Cadillac retail plan draws another challenge; global sales surge in August

The nation’s largest state dealer association has urged Cadillac to delay its Project Pinnacle incentive program, arguing that the plan will hurt dealers and violate at least eight California franchise laws.

The California New Car Dealers Association, in a letter to General Motors CEO Mary Barra, says it has heard from 52 Cadillac dealers who have expressed “serious reservations about the timing and substance” of the program, scheduled to start Jan. 1.

A spokesman said Cadillac is giving dealers an extra month to decide whether they want to enroll in Project Pinnacle but said implementation of the program otherwise is on target.

The California association’s letter follows similar criticism leveled by several other organizations representing dealers in other parts of the country.

It comes amid surging global sales for Cadillac, which has struggled to regain traction in the U.S. luxury market. Cadillac said its sales worldwide have jumped more than 20 percent in the past two months, due largely to the introduction of the XT5 crossover. In the U.S., sales have risen for three consecutive months.

Deadline extended

The dustup between Cadillac and its dealers in the U.S. threatens to overshadow that improvement.

Brian Maas, president of the California association, wrote that Project Pinnacle imposes unreasonable performance standards on dealers, discriminates against smaller dealers, requires unreasonable facility upgrades and violates a requirement that incentives be paid within 30 days, among other alleged violations.

Maas also disputed Cadillac’s assertion that Project Pinnacle is voluntary. He wrote that many dealers see it as “either a franchise modification or a constructive termination of their franchise.”

A Cadillac spokesman confirmed that the enrollment deadline has been extended to Sept. 30 after “minor” changes were made in response to feedback from recent dealer meetings.

Cadillac President Johan de Nysschen told Automotive News, for a report published Aug. 29, that criticism of Project Pinnacle was based on misunderstandings of the program and that it was legally “bulletproof.” The program changes the standards that dealers must adhere to, dividing them into five tiers with varying levels of requirements, and changes the way they are compensated.

Among the changes: Cadillac will no longer automatically reimburse dealers for providing car buyers with a full tank of fuel, instead making that payment contingent upon meeting customer-satisfaction targets.

Big gains in China

Cadillac said its worldwide sales rose 24 percent in August, to 28,228 units, including a 93 percent gain in China. Its sales are now up 4.5 percent on the year, after falling 1.5 percent in the first half.

The brand has sold 28,034 units of the XT5 and 6,695 of the CT6 sedan since they began arriving at dealerships in the spring. Together, the two nameplates represent 19 percent of the brand’s 182,188 sales this year.

Combined sales of the XT5 and the outgoing SRX it replaces are up 1.5 percent from a year ago.

In the U.S., Cadillac was the only one of General Motors’ four brands to post an increase in August. For the year to date, Cadillac’s U.S. sales are down 6.2 percent.

Cadillac said its China sales are up 31 percent on the year, to 64,489.

“We are seeing consistent progress on our mission to grow global volume while simultaneously building brand prestige,” de Nysschen said in a statement. “Product substance is the foundation of our disciplined approach to global expansion.”

Cadillac, citing data from the Power Information Network, said its average transaction price in the U.S. topped $53,000, the highest among full-line luxury brands.

Separately, Cadillac announced that buyers of its high-performance V-series vehicles will receive a free driver training program at a resort near Las Vegas. The Cadillac V-Performance Academy includes hotel accommodations and two days of “intensive driver training” in the vehicle they bought, though travel to the site would be the customer’s responsibility.