Cadillac president Johan de Nysschen knows very well it could take years before the brand begins to truly turnaround and post sales numbers on par with other luxury automakers. Most people don’t like change, but that’s exactly what his job is all about, even if it’s not going to result in strong short-term results.
A recent USA Today article discussing Cadillac’s sales, which were down 5.9 percent in the first 11 months of 2014, pinned the brand’s poor market performance on the higher prices of its cars. The vehicles are better than ever, but the prices also reflect this, which has driven former Cadillac customers away.
“You’re putting the brand at a different price point than the traditional Cadillac customers are used to,” de Nysschen told USA Today. The former Audi exec admits their target buyers, the one’s who currently buy BMWs and Audis, “can afford it (the price), but don’t have it on their priority lists.”
Cadillac’s marketing chief, Uwe Ellinghaus, calls this a “relevancy problem.” Cadillac has a good name and reputation, however most consumers with the money to buy a luxury car simply don’t consider the brand when shopping around. So they’ve driven away former customers with raised prices, and those who can afford the cars don’t know about them.
“They increased the price and had high (sales) volume expectations. You can’t do that unless you’re a brand with the right reputation,” explained Michelle Krebs, an AutoTrader.com senior industry analyst.
But de Nysschen has more than a few tricks up his sleeve which he believes will result in a boost for Cadillac. Between the relocation of about 100 employees to the trendy SoHo neighbourhood in Manhattan, the introduction of the CT6 and several other crucial products and reporting its earnings separately, he just might earn it the spot at the cool kids table it needs in order to move more metal.
Comments
I believe that Cadillac’s prices are ridiculous and that this new guy raising prices is to blame. I bet if Cadillac lowered prices they could be selling more cars and making lots of money.
Lower price, you say? Bullshit, I say.
Luxury is not affordable by nature and it doesn’t need to be. This isn’t Chevy or Buick. This is Cadillac. Current prices are competitive and actually lower when you start adding comparable options as on the Caddies to the German rivals. If anything, Cadillac needs to get better on leasing rates and residual rates for leasing.
The bigger problem is that Cadillac as a brand doesn’t yet have the same image as BMW, Benz or Audi or Lexus. The way to earn that image isn’t by lowering prices. It’s by years and years of product substance, great marketing, and uncompromising customer experience. Do all that, and the current prices are fine. But until the brand’s image changes in the mind of the general public, sales will be stifled. This will be the case no matter how great the product is. But good product, marketing, and customer experience is the way to get there.
All I’m saying is I don’t like the prices and I remember them trying to say we want to attract younger customers. I know some Cadillac’s are priced fairly but they cant get younger people to buy unless they some how manage to get rich.
How come you did not mention Infinity in your comment? Enough said!
All I know infinity is a ridiculous priced Nissan
“I bet if Cadillac lowered prices they could be selling more cars and making lots of money.”
You’d think so. But if the ATP is kept high, GM makes more money per unit sold. It’s the old “Quantity versus Quality” mantra. The hardest part for GM is getting the public to accept Cadillac and it’s higher ATP for what Cadillac offers. The product is better than Cadillac has ever built, but the public will take decades to give a damn and welcome Cadillac back into their lives.
When that’s done, they can ramp up volume PROVIDED GM can sell every Cadillac they build; there shouldn’t be an end of year incentive sales to push last year model off the lots.
That, and a low sticker price doesn’t look good on a Cadillac and wouldn’t attract the kinds of buyers that usually buy luxury products. If it’s suppose to be the best GM builds, why price it like it was Chevrolet?
An other thing I would like to mention is that look at the ElR and how it did. They priced it to high and no one really wanted to buy it because of price, they overstocked and lost money, Now some vehicles are priced accordingly in Cadillac’s line up but not all. I don’t mean lower the prices to where you cant make a profit just make them a little bit more affordable, like a decrease just of a few thousand dollars.
When your cars cost more than they used to, of course sales are going to dip, it’s common sense! What Cadillac needs right now is a strong ad agency to educate the target consumer about the brand and its excellent products, minor adjustments with every model year, diesels (lots of them), crossovers (a lot of them), shed all those dealers who carry the name but don’t sell that many cars or offer less than stellar customer service so that the ones actually working get the funds they need to attract more customers, and last but not least, continue to improve with future generations. For example: why stop at being 100 lbs lighter than the closest competitor, why not 120lbs lighter? Why stop at being 0.1 seconds faster, why not 0.2? The 2.0T is going to be purchased by the majority of ATS buyers, continue to refine it, the V6 should be replaced by something with lower displacement, more hp, and more torque. Manual transmission: can someone explain to me why Cadillac offers the ATS 2.0T as the only vehicle equipped with a manual? I understand they don’t sell in high volume as the automatics, but BMW offers plenty of manuals, why can’t Cadillac? The 8-speed meets to be in every single car now, not the clunky 6-speed.
First off you need to look at the numbers not the percentages. With the ATS it was it was hundreds different not thousands.
It is misleading like Chrysler sales as while they are up 20% the raw numbers are still pretty much smaller than most other companies. So when they pick up 500-1000 sales it can be a major percentage.
Also Cadillac is a work in progress. It is like building a house and right now with the recent changes we are to the point they are just building the foundation. They are now putting more into their cars than in the past and that cost money.
Also they are moving from the low end luxury buyer to the ones with real money. This means they are giving up the easy cheap buyer sale but have yet to earn the trust of the real player in the real luxury market.
Why is GM doing this? Well first off we have Buick and they need room in the middle to grow. But the real reason is if they can fix Cadillac they can be more profitable than even the Pick Up trucks. The luxury market is one of the most profitable segments in the industry. You do not have to sell as many cars but you can make so much more per unit sold. This will be important as it gets harder and harder to sell large trucks.
If you look to Ford many wanted to Axe Lincoln but what saved them. The folks who pointed out that they make money and can make more money if they fix them. The issue at Ford is unlike GM they have not fully gone all in to fix them and that is what it will take but until those in Ford win the argument for Lincoln they will continue to struggle.
While many are getting mad they can no longer be a Cadillac man that proves to be one of the points of todays segement that Cadillac has lost. Years ago not just anyone could own a Cadillac. You had to have the means to buy and not be a pretender. But Cadillac became Walmart Luxury and that is an image killer. Generally if you own a Benz or BMW in this country you have the means or a very large lease payment but the fact is not everyone can afford a new one and that sets these folks apart.
Going back to a cheap Cadillac will only damage the efforts to establish a new image and it will also hurt the content of the cars as you will not get the cut and sewn interiors. You would not get a TT V6 etc. You would have basically a XTS and that is not what they need if they want to be taken seriously
Scott, i have discussed this with you before but in your opinion how much of all these changes are Barra? What do you think Chairman Tim Solso and the Board has to do with this? And do you think we will see Cadillac advertised as Cadillac Motor Company without any mention of GM in a few years?
Another point to mention, when Cadillac does well, so does the rest of GM. For example, Cadillac is getting the right to build its own engine family built to its standards and able to better compete with the Germans. What does that have to do with GM? Hand-me-down innovation is how it all connects. Cadillac will get the money that Chevrolet/Buick/GMC would never receive funding to tech they can’t introduce in their own vehicles. Then, after a year or two, they’ll be passed down to the rest of GM’s divisions, similar to how VW does business now that Porsche is the biggest money maker under their umbrella.
I am glad that Cadillac is taking their brand seriously and pricing their cars accordingly. The way their cars are price is an indicator of who can afford a Cadillac and who can not. If anyone have a problem with Cadillacs current pricing, it is a good indication that you can’t afford them.
If you want a new Cadillac, go back to school to learn a new trade, open up a business or whatever that will make you wealthy.
This is tricky.
I have a Cadillac CTS STP. My wife drives a BMW 3 Series M-Sport.
I love my cadillac. In fact, I like it more than the BMW. However, we are in the market for a replacement, and I don’t think I even have plans to even test drive a cadillac. When I bought the CTS, it was bigger than the 3 series, but smaller than the 5 series- a perfect compromise. It was also priced much less than the 5 series, and looked great.
The problem though, is its NOT a BMW. So when its priced the same as a BMW, why would I buy a Cadillac if I can buy a BMW? Dismall comparative resale, and frankly when I pull into a sales meeting, are they more impressed by a Cadillac or a BMW? Cadillac is a “luxury” brand, but so is Acura and Lincoln, and I don’t put Acura or Lincoln on par with BMW either.
And frankly I’m not a big BMW fan either, but for the same price, I can get an imported german luxury, or a high end GM car? thats kind of the catch 22 in all of this. I bought the CTS because it was a heck of a value proposition. However, when it comes down to it, would I pay more for the BMW name than cadillac? without a doubt. Cadillac is trying to go head to head with BMW in all ways, Size, performance, and price. So even if the performance wins by a hair, the size is the same, and the price is the same, I’m going to go with the preferred brand, BMW.
This does make me sad because I really love my CTS. So much so that I’m probably going to hold onto it for another year or two. I love it, but it doesn’t carry the same prestige as the BMW nameplate, especially now that they nolonger have any niches, they are just an alternative- the offbrand alternative.
Why buy a Cadillac over a BMW you ask? Let’s look at what’s in print…
4yr / 50k mi Bumper to Bumper, 4yr / 50k mi Premier Care Maintenance Plan, with dealerships that offer the service; Concierge.
When you bring in a Cadillac for service, you get a Cadillac loaner. The loaner will be at ’14 or ’15.
The drive… I’ve driven BMW, Infinity, Lexus, and Mercedes…neither match the magnetic ride control. Take a test drive and be the judge.
Last but not least, how long to Cadillac owners hold onto their vehicle for over 5 yrs vs. the others?
I’m really interested in the ELR. So much so that I purchased the entire, four volume set of service manuals. My interest is not as a daily driver, but building a racing platform. To appreciate what these guy’s (engineers, designers…) have done, you need to look at these manuals. Having degrees in mechanical, electrical, and computer science, I understand the engineers’ excitement, appeal, and ease of adding more bells and whistles – it’s fun and very cool. But after reading some of the diagnostic codes and looking at what is being checked and reported, it looks like the engineers were like the “kid in a candy store”.
While I have not looked at the “lower-end” MB, BMW…, attracting younger clients to performance sedans may be as simple making the cars less intelligent, letting (or forcing) the driver become more than just a passenger being shuttled around.
Cadillac has an image issue that will take a while to dispel – my grandmother always owned Cadillac land-yachts. They have the talent to design and build cars for the next generation. They may need to step on some Corvette toes. How about some Drifting? Or (hint, hint) an ELR competing in endurance racing? There’s a guy in Florida wanting to build a Pikes Peak ELR who is now looking at an endurance race at Road Atlanta, the 10-hour Petit Le Mans. Just an idea.
Cadillac sucks I bet if that gave Buick every thing cadillac has Buick would kill in sales its only thing keeping gm from going down right know. Buick has a better name then Cadillac right now it sales better in the two biggest markets gm has
Too bad Buicks ATP is far less than Cadillacs. That, and what does Buick have to offer as a halo that the V-series offers?
The brand went bankrupt less than 5 years ago and therefore isn’t a symbol of success or it is very tarnished. The solution is to build cars which are better than the competition at a 25% discount for up to 10 years. Build up the brand, fix the horrible dealership experience and then profits will come along with increased market share. That’s how the Japanese do it.
The current severely flawed strategy will only lead to a progressive state of panic in the short-term and then to an inevitable fire sale with further deterioration of the brand image.
And damn it, put a manual in the CTS-V!
There was a manual in the V-series CTS in 2011. I have yet to see a manual in the V-sport, but oh wouldn’t that be interesting. And with the ATS V-Sport on the way…. who knows.
I’m really glad I bought my 2014 CTS Coupe in the fall of 2013, mainly for the price difference. To get the same package in the new coupe would cost a LOT more. In fact, I wouldn’t pay that much. There were several cars in competition when I made my selection and the higher price of the Cadillac would now put that model out of competition.
That type of publicity about Cadillacs being over priced doesn,t do any good for the brand . Somehow Cadillac needs to tell the public what you are getting for the price . Just because you have a price point like they do does not mean quality . And in addition they are loosing their old clientelle . So they will go elsewhere . Lexus has been trying for years to compete in the luxury market actually building knock off look alikes back in the 1990’s . And their cars were actually better in quality than Mercedes . But now they have decided to stop trying and settle for the top # 4 spot in sales . Its just an example on how tough it will be for Cadillac . Sell fewer cars at a high price ( which makes them exclusive !? ) , or move more cars at a reasonable price . It isn’t a good sign when you have new products to sell and your sales plummet and you have to lay people off because of high inventory .
Cadilac’s old clientele (re: traditional buyers) were even more stingy and whiny about price than Gen Y’s are. The trads can be ignored, especially when their demands of luxury car are so limited, they can be summed up in 5 words: “big boulevard cruiser, no tech”.
That formulaic approach doesn’t work for Gen Y’s and Z’s, and most definitely doesn’t work with luxury consumers outside of 60+ North American demographic.
Here’s the deal. Only one of two factors will give Cadillac a reason to keep on building cars; Product or Price.
Price will give them an advantage in volume and the unit sales will look good at the end of the model year, but a lower price will destroy the luxury consumers perception of Cadillac as a worthy product to equal that of Mercedes or Lexus. Residuals will fall flat, and any excess inventory GM has will need incentives to move off the lot. Luxury consumers will take their money elsewhere, and Cadillac will have to settle for people who think they are luxury consumer, but haven’t the means to live like a luxury consumer.
Product will give them an advantage in appearance and public perception, but it needs to be upheld and managed consistently and carefully for many years without fail or compromise. Decades will past and there can’t be any screw-ups or change of heart after the course is set. Sales numbers will be low as the long slow climb to build the public’s trust will be hard fought, and the day that Cadillac can offer and sell a $250K car are far, far away. Whoever replaces de Nysschen has to see luxury as being a product driven industry, not a sales race, and this attitude and approach to product has to endure.
For me, product dictates what is a luxury and what is a common good. I apply the same measure for my whiskys as I would for a luxury car. I ignore the price as I know that what’s on offer is better than those that are ‘value driven’. Most importantly, you yourself AS a luxury consumer should have the keen and discriminating awareness of what makes one product better than another.
Taste the difference, feel the difference, touch the difference. The finesse and care you exercise today in sifting though the common good in comparison to the luxury good is yours to savour tomorrow.