In an effort to move upmarket, Cadillac is imposing strict new standards for its dealerships, but is offering roughly 400 of its lowest-volume dealerships up to $180,000 to revoke their franchises and shut down instead of making the investment the brand’d require, reports Automotive News.
Cadillac’s new dealership standards will require both physical and process updates requiring significant investment by franchise-holding dealerships. The luxury brand says it’s not its intention to close any dealerships, but sees some low-volume dealer closures as likely given their sales numbers and the tough task of rebranding that lies ahead.
“Our target is to have 100 percent of the Cadillac dealers engaged with the Cadillac business,” Cadillac president Johan de Nysschen said in October. “Some people may choose to make life a little easier than what lies ahead.”
“This is going to be a long, arduous and challenging journey and certainly not one for the faint-hearted,” he added.
All of the dealerships eligible for Cadillac’s buyout sold fewer than 50 Cadillacs in 2015; they represent 43 percent of the brand’s 925 U.S. dealerships while only accounting for nine percent of its sales.
Dubbed “Project Pinnacle,” the effort to revamp the Cadillac brand will kick-off on January 1, 2017, and will change the way Cadillac distributes incentives to its dealers.
Its highest-volume dealers can earn the biggest incentives by meeting Cadillac’s strictest standards, while smaller dealerships that don’t measure up to Project Pinnacle’s highest standards will still be able to sell Cadillacs through a new online showroom, but won’t be allowed to keep any vehicles in stock.
Cadillac’s sales numbers would initially drop due to the closure of a large number of dealerships, but de Nysschen believes the remaining dealerships would eventually grow to exceed current nationwide sales figures.
Cadillac was once revered globally as a top-tier luxury automotive brand, but lost its luster after falling behind competitors including Audi, BMW, Mercedes-Benz, and Lexus.
The American luxury automotive brand is aiming to retake market share from its competitors through the rebirth of its product line and dealerships; it now ranks sixth among luxury brands currently on sale in North America.