Cadillac Dealers Reject Virtual Showrooms

Imagine a traditional luxury car buyer — yes, some still exist — walks into his or her local Cadillac dealer to check out the radically refreshed 2018 XTS. Naturally, the old XTS is hanging out in the parking lot, quietly serving as potential trade-in. After entering the dealer, a salesperson ushers our buyer over to a virtual reality machine to check out the many glories (and options) that await in the new model.

On the way to that machine, the buyer passes zero Cadillacs. There’s not a CTS or CT6 or hot-selling XT5 in sight. An unlikely scenario? Perhaps. A little weird? Certainly to a repeat (read: aged) buyer. It seems small Cadillac dealers definitely felt that way, as low-volume sales locales soundly rejected head office’s plan to do away with traditional showrooms and physical cars.

As a result, Cadillac has given the ominous-sounding Project Pinnacle a makeover.

According to Automotive News, the sales plan enacted on April 1st (after dealer backlash prompted a four-month delay) has pivoted away from scrapping cars at small dealerships.

Under Project Pinnacle, dealers are grouped into four tiers. Each tier requires a certain amount of customer service-related investment by the dealership in exchange for the possibility of greater bonuses. Those dealers lower on the ladder can choose to climb another rung (through extra investment), while fourth-tier dealers were given the option of dropping to a fifth level, where a virtual reality experience would replace the traditional car-buying exercise. No showroom, no on-site inventory. Just a fancy way of looking at a car, exploring trims and colors, and a real, honest-to-God car shipped in from elsewhere.

Dropping to the fifth tier also involved a $10,000 expenditure. Small dealers, the vast majority of whom did not spring for a buyout from Cadillac last year, weren’t keen on the idea. Currently, the only VR machine in a U.S. Cadillac dealer exists in tony Greenwich, Connecticut, at a large dealer operation.

“We decided to focus on our larger dealers with respect to VR so it will become a permanent element of our new facility image for the dealers who decide to go through the voluntary facility upgrade,” said Cadillac spokesman Andrew Lipman in an email to Automotive News.

To be clear, the fifth tier is now officially off the table.

Project Pinnacle was originally scheduled to take effect on October 1st of last year, though dealer squabbling forced Cadillac to make changes to its grand plan. The automaker identified 400 low-volume dealers for a buyout, but owners rebelled after the offers proved too low. Less than 20 of the 400 dealers went for the buyout.

Some dealers accused Cadillac — and its president, Johan de Nysschen — of being heavy-handed with the project’s rollout. One owner said the offer to sign on to Project Pinnacle was akin to a “Soviet election.” Later, some saw the virtual reality option as yet another way to ditch dealers that didn’t go for the buyout.

In response to the criticism, Cadillac gave its dealers more time to understand what the project required of them, while making a few tweaks to the reward structure. Now, dealers are eligible for partial bonuses even if sales tallies fall short of Cadillac’s goals.

In the U.S. in 2017, sales of Cadillac vehicles are down nearly 5 percent, year-to-date.

[Image: General Motors]

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