Besides lacking a broad crossover lineup and trailing the competition in the brand image department, Cadillac is missing another huge opportunity: the rapidly-growing subcompact segment.
During April 2015, luxury automakers sold a cumulative 8,036 units of subcompact vehicles in the U.S. For the first four months of 2015, cumulative subcompact car sales totaled 29,551 units. Unfortunately, Cadillac’s share of that segment was zero.
That is because currently, Cadillac does not have a subcompact luxury vehicle to sell.
| BRAND | MODEL | APRIL 2015 SALES | JANUARY 2015 – APRIL 2015 SALES |
|---|---|---|---|
| AUDI | A3/S3 | 3,187 | 10,930 |
| MERCEDES-BENZ | CLA-CLASS | 2,670 | 10,896 |
| LEXUS | CT | 1,170 | 4,569 |
| BMW | 1/2 SERIES | 1,009 | 3,156 |
| TOTAL | ALL | 8,036 | 29,551 |
Those not intricately familiar with vehicle categorization should note that the subcompact segment is the one immediately below the compact segment that includes the Cadillac ATS, BMW 3 Series and Mercedes-Benz C-Class. Subcompact cars are typically smaller than compacts, are slightly less feature-rich (although this is changing), and are also less expensive. In the U.S., entries in the subcompact luxury category include the Audi A3/S3, Mercedes-Benz CLA-Class, Lexus CT, and BMW 1/2 Series.
In Europe, the subcompact space has been and continues to be very popular, but it has been nearly nonexistent in the U.S. Over the last 20 months, however, sales of subcompact luxury vehicles have seen a sharp increase, spurred mostly by the all-new Audi A3 and Mercedes-Benz CLA-Class.
The good news for Cadillac fans and enthusiasts is that a subcompact model to slot below the ATS is in the works. But such a model can’t come soon enough given the high sales volume of successful subcompact luxury vehicles like the A3/S3 and CLA-Class.
To demonstrate the sales volume of the subcompact segment, consider this:
- Cadillac sold 2,119 units of the ATS in April 2015 and 7,943 during the first four months of 2015. By comparison:
- Audi sold 3,178 units of the A3/S3 in April 2015 and 10,930 during the first four months of 2015, and
- Mercedes-Benz sold 2,670 units of the CLA-Class in April 2015 and 10,896 for the first four months of the year
| BRAND | MODEL | APRIL 2015 SALES | JANUARY 2015 – APRIL 2015 SALES |
|---|---|---|---|
| AUDI | A3/S3 | 3,187 | 10,930 |
| MERCEDES-BENZ | CLA-CLASS | 2,670 | 10,896 |
| CADILLAC | ATS | 2,119 | 7,943 |
Both of those are higher than ATS sales, which is quite concerning from a sales volume standpoint since since both Audi and Mercedes-Benz have “true” compact rivals (to the ATS) in the A4 and C-Class, respectively.
So, here’s to hoping that the subcompact, Alpha-platformed Caddy isn’t too far off.
Comments
Maybe Cadillac should reduce the content in the ATS and position it to battle the A3/S3 and CLA, and then build a slighter larger car (BTS maybe?) to compete with the A4, 3 Series and C class. The Current ATS isn’t much larger than the CLA or the A3
Technically, the ATS with the 2.5L already is the “decontended” model to compete with those. But its starting price is $4,000 higher than the starting price of the A3.
What will end up happening is Cadillac will make a sub-ATS car (CT2 or CT1). It will be about the same size as today’s ATS. Meanwhile, the next-gen ATS will grow in size to be in the size spectrum of the current A4, new C-Class, and new 3 Series. That also gives the next-gen CTS (CT4 or CT5) some room to grow in size as well. And then the CT6 and CT8 round out the full-size space.
Not a bad idea, but like the headline says, they need it yesterday, not in 2017.
I’m not sure this patient is capable of recovery, doctor.
Now is more important the crossovers than sedans
They addressed that in the first sentence of the article:
“Besides lacking a broad crossover lineup and trailing”…
It’s not that one is more important than the other. It’s about offering a complete lineup of luxury cars. One that a family can buy into, with the husband driving an ATS and the wife driving a crossover or the subcompact model. All in the family. And Cadillac can’t do this right now, hence the major competitive disadvantage.
Perhaps they could sell the ATS-L in the US to compete with the C-class/3-series and move the current ATS downmarket
That is a CTS for the most part.
I think Cadillac should offer the ATS in 2dr Hatchback with a functional back seat. I would love to get my hands on that A3 sportback coupe that is not available in the U.S.
Okay, some people have to get their heads in tune with the 21st century. The solution is not decontenting the ATS, or increasing the size of the ATS and making a car its size and calling that a subcompact. These days, there are an increasing number of people who want smaller cars. Luxurious and with great styling. But smaller so they are easier to park and get better fuel economy. And this is not because governments are forcing them to.
Cadillac does need this car moving forward because the subcompact luxury market will continue to grow.
Bronco is right gutting an ATS fixes little as most people want all the bells and whistles in a car just at a lower price not a gutted car at a lower price.
Also all these companies are going for this segment for two reasons added sales and added MPG.
The real issue is that Buick is in this area for size and price and this is a conflict for GM.
We have to remember GM has this third division that takes up some of what the other brands have to do with one or two divisions.
It is a different lay out for GM but Cadillac can take and do a smaller RWD car like the small BMW and maybe make some headway. Also they could use this platform for a sports car too.
With the stagnate economy many people have down sized and they are looking to keep with these higher level brands in cars that do not cost as much. That is where the pick up is in sales.
As for Cadillac sales you really need to stop reading the percentages of increases and decreases as they do not tell the real story. The fact is look at the hard sales numbers as this is a low volume brand now and a drop of 30% is many times only a couple hundred cars. A 30% drop at Chevy could mean 10,000 cars but at Cadillac it could be only 200 cars.
Scott, when you say they could also do a sports car, what badge or badges do you imagine it wearing?
Possibly a small roadster like the Z4 or SLK, I imagine.
Like stated here I think they could do Z4 at a price where they could do enough volume to make it profitable.
I know many want to do a world killing Mid engine Evok like car and later on once they get their house in order that could be looked at.
But right now it is about getting the rest of the line up right and a small roadster would suit them well and match up to the other brands. Also the bits could be leveraged out over a small Sedan, Coupe and CUV to make it profitable.
All the Major Luxury brands will be moving smaller than they ever have and this will be a key market.
The question is do you go RWD or FWD the market has been split so far and both have done well. I think with the RWD car GM would be better off as it would help keep Buick and Cadillac in two separate groups.
Also consider this could also lead to the smaller RWD Chevy coupe if there was a platform already leveraged out over several models. It would be a much different car than the Cadillac like the Camaro is to the ATS.
In this era you need to build smart and not just with your heart only. Too many here look at these product decisions but only consider the emotional side. While it needs considered you have to still factor in the money making side. Large volumes are not needed as much in this segment but you still need to leverage the platform over several lower volume models.
The platform can be “leveraged” across Cadillac models, rather than other GM brands. If it’s on Alpha, it will be shared with the ATS and CTS sedans; add in coupe and crossover variants of each, and there is more than enough “leveraging” (the better word is cost diffusion).
About Buick being in this market: what GM needs to learn to do is to allow its brands to compete with each other. It has no problem having Silverado and Sierra, Equinox and Terrain, or the Lambdas being in the same price and size segments and it has been very successful here since it is up to the customer to decide what brand, styling, etc. they want to associate with. The same shoukd be for a subcompact Cadillac and the Verano. This will be more than ok if the Caddy is RWD/Alpha, and the Verano remains FWD/D2XX.
About percentage decreases: a decrease in sales is a decrease, and is not a good thing not matter how you spin it. It means that 1) people are buying less of a product category (market situation) or 2) people are buying your product less and the competition’s product more (brand/product situation). Cadillac had the second problem on its hands. The competition is growing but Cadillac is not. Those 200 units that you refer to, Scott, might be what breaks a program even. The goal should be to not see model decreases in sales, period.
Also, I am right there with you on an alpha-based roadster. But what’s more important is that Cadillac leverage the Alpha and Omega platforms for a shit-ton of crossovers.
First off GM is working to decrease the competition of divisions as much as possible since this got them into trouble before. The last thing you do is compete with yourself.
The few we have now will grow more apart as time goes on. Look for Terrain and Nox to become more different in style and price. The GMC and Chevy trucks are working to this now and will continue to grow apart. The key as long as it is making money like they are GMC is a cash cow and is not harming Chevy as they remain in high profits.
As for Cadillac they operate much different than they used too. They are a low volume brand and make their money on high mark ups. Even with the way things are Cadillac accounts for nearly 50% of all car profits at GM where they make thousands on each sale and not just hundreds. They do not work the same volume sales deal like Chevy does with small mark ups.
GM is investing long term in Cadillac as they can as this car in this class is a cash cow like the trucks are.
To build and design a Cadillac is not much more than a Chevy or Buick. But they also sell for 2-3 times the price. The content is not all that much more either. This is why there is a force inside Ford trying to save Lincoln as there is a lot of money to be made there even in low volumes.
The fact is you can make a lot of money in this class an never lead the sales of the class.
All this is going on as the CUV models are cleaning up profits everywhere else and Cadillac will be enriched by these coming models over the next 3 years.
I’m sure Cadillac won’t price it below the others because it’s wort it. LOL
And again GM ( Cadillac ) is missing out on a hot segment of the market . Their goingto have to catch up to the rest of the industry . When the sub-ATS does come out along with the XT5 and whatever their flagship model is going to be are these products going to be behind at the start . They cant aim for what is in the market now but what it will look like in the future when the other automakers are in the process of updating the current models . Cadillac has ALOT of work to do , and it is going to take the 10 to 15 years that some analyists are now claiming . There has to be a complete portfolio to start and grow from there . Talk of building a super car that would sell for 200g’s is a bit foolish when the company is so far behind . Its just lost sales for Cadillac and money . You have to be building what the customer wants in order to generate the cash flow so you can continue to grow and prosper .
Hence, what Cadillac will be doing (building out a portfolio). But you’re right in that it does take time.
As for the CT6 (full-size flagship)… the car will actually be ahead of the curve when it comes out. It’s the one vehicle that was benchmarked correctly against the future competition, rather than the current competition.