It’s not news that Cadillac‘s sales have been weak as of late, as exemplified by the CTS. For August 2014, sales fell 35 percent after tumbling 29 percent in July. With a world-class car in its portfolio, what’s bothering Cadillac? According to Uwe Ellinghaus, Cadillac’s chief marketing officer, Cadillac may have been too ambitious on price.
“There is a tremendous growth in the luxury segment of the world car market and we are currently not capitalizing on this growth to the same degree that we hoped for,” Ellinghaus has said. “The price is definitely an argument…”
But it’s not just price that is plaguing Cadillac. When the CTS was redesigned for 2014, it moved up slightly in size, becoming more of a head-to-head E-Class and 5-Series competitor. To some buyers, the CTS is a bit too ambitious, even though it competes toe-to-toe with the Germans. For other buyers − especially previous CTS owners − they are being faced with a large price premium because the CTS is now in a higher segment.
“While it may have been a terrific car, it may not have been perceived as having earned its stripes for that kind of pricing against the Germans,” Michelle Krebs, senior analyst with Autotrader.com, told Bloomberg.com. “Cadillac has just not earned its way to charge the kind of premium that the Germans can get.”
Added Ellinghaus, “We were maybe a little too ambitious − after the great success last year − for some form of continuation that so far we don’t see for the CTS. While the price increases have been absolutely justified, a returning CTS customer may now be staring at a sticker price that’s $7,500 more than a similarly equipped older model. [This] “amount of money is definitely something where people think twice.”
While sales are down, transaction prices for July are up 26 percent compared with the outgoing CTS a year earlier. One way to maintain transaction prices and help sales is to add options to “broaden [the CTS’s] appeal.” Ellinghaus has hinted that Cadillac may allow certain options to be ordered individually instead of grouped as a package. “These are things that we can do relatively quickly” while still making a “decent profit on the car” without lowering the price − a no-no in the luxury world.
Next year, Cadillac will be preparing four new models including a redesigned SRX and a flagship car.