By on December 6, 2017

2017 Cadillac XT5 - Image: Cadillac

Project Pinnacle hasn’t been incredibly popular with dealerships. Low approval ratings required multiple revisions of the plan, and dealers still found themselves irritated with the final version. There was a lengthy delay, refusal of noncompliant stores to accept General Motors’ buyout plan, and difficulties ensuring eligible shops adhered to the plan’s high standards of service.

Cadillac now says it will weigh customer satisfaction scores and compliance with brand standards more than actual sales volumes when determining U.S. dealer bonuses for 2018. The reason for this comes down to so many dealerships not meeting this year’s sales targets. That’s good news for those smaller outlets that were upset with Pinnacle to begin with

According to Automotive News, Cadillac head Johan de Nysschen attributed the unmet sales goals to the brand’s sedan-heavy lineup and unwillingness to employ aggressive incentives. Sport-utility vehicles and crossovers are performing rather well, especially among luxury nameplates, but they’ve forced sedans to forfeit a portion of the overall market.

“They sold fewer cars than in the prior year, but on top of that, by not qualifying for the sales bonuses, many of them also made less profit on each car they sold,” de Nysschen said in ant interview.

The automaker told dealers about the changes at the start of this week as de Nysschen stressed the importance of transforming the network into a more premium chain. “It’s an important improvement and one that reflects the spirit of what we’re trying to achieve, by saying that dealers who perform need to be in the money,” he explained. “I absolutely believe that dealer profitability is a precursor and an essential requirement for a strong franchise, and a strong franchise is necessary for Cadillac to be strong. Pinnacle’s objective is to make dealers more profitable — provided they perform.”

De Nysschen said he understands that sales volumes aren’t entirely dependent upon a store’s performance, which is one reason why Cadillac is stressing project compliance over volume for the 2018 bonuses. However, the company needs both to rationalize the $800 million investment that is Project Pinnacle.

To solve the problems associated with its lineup, Cadillac plans to launch a compact luxury crossover later next year. Called the XT4, the upcoming model will slide in below the XT5 in terms of price and sizing, helping to make the brand’s fleet more competitive. More entries will follow over the following two years, resulting in a Cadillac where crossovers and SUVs greatly outnumber sedans.

Through November of this year, the brand’s U.S. sales are down 5 percent overall and 7.8 percent on a retail basis. De Nysschen said he expected the decline but didn’t anticipate lessened demand across the luxury market. However, the brand is not comfortable offering large incentives to boost sales at the expense of overall profitability.

“To use a metaphor, making the goose not only alive but vibrant and strong is far more important than losing a couple of eggs along the way,” de Nysschen said. “Losing a couple of eggs means walking away from bad business and seeing the impact on the sales scoreboard. It was anticipated, but it doesn’t make it any more comfortable when that anticipation turns into reality.”

[Image: General Motors]

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33 Comments on “Playing the Long Game: Cadillac Softens on Project Pinnacle After Sales Shortfall...”


  • avatar
    FreedMike

    And today’s Two Minutes Hate On Cadillac begins…

    • 0 avatar
      Middle-Aged Miata Man

      If only GM didn’t make it so easy.

    • 0 avatar
      Terry

      Mike, people dont hate Cadillac. They just dont care about Cadillac at all. Not on their radar at all when shopping for a car. Outside of the comparison tests in some magazines, do you REALLY think consumers are saying to themselves…”Gee, I’m looking at Mercedes, Audi, Lexus, Porsche…maybe I should give Cadillac a try!” GUESS AGAIN!

      • 0 avatar
        Snooder

        Actually people DO do that.

        I did. Literally. I had an appointment to test drive a 228i, and after the test drive I saw a Caddy dealer just down the block and figured “hey, I’m in town, might as well see what the ATS is like”.

        And i ended up getting the ATS because it drove just as nicely as the 228i, while being a lot cheaper and having an interior i like better.

        So yeah, Caddy can win over people interested in a BMW.

        • 0 avatar
          mmreeses

          if you’re a TTAC reader, pretty much by definitely you’re not the “typical car buyer” whatever style or price you’re looking at.

          And if anything it isn’t hate on Cadillac. it’s disappointment.

        • 0 avatar
          Scoutdude

          Yeah a Caddy can win over a BMW owner. My SIL has an x5 and it is beginning to have more and more problems every day. She wants a Cadillac, not sure which one, meanwhile my BIL wants a Lincoln. Since she will be virtually the only one driving it I bet it is the Caddy that shows up in their garage.

    • 0 avatar
      Snooder

      I’ll never understand the Caddy hate around here.

      We hate bland CUVs, right? We like sporty coupes and sports sedans, right?

      So why hate on Cadillac when their only sin is making too many of the latter, and not enough of the former?

      • 0 avatar
        ajla

        “We hate bland CUVs, right? We like sporty coupes and sports sedans, right?”

        Sort of. I want modern ’69 Eldorados, ’49 Series 62, and ’96 Fleetwoods from Cadillac (think Escala, Ciel, or Elmiraj). Not modern E46s.

        I doubt the heritage-designed cars would do any worse in sales than the Xerox BMWs.

        • 0 avatar
          Snooder

          Yeah, i guess i just don’t really like landboats. They’re interesting as museum pieces, but i’d hate myself if i had to drive one daily.

          Hell, even a CUV would probably drive better and have extra space to justify the worse handling over a sedan.

    • 0 avatar
      ajla

      I love Cadillac. Cadillac just doesn’t love me back.

  • avatar
    28-Cars-Later

    Sales shortfall? Unpossible.

  • avatar
    DeadWeight

    500,000 (POS) Cadillacs sold by 2020, Johan!

    You pledged this to get Mary Buggin’ Barra to cut you a check for 12 billion USD to Arena/Dare Greatly/Jason Wu/Millennial Chick, move Cadillac’s HQ to oh-so’hip SoHo, and open Cadillac Hause Du Cafe (12 billion represents 22% of total GM R&D through 2022 even though Cadillac is responsible for a mere 1 out of every 20 General Motors vehicles sold).

    YOU’RE A TREMENDOUS SUCCESS, JOHAN, AND YOU’RE A LITERAL ROCKET SCIENTIST, MARY BARRA, AND I’ve NEVER BEEN MORE CERTAIN THAT CADILLAC WILL MEET ITS GOAL OF SELLING 500,000 VEHICLES A YEAR BY 2020 (*w/in 24 months) UNDER THE BRILLIANT STEWARDSHIP OF JOHAN!!!

    *p.s.

    Hey Jack (and Mark) Baruth –

    “Trade deficit soars on record imports from China.” (it will be worse in 2018 year end, and 2019, and 2020, guaranteed – MAGA!)

    https://www.bloomberg.com/news/articles/2017-12-05/u-s-trade-deficit-is-widest-since-january-on-record-imports

    MAGA! SO MUCH MAGA!!

    Trump is a year into office and the MAGA is so strong!!!

    Trump’s quotes (promises) on China trade imbalance and “how HE ALONE,” could correct it (MAGA):

    Campaign event in Bluffton, S.C. – July 21, 2015

    “I beat the people from China. I win against China. You can win against China if you’re smart. But our people don’t have a clue. We give state dinners to the heads of China. I said why are you doing state dinners for them? They’re ripping us left and right. Just take them to McDonald’s and go back to the negotiating table.”

    Campaign rally in Staten Island, N.Y. — April 17, 2016

    “China’s upset because of the way Donald Trump is talking about trade with China. They’re ripping us off, folks, it’s time. I’m so happy they’re upset.”

    ‘Crippled America’ book – 2015

    “There are people who wish I wouldn’t refer to China as our enemy. But that’s exactly what they are. They have destroyed entire industries by utilizing low-wage workers, cost us tens of thousands of jobs, spied on our businesses, stolen our technology, and have manipulated and devalued their currency, which makes importing our goods more expensive – and sometimes, impossible.”

    ’Good Morning America’ interview – Nov. 3, 2015

    On labeling China an enemy

    “Because it’s an economic enemy, because they have taken advantage of us like nobody in history. They have; it’s the greatest theft in the history of the world what they’ve done to the United States. They’ve taken our jobs.”

    Twitter – March 30, 2013

    “China is the biggest environmental polluter in the World, by far. They do nothing to clean up their factories and laugh at our stupidity!”

    Campaign rally in Fort Wayne, Ind. – May 2, 2016

    On China’s trade policies

    “We can’t continue to allow China to rape our country and that’s what they’re doing. It’s the greatest theft in the history of the world.”

    Twitter – Sept. 21, 2011

    “China is neither an ally or a friend — they want to beat us and own our country.”

    Campaign rally in Manchester, N.H. – June 20, 2016

    “The single biggest weapon used against us and to destroy our companies is devaluation of currencies, and the greatest ever at that is China. Very smart, they are like grand chess masters. And we are like checkers players. But bad ones.”

    Twitter – Aug. 8, 2012

    “No surprise that China was caught cheating in the Olympics. That’s the Chinese M.O. – Lie, Cheat & Steal in all international dealings.”

    ‘Good Morning America’ interview – Nov. 3, 2015

    “But when you see China, these are fierce people in terms of negotiation. They want to take your throat out, they want to cut you apart. These are tough people. I’ve dealt with them all my life.”

    MAAAAAAAAAGGGGGGAAAAAAAAAAAA!!!!! SO MUCH MAAAAAAAAAAAAAAAGGGGGGGAAAAAAAA!!!!A1

    TIRED OF WINNING IT HURTS SO MUCH MAAAAAAGGGGGAAAAAA!!!

  • avatar
    DeadWeight

    This is why Cadillac is going to abandon Johan’s 12 billion dollar plan to be the next BMW and just rebadge Chevy and GMC CUVs as Cadillacs, completely reminiscent of Roger Smith’s brilliance.

    Johan, Melody & Uwe (now departed) talked so long, (allegedly), passionately, longingly, and with such seeming conviction about how they were going to turn Cadillac into a German-besting wunderbrand, with an emphasis on the ‘brand,’ as a representation of edgy, hip, opulent, socially connected, ecoluxury, SoHoness, and for all their years of sound, fury, sponsorship of New York Fashion Week, ads featuring playing-with-dolls-and-dresses, designer Jason Wu, and trumping brand over product Uwe-speak, Cadillac’s lineup will soon consist of:

    XT1 – Rebadged Chevy Spark-based CUV (this can actually be seen in the Cadillac Urban Luxury concept)

    XT2 – Rebadged Chevy Sonic-based CUV

    XT3 – Rebadged Chevy Cruze-based CUV

    XT4 – Rebadged Chevy Malibu-based CUV

    XT5 – *exists*

    XT6 – Rebadged Chevy Impala-based CUV

    Escalade – *exists*

    And there’s your future Cadillac lineup, that Roger Smith himself would proudly bring to market and ensure that pleather trim, CUE and the storied Cadillac emblem, now monochromatized and devoid of wreath, are distinguishing, standard features separating the Cadillacs (“standard of the world”) from their less prestigious GM siblings….

    ….and better service department coffee, hopefully.

    • 0 avatar
      28-Cars-Later

      You’re spot on in terms of future strategery for Cadiwrek. The only current thing which will continue is the obnoxious faux SoHo image because society is so toxic and the nation so fallen.

      • 0 avatar
        cognoscenti

        +1. That’s it. I’m officially, all-in, a DeadWeight fan. I never thought it would happen. I actually love GM – but Cadillac needs some tough love SO BAD.

  • avatar
    CaddyDaddy

    DeadWeight: it’s sad that your Cadi-Rant always turns into a political diatribe to vent your TDS Trump Derangement Syndrome. It lessens your legitimacy. BTW, you are spot on about Cadillac and there NYC centered lifestyle brand that no one buys except some die hard oblivions in flyover country who have not realized that they are re assembled Chinese knockdown kits.

    Merry Christmas

  • avatar
    Fred

    I see CTS-V wagons come up for sale and they command a pretty high price. So my analysis suggest it’s not that they have too many sedans, but not enough wagons.

  • avatar

    Can GM please just kill this brand already? I know literally 0 people who are interested in Cadillacs – from the people I race with to my elderly clients I work with every day. I don’t know a single person who owns one or is contemplating one.

    • 0 avatar

      Maybe you need to get out more.

      • 0 avatar
        DeadWeight

        I live in THE HEART of General-Guangzhou Motors country (Oakland County, Michigan) and rarely see a CT6, and 80% of new ATSs and CTSs are employee-leased $249/month and $299/month $0 down specials, or engineer driven (why?) PEP fleet cars.

        The XTS is a livery special at Detroit Metro Airport, or driven exclusively by those blue hairs 75 YO or older (ironic, as it’s more Cadillac than the awful ATS [could’ve been the next gen Pontiac Grand Am] or nearly as bad 3rd gen CTS [overpriced, non-luxurious dog excrement]).

        I just love seeing American flag festooned and MAGA bumper sticker-plastered Chinese Buick Invasions, too HAHAHAHAHHAHAHHAAAAA!

    • 0 avatar
      Middle-Aged Miata Man

      I’m right there with you. Not a single HNW individual in my orbit would ever consider a Cadillac simply because they view the brand as appealing primarily to those several societal rungs below them.

    • 0 avatar

      @Ricky Spanish
      0 is a serious mathematical object that should not be taken lightly. If you can see 0 people you are either genius or need a serious help.

  • avatar
    Shockrave Flash Has Crashed

    They are better, but it will take a while to win people back. I’m old enough to remember the Cimarron, diesel and the 4-6-8. I for one am not ready to trust them again.

  • avatar
    ryanwm80

    Bonuses are based on customer satisfaction scores, but customers would have a different level of service based on the tier of their dealership, so I would expect the dealer in Newport Beach to have a higher rating than the dealer in Des Moines, because Project Pinnacle doesn’t allow the dealer in Des Moines to offer the same level of service to their customers because … it’s a smaller town? Then again, I have to think the customers in Newport Beach have a higher expectation of service, and might score their dealership lower than customers in Des Moines. How would a customer in Des Moines know they’re not getting the same level of experience as a customer in Newport Beach? The dealer in Des Moines could score just as well, or better than the dealer in Newport Beach in spite of much lower sales, but wasn’t Project Pinnacle supposed to allocate perks based on volume, effectively preventing a smaller dealer with higher scores from ever getting a higher bonus?

  • avatar
    CincyDavid

    Back in the 80s, John Molloy wrote the “Dress for Success” book. I seem to recall a blurb in there about different expectations for different markets. For instance, a dealer with an affluent clientele might dress in golf shirts and whatnot because a Cadillac is something the customers buy periodically, just like a refrigerator and you want the staff at the dealership to look like their country club buddies. Conversely, a store with a less affluent clientele should dress up, and make it more of a “special occasion”…perhaps these buyers have scrimped and save their whole lives to finally step up to a Cadillac. Different clienteles respond differently…and have different expectations.

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