DETROIT -- Cadillac is delaying the start of its new incentive program for dealers, Project Pinnacle, for three more months, starting it in April instead of January.
Cadillac President Johan De Nysschen said the delay is to give dealers more time to understand the program and put themselves in position to earn payouts after it starts. He said it is not because the brand is having second thoughts about the program, which some dealers and state dealer associations have criticized as unfair and possibly illegal under various franchise laws.
“Pinnacle’s going to be around for the long term, so there’s no need to rush it into execution,” de Nysschen told Automotive News. “Adding another three months certainly will not hurt.”
One benefit of the delay is more time for dealerships where Cadillac shares showroom space with other General Motors brands to create a more exclusive, higher-end customer experience, he said.
Buyout offers
Cadillac informed its dealers of the delay late Tuesday, a day after its 400 smallest retailers had to decide whether to accept a buyout of as much as $180,000 to give up their franchise. De Nysschen said fewer than 20 of the 400 eligible stores elected to take the deal.
He called the low acceptance rate “another proof point that there’s a very high degree of engagement and optimism for the long-term prospects for the direction of the Cadillac franchise.” But some dealers said that the offers, which averaged $120,000, were too low to make them worth taking.
“The vast majority of people have Chevy, Buick and GMC tied in with that Cadillac store,” said Will Churchill, chairman of the Cadillac dealer council. “When you see the amount of money that was put out there, it’s like a rounding error if you’ve got a Chevy store. So I think people are deciding they’ll take a roll of the dice.”
Cadillac has 925 U.S. dealerships, a number that de Nysschen has said is too high relative to its sales volume. The brand sold 133,234 vehicles in the first 10 months of 2016, 5.6 percent fewer than the same period last year.
However, de Nysschen maintains that Project Pinnacle is not an effort to shrink Cadillac’s dealer network. Cadillac announced the buyout offers in September in response to requests from the National Automobile Dealers Association and individual retailers.
Simulated version
Cadillac originally planned to implement Project Pinnacle on Oct. 1 but pushed it back three months in response to early dealer feedback. Instead, officials started running a simulated version of the program in October so dealers can see how they would have done.
De Nysschen said 832 of Cadillac’s dealerships enrolled in Pinnacle by the Sept. 30 deadline. The 93 that declined account for just 1.2 percent of the brand’s retail sales volume.
He said he hopes to engage with the holdouts and that eventually they would decide to participate.
De Nysschen said: “We really are trying to implement this thing in as collaborative and considerate a fashion as possible.”
