The backlash towards Cadillac’s upcoming dealer structuring program, Project Pinnacle, may be fading, according to the latest report from Automotive News. Following the news of Cadillac offering buyouts to 400 of its smallest dealerships, 98.7 percent of Cadillac’s dealers have adopted the standards put in place by Project Pinnacle.
Project Pinnacle turns Cadillac dealerships into a tiered system regarding financial incentives. Most dealers have opted to place themselves in higher tiers in hopes of earning greater rewards, however, the brand’s smallest dealers can opt to use “virtual showrooms“, which would leave zero inventory on hand to actually sell vehicles.
As the report states, it would seem unanimity has overtaken Project Pinnacle, but some dealers report they feel as if they had no choice but to adopt the stringent standards, which aim to put Cadillac in a better position against its core rivals.
“It sounds like a Soviet election to me. You’re all required to show up and vote, but we only have one candidate,” said Brian Maas, president of the California New Car Dealers Association. “I think there are lots of Cadillac dealers in California and across the country who would say, “We did it under protest.'”
The program will not have any financial implications for dealers signed up until January 2017, with the remainder of 2016 serving as a “full simulation”, according to the brand.
Comments
Buying a car from a ” virtual showroom ” ………. Really ! Those dealerships might as well take the money and invest it somewhere else . Most customers shopping for a car want to see it in person so they can test drive it , see how much room is in the rear of the vehicle for their stuff , sit in the seats to see if it is comfortable , play around with the options to see if is something they want or need .
Read any article about salesman at any dealership and usually the first thing they tell you is to never buy a car without taking it for a real test drive .
Cadillac is basically telling their smaller dealerships , do it our way or hit the highway . Cadillac does have a bloated dealership in this country but to treat those that sell less than 50 @ month is only the fault of Cadillac . I don’t blame Johan for the problems of the past however chasing the Germans by raising prices and selling fewer cars to make money . Sure TAP’s are better than ever but that isn’t going to last forever and isn’t the best way to gain market share for the company . You would think selling more cars at first getting them in the hands of consumers and ” start ” to regain your image then start to raise prices on the high end vehicles would be the best way to becoming the standard of the world again .
Not 50 per month, 50 per year. I don’t remember the exact number, but almost 50% of Cadillac dealerships sell 50 or less vehicles per year. That’s 4 per month. I believe it was stated previously that all these dealerships are bundled with other brands (Buick and GMC primarily). So, who cares if you sell a Cadillac as long as your are selling the other brands. This is what Cadillac is trying to change. It’s about differentiating the brand.
Well the only way forward is as one. No more of this dealers doing their own thing and getting away with old dealers and old ways of doing business.
Sure some will fight this as they are making money just coasting along but they are doing nothing to bring in new business and to cultivate a better overall company image.
This was also a way to get the Chevy and Buick dealers that have been selling Cadillac as a part time job to focus on their core brands.
The fact is less dealers in most markets will provide much better ATP with less inter brand competition. The stronger dealers will be able to provide much better overall customer service.
How do dealers like BMW, Benz and even VW provide much better dealers and service? Well they have a very strong network of dealers that are doing well as there is only one dealer in most average market areas.
They do not sell a Chevy and them try to sell a M3.
Well there is also more to the Virtual Showroom. There will still be cars to play with but in the show room they can configure a car to just what the customer wants and present it to them. It then can be ordered or even picked up on a dealer trade in a day.
I also suspect there may be an effort for more custom builds in the future where you can come in and choose special trims and colors and get the car made to your spec. That is off a little ways but I can see it coming on a flag ship and spreading to the rest of the line.
The potential here is unlimited with where they can take this once they get the new product moving and the dealer system strengthened.
Could you imagine a dealer that sells less than 50 cars placing an order for custom interiors or colors? They would spend a day calling around to find out how to fill out the order.
BMW already does a central commissary where they store common models without the trim applied yet, awaiting customer builds.
This is similar to what GM could do. But also with these cars being built in country they could easily also be factory build as a priority with today’s system and even offer factory delivery if they so choose.
Many models for BMW are built overseas and the time to deliver would be months. Though their factory delivery is much more an experience going to Bavaria.
Their delivery program was featured in Via Corsa and was very interesting.
I think Avenir was a gift to Buick dealers who did Cadillac. Granted, given the sub brand’s probable price point, service will need to also improve at Buick dealers.
“It sounds like a Soviet election to me. You’re all required to show up and vote, but we only have one candidate,”
Meanwhile all the commenters here and on A-uto B-log cry long and loud: “Tesla should never be allowed to sell direct, that’s so unAmerican!!!” which is funny because selling stuff is American.
No here is the problem.
For them to change the law to let MFG sell direct will let Tesla and any other new automaker into the market sell direct and not have the legacy cost or buy out cost of a large dealer network. This would put every MFG out there now at a large disadvantage.
Now pay attention this is where it gets ugly Tesla is not the problem. The problem comes in if China wants to start selling cars here at massive discounts direct and it would damage the automakers here with the dealers now. With the need to compete with much lower prices and the damage the buy out of the dealers would incur it would do some real damage to all automakers we have now.
The only way to make this work is to let the MFG terminate the dealers at no cost and let them sell direct. Or do this over a period of time to let them pare down the number of dealers to where they can compete.
But we know there will not be any buy outs as the automakers can not afford to buy out all the dealers. We also know that even if the companies sell direct at lower prices the government would not allow this and even if they did the dealers would take everyone to court.
The Pandora’s box of forced dealers is one where going back is not easy and will do a lot of damage one way to another.
Now we get those here who like to believe you just can unlock the floodgate with no consequences are only fooling themselves.
In the end odds could be very good the Chinese models will flood the market with cheap cars [Yes people will buy them] and leave us with a number of MFG crippled with high cost of development and the lack of money because they would have spent it on dealers they bought out or dealers that have taken them to court for more money.
And by then Tesla could be belly up anyways due to the lack of profits and income to continue future model replacement and future models they just could not afford to get into production on time or even very late to save them. By then a Chinese automaker may have bought them out.
There is nothing unAmerican at all it is just a system that is much like a hand grande that once the pin is pulled it is going to be a B&$h to put it back in even if you can find the pin.
If the threat of cheap cars from China or even India were not a threat it would be easier but that is the real fear here.
Who though years ago Hyundai would amount to much when they arrived with their poor cars. Never under estimate the competitors.
To be fair this whole thing needs to be done on a even keel to make it so everyone is getting a fair shake.
As for many companies and even sports the ones run as a benevolent dictatorships often are the ones that last.
Not my pick for government but for companies and even car clubs they are often the most competitive and best run.
Example. Olympics are run by committee. NFL run by benevolent dictator. Who is the one that has not lost money?
I know that I will no longer frequent my small town Cadillac Dealer if they only offer virtual garbage. Why would one need to see the dealer when a vehicle can be configured on the Cadillac website? With some of the issues surrounding the 2015/16 Escalades I made sure to wait and test drive the vehicle on the lot. Granted there were few Premium Escalades in the surrounding States inventory so I bought a Platinum after I perused the vehicle and went for a test drive. I will definitely begin looking at the competition. If I have to drive to buy a vehicle as well as have it serviced I will go with foreign marques.
So, you are admittedly purchasing Cadillac for convenience, not because it’s what you really want. Herein lies the problem. Cadillac wants your business because you want a Cadillac. People don’t choose BMW, MB, Audi, etc for this reason. People don’t purchase luxury vehicles because they are convenient to their geographic location. That is what Chevy, Ford, Toyota, etc are for.
I didnt admit purchasing an Escalade for convenience I stated if they are not going to allow small town Cadillac dealers physical inventory as opposed to virtual then there is no reason to visit my local dealer. In that sense there is no need for you to project. I wrench on my vehicles so I have an expectation to be able to make sure the vehicle accomodates my needs in addition to performing as advertised. Virtual performance/comfort is different than real world performance/comfort. Modern Cadillacs are not bespoke vehicles and I’m never going to blindly buy any vehicle without kicking the tires first. Therefore, if I’m going to drive several hundred miles to test drive a Caddy it behooves me to also evaluate the competition which not only emcompasses the vehicle but the sales and after sales experience especially at this price point (95K).
“If I have to drive to buy a vehicle as well as have it serviced I will go with foreign marques.”
Is there an Audi, Lexus, or BMW dealer in your small town?
If you’ve answered ‘yes’, then you don’t live in a small town.
If you’ve answered ‘no’, then you know why Audi, Lexus, BMW, and now Cadillac, aren’t available in your town.
My post is about the virtual experience Project Pinnacle is imposing on a small town/volume dealer. I can get the same experience and more relevant information by utlizing the internet. Why should I visit the dealer to have a redundant experience?