don’t do that, but men do. Sometimes it takes us 10-15 minutes to get them off those little rings, but we do it!”
“it takes us 10-15 minutes to get them off those little rings, but we do it!”
Not me; my deltoids cramp-up halfway through, have to make two goes at it.
But if we’re going to toss it anyway then I can use side-cutters to just snip those grommets and yank.
Here’s a novel concept. How about quit trying to chase BMW, lose the meaningless letter names that are changing and causing even more confusion, put some better quality interiors and dashes in your vehicles, quit restricting the larger engines to only high trim levels, lower your prices on the ATS and CTS, beef up your advertising and improve the dealership experience.
Moving your headquarters to NYC, changing letter names, restricting V6 engines to the highest trim levels, changing grille textures and continuing on your current path will not make a spit of difference to your sales. Neither will project pinnacle!
There are plenty of smaller towns that have Buick-Cadillac-GMC dealers, or even Chevrolet-Buick-Cadillac-GMC dealers. They don’t sell an awful lot of cars (especially Cadillacs), but Cadillac owners in smaller towns don’t want to have to drive 50 or 100 miles to shop for a Cadillac, or have it serviced.
It might make sense to stick it out just so they don’t lose the opportunity to stock Escalades.
This could be an opportunity for Lincoln especially if there are Ford dealers in these smaller areas.
DING DING DING…….We have a winner! Except Lincoln has been getting rid of the smaller dealers too.