Cadillac will spend $800 million in its effort to transform its retailer network, known as Project Pinnacle in the first three years, the brand’s president, Johan de Nysschen, revealed.
Pinnacle, which starts April 1, overhauls how dealerships earn payments from Cadillac for meeting brand standards. Dealerships are divided into five tiers, largely based on their sales volume, with larger stores able to earn higher payouts by making larger investments in the brand.
For now, Cadillac is running a simulated version of the program, allowing dealers to see how they would have done in comparison to their previous arrangement with the factory. In November, de Nysschen delayed the program’s start date by three months to give dealerships more time to earn payouts.
Since the simulation began in October, de Nysschen said some dealerships would have seen their payout increase, while others would have earned less. The goal, he said, is that all dealerships earn more under Pinnacle, and in turn make Cadillac a stronger brand.
“The program is not a principle that says you rob Peter to pay Paul. Everybody can qualify. Everybody can earn more money,” de Nysschen said in an interview. “And so it’s entirely within each dealer’s capability.
De Nysschen said Pinnacle will cost $800 million more than Cadillac’s current dealer incentives, regardless of how many dealerships comply with the standards for their tier. That’s because Cadillac has committed to distributing any unearned funds among the dealers that did meet their targets.
“When dealers say that we set these brand standards because we don’t want to pay them, this is not true,” de Nysschen said. “We’re going to pay out the money. It’s up to the dealers to determine to whom we pay it out.”
Pinnacle, announced in early 2016, has been criticised by some dealers and state dealer associations as unfair to smaller retailers and unlawful under some state franchise laws.