Cadillac pledges makeover money, ends holdback

Cadillac is rolling out a new image program for its dealerships, just as some of its stores are putting the finishing touches on the last remodel.

But Cadillac executives are billing the new voluntary guidelines as more a revitalization than gut rehab. Any of its 925 dealerships built or retrofitted to meet the current standards since 2010 will be deemed in compliance for seven years from the date they were completed, Cadillac said.

"It is an evolution, rather than a revolution" of the look and feel of Cadillac's dealerships, Cadillac President Johan de Nysschen said in an interview last week. "It emphasizes the repositioning of Cadillac as being a very contemporary expression of luxury that is modern, progressive, authentic."

Separately, Cadillac is revising the way it pays dealers to align it with the practices of other luxury automakers. That includes the elimination of the holdback, or the automatic lump-sum payment made to dealers as a percentage of the sticker price.

Instead, more of Cadillac dealers' compensation from the factory will come from a new incentive system, named Project Pinnacle. It will replace two bonus programs that have been in place for years: Standards for Excellence, which pays dealers primarily for increasing quarterly sales; and Essential Brand Elements, which doles out money to help defray the cost of complying with the current image program.

Project Pinnacle includes sales objectives for dealers, but that element is weighted less than under SFE. In short, the harder dealers work to improve the customer experience, the more money they will make under the new system. Examples of improvements include hitting customer-satisfaction benchmarks, offering roadside assistance programs and using customer-friendly technology.

De Nysschen said dealers will have the opportunity to earn more money than they were paid under SFE and EBE combined, which can net higher-volume stores more than $1 million per year, according to GM documents outlining the programs.

He said the new system is aimed at leveling the playing field between large and small dealers. Lower-volume dealers have complained that the EBE program favored larger stores because they were rewarded for ordering in higher volumes.

The new image program is separate from the incentive piece and will be funded through $500 million that Cadillac has set aside to help dealers defray the cost of renovations. De Nysschen said support levels will be decided case by case and that payments won't be tied to vehicle sales or orders. Under EBE, General Motors pays dealers bonuses based on the number of vehicles they order from the factory.

Dealers were shown some images of Cadillac's new dealership look at meetings in California last week. De Nysschen described it as "light and airy," with a lot of white hues and wood trim.