Turning Cadillac into the American luxury powerhouse General Motors envisioned is proving to be rather difficult. As Reuters points out, Cadillac can’t find enough American buyers to trade their Mercedes or BMW in for a CTS or ATS, and its best-selling model, the Escalade, can’t be produced fast enough to meet consumer demand.
One Cadillac dealer in suburban Seattle is offering up to $12,000 off the sticker price of an ATS. Another dealer just outside of St. Louis is also offering steep discounts on the luxury sedans, including $17,500 off the sticker price of a CTS. Cadillac dealer Brad Brotherton said the brand made a commitment to relieve dealer inventories with incentives, something dealers had been requesting for a long time.
Reuters says the fire-sale at Cadillac dealers adds another hurdle to GM’s plan of challenging BMW and other luxury automakers. A luxury buyer might not mind a Cadillac, but the brand “has a relevance issue” and most shoppers simply don’t consider the brand when browsing for a new vehicle.
“The problem is, Cadillac is not BMW,” Larry Dominique, president of ALG in Santa Monica, California, told Reuters. “The ATS is the product that Cadillac could have used to build brand equity, but it was overpriced and overproduced.”
A company spokesperson said on Monday Cadillac had cleared 90 percent of the leftover 2014 ATS and CTS stock through subsidized leases, discounted financing and rebates. Dealers are offering $1,000 on the 2015 ATS and 2015 CTS, $4,000 on the 2014 ATS and $6,000 on the 2014 CTS. Some dealers are offring up to $7,000 off certain models.
On the other hand, Cadillac can’t produce enough Escalades. The model’s sales in January rose 149 percent year-over-year, and GM’s Arlington Assembly plant has been running three shifts and weekend overtime to try and match demand for the luxury SUV, along with GM’s other full-size products.
GM is probably delighted to see the new Escalade selling so well, but Cadillac CMO Uwe Ellinghaus says the model “does not set the direction” for the brand’s future. That consists of new small models, including a compact car and compact crossover, along with the CT6 full-size sedan, and eventually, a large flagship model.
“We understand we have a lot of work ahead of us with Cadillac,” GM CEO Mary Barra said.