Cadillac executives presented Project Pinnacle to dealers during the brand’s national dealer meeting in California in February. A comprehensive overhaul of the system by which Cadillac incentivises and pays dealers for new-car sales scheduled to go into effect this fall, Project Pinnacle binds dealer compensation to several metrics such as sales and customer service, among others measures.
According to the chairman of the Cadillac National Dealer Council, Will Churchill, the goal was to ensure that the program:
- Is not mandatory, but rather voluntary
- Does not include a stair-step component for sales
Stair-step components of sales programs award dealers tiered bonuses for hitting ever-growing sales thresholds, which “result in dealers beating their brains out to sell those extra few cars,” Churchill told Automotive News. “This is not that at all”, added the 39-year-old dealer principal at Frank Kent Cadillac in Fort Worth, Texas.
Other components of the Project Pinnacle scheme include a voluntary facility image program, a change in the way that Cadillac pays out for car sales, the way that sales objectives get set, and a focus on sales of Certified Pre-Owned vehicles.
Facility Image Program
Cadillac executives floated a new facility image program under Project Pinnacle. Ironically, many dealers have only completed renovating their facilities under a previous program.
The facilities program under Project Pinnacle, however, is voluntary.
Repositioned Margins
Project Pinnacle repositions a significant amount of margin that had been built into a new-car sale, such as holdback, floorpan, credits, and more.
“The Cadillac dealer council’s opinion is we should be paid to sell cars, not paid to take cars. That aligns with [Cadillac President] Johan’s view, and we totally support it”, Churchill told Auto News in an interview.
Setting Sales Objectives
Another interesting element of Project Pinnacle is the way the sales objectives for individual dealers gets set. Churchill says that Cadillac President Johan de Nysschen would like to see the process of determining a dealer’s sales objective as a collaborative measure. Even so, that might to be possible in the way Cadillac operates within GM:
“I think that’s his desire”, said Churchill referring to de Nysschens. “But from a legal standpoint and working with GM, I don’t know if they’ll be able to have such an open architecture in terms of determining objectives.”
Allocating Vehicles
Auto News also asked Churchill whether there is anything different about the way vehicles will be allocated to dealers. Allocation is a process by which dealers can request (order) and receive vehicles from GM/Cadillac, usually as a result of a sale.
One of the more common gripes with the process is that dealers often can’t get enough product from the factory to hit their sales objectives, as was the case during the launch of the current,-gen, 2015 Cadillac Escalade.
In replying, Churchill stated that Project Pinnacle is not a stair-step program.
“I think the key with this program is that it’s not a stair-step. It’s designed so that every dealer has the opportunity to get the same amount of money. It just depends on their level of commitment to Cadillac, through customer-facing touch points and that sort of thing. Your planning potential puts you on a landing pad, but you can move up the scale to any level that you want.”
He added that “… that’s a big difference between the conventional stair-step. That was a big deal for the council to set it that way. And I think that was a big win for the dealers.”
Refocusing On Certified Pre-Owned
Another focus item under Project Pinnacle is sales of Certified Pre-Owned (CPO) Cadillacs. Though CPO sales were a big focus several years ago, the effort lost momentum before being changed, causing some dealers to lose faith in Cadillac’s CPO program.
Churchill noted that there will be a lot of lease returns starting at the end of this year through 2018.
“If we don’t have a robust CPO program, we don’t have a way to dispose of these off-lease vehicles without sending them to auction,” he said.
When a vehicle goes to auction, it degrades residual values — which currently is another problem area for Cadillac.
“We as dealers need to be more responsible for our lease turn-ins and keep them out of the auctions so we’re not competing with CarMax and others,” Churchill concluded.
New Wave Of Vehicles
Starting this year, dealers will have two new vehicles to sell — the 2016 Cadillac CT6 full-size sport-luxury sedan, which launched in March, as well as the 2017 Cadillac XT5 midsize luxury crossover, which launches later this month as a replacement for the popular SRX.
After that, Cadillac will go on a product hiatus and not introduce any new vehicles until 2018, when a new product onslaught is expected to begin. Until then, Caddy dealers will have to make due with the current portfolio of products as the brand establishes more business discipline.
Comments
A lot of this will depend on how independent Cadillac will be of GM in the future. If its true that Cadillac will have its financial results seperate from the rest of GM, then I can’t see why they wouldn’t be able to make more of their own rules in terms of what Churchill was saying.
That is exactly what they are looking to do.
While GM still holds the leash here they have given Cadillac a lot of room to work on their own and account for their own actions and decision.
I think they are right now working to get the dealers trust back and then once they start seeing money they will work to get a uniform look and hold the dealers to other actions they will be better suited to do once they have more money rolling in.
A happy profitable dealer will be much happier to abide by the franchise rules and expectations than one just working to keep the doors open.
Cadillac can work a little more with their dealers too since in most cities they do not have too many dealers like Chevy does. They do have some overlap but for the most part they are in better shape on dealers and locations. I know here we have one Cadillac dealer for about 10 Chevy dealers. Chevy really needs to lose about half of their dealers.
Voluntary, not mandatory? Etc?
Johan had a very firm and distinct pov when he arrived. Then the machine started to grind him down.
Moving to NYC didn’t help enough.
He’s punching with Nerf gloves now. Sad.
Next big question of Johan de Nysschen is whether Cadillac will enter the truck business with their own version of GM trucks to go head to head with Mercedes’ X-class of trucks; of course, one of the biggest difference between a Cadillac pickup truck and one made by Chevrolet and GMC is the engines available would include the LF4 and the LT4 as well as the magnetic rice control suspension system.
Given Duncan Aldred, who seems to have an eye for differentiation, a 75k+ pickup fits squarely in GMC’s product portfolio the same way the A3/CLA-fighters fit in Buick’s portfolio. If GM wants to build an X Class-fighter GMC should do it, not Cadillac.
Cadillac pick up trucks will be interesting.
Cadillacs dealerships will opt-in to this latest program if they see decent products being made that they can sell and make money . Some of them are alittle shy in making the investment based on Johans vision to get Cadillac back to creating cars that will eventually change their image . It’s a song and dance they have heard for years now .
Not only do they want a “true” Cadillac but also need that volume vehicle that helps keep the doors open . The XT5 is going along way in helping them do that .
ct8 is cancelled. fuck u cadillac and ur fucking dated designs. and fuck ur a&s. fuck ur dead marketing. fuck ur everything