Butler, 64, is executive manager of the Suburban Collection, a Michigan-based dealership group with 36 automobile brands in 54 retail locations in Michigan and California. He spoke with Staff Reporter Michael Wayland about the council's work on Pinnacle, the ousting of former Cadillac President Johan de Nysschen and continuing challenges for the brand. Here are edited excerpts.
Q: What are your priorities as Cadillac's national dealer council chairman?
A: I've been on the council now for a year. My priorities are the dealers, and our No. 1 priority is profitability. Every meeting we have had over the last year, we've put that as No. 1 on our agenda to talk about. Basically, any of the direction or topics that we're reviewing is a forefront for our endeavors to enable dealers to become more profitable.
Has Project Pinnacle helped dealer profitability?
Pinnacle is starting to take hold; it has taken hold through 2018. It's delivering what Johan [de Nysschen], when he introduced Pinnacle, promised. Cadillac dealers have been more profitable through '18 than they have been in prior periods. We've seen some growth with profitability and honestly with the introduction of XT4 and the onslaught of products that takes place in 2019, we're anticipating that will continue to grow.
So dealers have settled into Project Pinnacle?
Yes, they have. We launched it effectively in early '17. There's a lot of work that went into it prior to that, and yeah, whenever you impose a change of that magnitude on an entire dealer body, there's a lot of give and take. And a lot of work on both sides. It seemed like when it was launched in '17, there was a lot of learning that was going on at a dealership level. Through '18, it seems like we have the basics down pretty well and it's really starting to work well for us.
Now that we have a lot of the brand standards in place at our stores, that's pretty much second nature for us and we've been focusing more on the objectives of the program and how to make that effective for our dealerships, which in our case is reward payments. It's really played out to our benefit in 2018.
What were changes you wanted to concentrate on heading into 2019 for Project Pinnacle?
At this point with Pinnacle, we're down to really tweaks and we've had some minor changes among the brand standards. Some that come in, some that go out. We're learning from experience on those and what's important. Those weren't really one of the achievements that the council wanted, it's just the question of what Cadillac wants to change and what we agree with for those changes.
The big changes are really revolving around how the retail objectives come into play. We're going form a quarterly objective program to a monthly in 2019. Another change that we made was we adjusted how the objectives for CPO are set. It's something that the dealers wanted to get done.
Is Cadillac doing enough to promote and support CPO through Pinnacle?
As a dealer, we always say they could do more for us. We'd like something in play every month but if you do have something every month, it gets stale. So, Cadillac has found a way to mix it up, if you will, and come at different times in the year with promotions and advertising.
How was 2018 for Cadillac dealers?
I was a little disappointed in it. I expected our sales to grow a little bit more than where we ended up.
What are your expectations and priorities for Cadillac dealers in '19?
I'm going to say profitability, and along with profitability goes throughput at our stores. I think with the onslaught of product coming at us, we all expect to grow sales. That's a critical component of profitability at this point for us.
Any expectations on how much Cadillac sales can grow in 2019?
We haven't really worked out a 2019 plan. I think we're going to be jumping into that in January. I don't know Cadillac's expectations yet.
Cadillac dealers finally got a compact crossover to sell with the arrival of the XT4 in the fall. How important is that product to future growth? How have sales been thus far?
With any launch vehicle, dealers want it quicker and the manufacturers want to make sure that it's right. We also want to make sure it's right too, but it came to market a little later than we wanted it to. We were making sure the quality was right on that car.
But the acceptance in our showrooms, everything that I've seen at my stores and the dealers I've talked to, has been phenomenal. Customers are delighted with the vehicle. We have a new sense of excitement in our stores with the XT4 there.
We're very pleased with the XT4. It launched in October-November, our first full month, and it immediately shot to No. 1 in the segment. I think we've got some great things coming with that vehicle.
Do you think Cadillac is too late to the game for crossovers like the XT4? Or will demand for that segment continue to grow?
No. Everything I've seen in that segment or any of the crossover segments, continues down the road. Yeah, I think, as a dealer, we always think the manufacturer comes too late with products. However, I think Cadillac has shown that they can come to the market relatively quickly, evidence by the XT4 coming out and immediately being a success.
How important is it to have a product like the Cadillac XT6 coming to help fill the gap between the XT5 and Escalade?
That gap between the XT5 and Escalade, in my opinion, is a very important gap. We see what the other luxury manufacturers have in their portfolios and for us that's a huge area. We talk to customers every day that love the look of the XT5 and they, of course, love the Escalade. But the Escalade's just a little too big for them but they need three rows of seats, and they go elsewhere to buy vehicles in that gap.
In November, GM announced the Cadillac CT6 would be ending production this year in the U.S. What are your thoughts on potentially losing that car?
I don't feel good about it. The CT6, from my standpoint, is a very successful vehicle. I would just say I'm not excited about CT6 potentially going away.
How has Super Cruise, which is currently exclusively offered on the CT6, been received in the marketplace?
Super Cruise has been fantastic. There's talk everywhere right now of autonomous driving. It seemed to me to be a little slow getting off the ground but pretty quickly on, after it was launched, we had people that came into the store and they were asking for test drives of that vehicle with Super Cruise. It quickly ramped up and 30 percent of our CT6s nationally have Super Cruise on them. It's a great product.
GM announced plans to begin expanding Super Cruise across Cadillac's lineup, followed by other brands, beginning in 2020. As it grows across the Cadillac portfolio, can it be a differentiator for Cadillac?
I'm very excited about it rolling out the product because we've had customers who want the XT5 but they want Super Cruise too and we had to tell them that's only available on CT6. So yeah, I'm really excited about that.
Do you feel Cadillac dealers are adequately prepared to enter new mobility segments and sell new technologies such as Super Cruise or electric vehicles?
Yes, we are. Whenever we launch any new technology, Cadillac has pretty much been at the forefront of it and they have typically been out at our stores well in advance of the product coming along with the actual technologies. We have training that's required for all the people that deal with both the product and customers. We've been ahead of the game pretty much all the way down the road.
New-car margins are getting squeezed throughout the industry. What are Cadillac dealerships doing to help profitability and reduce expenses?
Pinnacle launched in 2017. That was a whole new dynamic as to how the dealers had to approach profitability form a front-end standpoint because our margins changed and a lot of the prior front-end profit translated into Pinnacle bonuses, if you will.
So we had to take a look at how we paid our people, all the way from salesmen to managers. I think the heavy lifting for that was all done in '17. We've tweaked some of the things going through '18 but aside from the changes in '17, I don't see dealers really, other than doing their normal expense reviews in '18, I don't see a huge changes.
Is vehicle affordability a concern for Cadillac dealers and their customers?
Right now, I do not see that as being an objection to a lot of our customers. Again, being a dealer, we always think the manufacturer overprices their vehicles. It doesn't appear that anybody is really pricing themselves out of the market, so no, I think we're OK right now.
Are rising interest rates affecting Cadillac dealerships?
Yes, they are. The cost of flooring our vehicles has gone up and that's a concern for us. It requires that we watch our days supply closely, as we always do, but it's even more important in a rising interest environment.
Are Cadillac and GM Financial doing anything to help mitigate challenges created by higher rates?
I have not seen a change from GM Financial on how they might mitigate that expense.
What was dealer reaction to GM replacing de Nysschen with Steve Carlisle as Cadillac's president?
Johan was a very polarizing individual. I think probably the response that I heard was 50/50. Some people loved Johan, other ones not so much.
The dealers, with the change of bringing Steve in, most of the dealers in the U.S. didn't know Steve Carlisle or don't know him. So, I think they're sitting back right now with the wait and see approach. Let's see what he brings to us.
They saw him for the first time [in September] at the dealer conference in Las Vegas and the dealers that I talked to out there that had met him and had listened to his presentation were all pretty upbeat about it.
What are your thoughts on Carlisle as Cadillac president?
I've had a lot of interaction with Steve since he's come on board. I'm very excited about having Steve at the helm of Cadillac. Steve is not as flamboyant, but he is a very intelligent, articulate individual and I think he's going to do great things for Cadillac.
Cadillac's marketing has become more upbeat in recent months. How do you and other dealers feel about the new messaging?
I'm hearing applause from the dealers I have heard from, and thank God for that. The changes are more than welcome. I think the New York campaign, when it was launched, served a purpose. I think it was getting a little stale, in my viewpoint. This new campaign is fantastic.