Cadillac delays Project Pinnacle dealer plan until April
General Motors Co.’s Cadillac brand is delaying the launch of its controversial Project Pinnacle rewards plan for its 925 U.S. dealers until April. It was originally planned to start Jan. 1.
Cadillac spokesman Andrew Lipman on Friday confirmed the delay, saying it was to “give dealers more time to understand the program and put themselves in position to earn payouts after it starts.”
This is the second delay for the project, which originally was supposed to start on Oct. 1, but was pushed back to January.
Several dealer associations have expressed concerns about the luxury brand’s plan to reinvent its dealer network and change how dealers are paid. Project Pinnacle includes assigning dealers to five tiers and rewards them based on dedication to the brand and customer experiences. The more a dealer participates, the higher the dealer’s potential earnings.
The plan also includes transitioning the smallest Cadillac dealers into “virtual showrooms,” meaning they wouldn’t have vehicles on-site but would show vehicles virtually to customers.
Cadillac has developed a virtual reality kit and software for dealers that allows virtual simulation of every product Cadillac produces, since small dealers won’t have all vehicles in their showrooms, said Will Churchill, who is chairman of the Cadillac National Dealer Council and dealer principal of Frank Kent Cadillac in Fort Worth, Texas.
“You can see it, sit in the car, do a walk around, do everything from a virtual reality perspective,” Churchill said.
Cadillac, under its president Johan de Nysschen, is working to evolve the Cadillac brand and the experience people have with its dealers. The Cadillac brand has several hundred more dealers than some rival luxury brands in the U.S.
In September, GM and Cadillac said they would offer 400 dealers buyouts of up to $180,000 to exit the business. The voluntary buyouts were targeted to dealers who sell fewer than 50 Cadillacs a year; all but six of the 400 dealers had other GM franchises; and for 290 dealers, Cadillac represented less than 10 percent of their overall business. Dealers who wanted the buyouts had to respond by Monday.
Lipman said fewer than 5 percent of eligible dealers elected to take a buyout. It wasn’t immediately known if any dealers opting to take buyouts are in Michigan.
Cadillac’s Project Pinnacle has been challenged and criticized by dealer groups. The California New Car Dealers Association this fall said it believed the plan could violate franchise laws. Many dealers think the program won’t build the Cadillac brand, that it is not fair to dealers and think it is aimed at eliminating dealers, according to a National Automobile Dealers Association survey.
Churchill said on Friday that the delay gives dealers more time to become compliant with the program elements that, depending on the dealer’s assigned tier, range from changing stationery and business cards to offering roadside assistance.
De Nysschen last year said Cadillac had “too many” U.S. dealers. He hoped to convince smaller Cadillac dealers to create downsized, standalone “boutique” stores to improve the luxury maker's image.
In January 2015, Cadillac had about 200 standalone flagship stores that it planned to join with 700 smaller boutique stores that would feature “exclusive Cadillac consumer touch points, highly trained sales and service staff and luxury amenities.” It said then it had no plans to cut the number of U.S. dealers. The plan then was to include virtual showrooms that would allow customers to configure a car.
Cadillac’s U.S. dealer count is substantially higher than BMW, Mercedes-Benz, Audi and Lexus. They each have hundreds fewer U.S. dealers than Cadillac but last year sold more vehicles. Before GM’s bankruptcy, Cadillac had 1,422 dealers at the end of 2008.
The Wall Street Journal reported Wednesday that more than 800 Cadillac dealers had signed up for Project Pinnacle.