The full-size truck market is getting more competitive, requires more innovation, new fancy features and, as a byproduct, has a shrinking profit margin. How does GM plan to help save the profit margin found in trucks like the 2015 Chevrolet Silverado or 2015 GMC Sierra? Simple, they will revitalize Cadillac.
For more than a decade, Cadillac has languished without getting much support. Now, with the changing truck landscape and growth in the luxury market, GM is investing a substantial sum to re-invigorate the brand and its profits to offset shrinking truck markets.
According to NASDAQ, Cadillac President Johan de Nysschen pointed to lower truck margins as a key reason for need to revitalize the brand during a business plan presentation. He said flat out, GM needs Cadillac’s profits to offset the new truck innovations tied to meeting rising fuel economy requirements.
In the next five, 10 and 15 years, trucks will undergo a radical shift from the gas guzzling V8 beasts made of heavy steel to more efficient and lighter varieties. In order to do this, GM will need to incorporate more expensive materials, develop new engines and 8-, 9- or 10-speed transmissions. This will cost them a substantial amount of money and Cadillac, because of its profit margins, will be leaned on for this.