By Alysha Webb, Editor and Publisher
Cadillac says its Project Pinnacle is a way to level the playing field for its dealers – for those in large and small markets to benefit from selling the brand. Buy sell professionals are not so sure, however. At least one aspect of the program – for smaller Cadillac dealerships to lean heavily on virtual reality to make a sale – won’t bode well for the dealerships that go that route, they say.
“I see that the market for luxury cars is getting more competitive,” Todd Berko, managing director of buy sell advisory Bel Air Partners tells Automotive Buy Sell Report. “To reduce the point of contact is not good for the people who are virtual dealers.”
The Pinnacle Plan is Cadillac president Johan De Nysschen’s strategy for making the brand the luxury car of choice for more drivers. It involves changes ranging from how dealerships get paid for new car sales to sales staff training and certification.
For smaller dealerships, Project Pinnacle will also offer the choice – or perhaps the mandate, it is too soon to tell – of using virtual reality rather than a showroom full of Cadillacs to show potential buyers more about the brand. Whether or not they decide to go the VR route will depend a lot on the details of the new planning program Cadillac announces soon.
Cadillac says Project Pinnacle is all about enhancing the customer experience at its dealerships. Smaller stores have a hard time meeting the manufacturer’s facility upgrade requirements and customer service demands. This puts them at a disadvantage to larger stores in major metro areas.
“Pinnacle is a program to allow dealers large and small to make more money,” Andrew Lipman, global communications director for the Cadillac brand, tells Automotive Buy Sell Report.
The brand will embark on a road show of sorts in late June to introduce Project Pinnacle to dealerships, he says.
Some suspect Project Pinnacle is really a way to drive smaller dealerships out of business.
Nancy Phillips of buy sell advisory Nancy Phillips Associates Inc. in New Hampshire says the plan is “just another wolf in sheep’s clothing.”
“Why not just put all this added operational and legal expense into buying back those dealers that they really don’t want?” she writes Automotive Buy Sell Report in an email. “The writing has been on the wall for years. Cadillac wants to be like Lexus – gorgeous look alike facilities in major markets each of which sells major units!”
Al Haig, president of Haig Partners LLC, says the program is “a sort of Trojan horse.”
The real problem is that Cadillac has too many dealerships compared to other luxury brands, he says. There are some 900 Cadillac dealerships across the United States, compared to a few hundred for its competitors. The smaller Cadillac dealerships are sometimes a side show to a Chevrolet Buick GMC facility.
“It is hard to charge a premium price if you are going to have a mass market experience,” says Haig. “[Project Pinnacle] seems like a way to put those low volume dealers at a disadvantage to the high volume dealers.”
Project Pinnacle is De Nysschen’s attempt to turn Cadillac’s large dealership presence into a competitive advantage, says Lipman. The smaller dealerships won’t have to hold a lot of inventory, but they will have always have access to demonstration models for customers to test drive.
As for what Project Pinnacle will mean for Cadillac dealership valuation, “those stores aren’t worth a lot of money today,” says Haig. “I don’t see reducing [inventory] holding costs does much for them. It allows [smaller dealers] to keep selling cars, but it doesn’t do much for Metro dealers.”
Says Haig: “The biggest issue is [that] Cadillac has to really become a luxury brand. You have to provide a luxury experience to customers and it is impossible for a small dealer to do that.”
One Comment
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Cadillac is an American Car with a strong American Heritage. A group of Europeans with. German thinking will not steer the Cadillac Brand correctly. GM will wait ten years for results from the current Cadillac Plan. GM will waste ten years.
Make a high quality Americam Car with exceptional benefits to customers now. GM would be further ahead than to wait ten years for results. But Domestic Manufactures become arrogant when they make money. Will history repeat itself?
The GM leadership is not there. Anyone can sell product in a market with strong demand. The GM leadership were the same people who are responsible for GM declaring bankruptcy.
When would stockholders wake up?