Dealers Claim Cadillac’s U.S. Retail Plan Aims to Trim Their Ranks

Dealer groups are complaining to General Motors Co. that Cadillac’s new U.S. retail scheme, Project Pinnacle, is actually a disguised effort to illegally prune their ranks.

Dealers claim the program being rolled out by Cadillac President Johan de Nysschen is designed to force the brand’s smaller retailers out of business, Automotive News reports. In a protest letter to GM, they say the supposedly voluntary program would reduce wholesale car prices about 8% for top-tier participants compared with dealers who opt out of the program.

The plan would assign Cadillac dealers to one of five groups, depending upon their sales volume. The smallest dealers—mainly those in small towns—would present products to shoppers through virtual reality headsets rather than physical inventory.

In the letter, dealer groups in seven states say the program isn’t really optional because “every Cadillac dealer compete with every other Cadillac dealer.” They describe Project Pinnacle as the “most serious attack” on their survival ever.

GM reduced its U.S. dealership count after it went bankrupt in 2009. But it still has more than 900 Cadillac retailers, considerably more than such better-selling rivals as BMW and Lexus. Strong state-level franchise laws make it difficult for manufacturers to shrink their independently owned retail networks.