Cadillac Will Pay Dealers to Disappear

If dealership owners spring for a recent offer by the president of Cadillac, expect to see a vastly reduced brand presence in towns and cities across the U.S.

Johan de Nysschen is offering 400 low-volume Cadillac dealers cash to close up shop and walk away,Automotive News reports.

It’s nothing personal, the brand’s performance-focused leader claims — just business.

In an interview with AN, de Nysschen claims the brand has too many dealerships as it is, at least when compared to its luxury rivals. Paring down the herd, even significantly (the 400 dealers are 43 percent of the brand’s U.S. dealer presence), would make it easier for the brand’s dealers to fold into the executive’s controversial “Project Pinnacle.”

That program, due to kick off on January 1, would see dealers slotted into five tiers based on sales volume, each offering a certain level of customer perks. Compensation from the automaker would be tied to sales performance.

Because dealers would need to invest in their facilities to upgrade their services, the buyout offer gives smaller dealers a chance to avoid the hassle, de Nysschen says. The offers starts at $100,000 and rises to $180,000, depending on the operation. The 400 targeted dealers each sold less than 50 Cadillacs last year.

Ideally, de Nysschen would like every Cadillac dealer in the country to be on board with Project Pinnacle. “Our target is zero,” de Nysschen said. “Our target is to have 100 percent of the Cadillac dealers engaged with the Cadillac business.”

Backlash against the program has grown since de Nysschen introduced it. A California dealer group recently wrote to General Motors CEO Mary Barra in a bid to delay the rollout. The group claimed Project Pinnacle violated state franchise laws, heaped unfair costs onto dealerships, and discriminated against smaller dealers.

It’s hard to see this buyout offer as anything other than a make-the-problem-go-away effort.