DETROIT — Cadillac plans to hold off on a contentious element of its Project Pinnacle dealer incentive program and shift its strategy for using virtual reality technology in showrooms to larger dealerships.
The changes for the 2018 program come after a lack of interest among smaller dealerships, many of whom voiced concerns about Pinnacle terms that encouraged them to shed their physical inventories and convert their showrooms primarily to service centers with boutique displays that use virtual reality systems to showcase new cars.
"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," Cadillac spokesman Andrew Lipman wrote in an email to Automotive News. The facility program effort isn't linked to Pinnacle.
Under the Pinnacle program, which launched April 1, Cadillac sorted its dealerships into four tiers based on market size and sales volume, with different enrollment fees and bonus formulas assigned to each tier. Dealers could choose a higher tier than they were assigned — and commit to investing more upfront for the chance to earn bigger bonuses — while those in the lowest-volume tier could drop to a fifth tier.
Tier 5 dealers would shed their physical inventories and showrooms and instead spend $10,000 for the VR technology to demonstrate vehicle features to customers.
Some dealers and dealer groups saw the plan as an attempt to muscle out low-volume dealers who didn't agree to a buyout offer from Cadillac. Few dealers accepted the buyouts offered a year ago, and Cadillac President Johan de Nysschen said he doesn't plan to offer them again.