Last month, we outlined the sales volume Cadillac is missing by not having a sedan below the ATS in its product lineup. Dominated in the U.S. by Audi’s A3 family and the CLA-Class from Mercedes-Benz, the subcompact class is continuing to grow at a break-neck pace, while showing no signs of slowing down. But Cadillac isn’t only missing immediate sales by not having a subcompact vehicle.Unfortunately, it’s also missing future vehicle sales as well.
Why Subcompact Luxury Cars Are Gaining Popularity
Sub-compact vehicles aren’t as spacious and don’t provide the same level of driving experience or features as their compact counterparts, but they present a great way to purchase a new vehicle with a prestigious luxury badge for a still-attainable price. So instead buying a high-end vehicle from a mainstream brand, subcompact luxury car buyers are opting for a lower-end vehicle from a luxury brand.
In practice, this looks somewhat like this: rather than buying a loaded Toyota Camry, Honda Accord, Volkswagen Passat, Ford Fusion, or Chevy Malibu, the customer instead buys an Audi A3 or a Mercedes-Benz CLA250. The luxury badge plays a key role in the purchase decision, as the buyer is capable of saying, “I love my new Benz, bro.”
That is usually followed by immediate gains in public image and status.
Subcompact Customers Are New To The Brand
Then there’s the fact that the overwhelming majority of subcompact luxury car buyers are new to the brand. So with time, these customers can graduate up the vehicle ladder, upgrading from the Audi A3 to an A4, A5, A6, Q5 or Q7, or from a Mercedes CLA250 to a C-Class, E-Class, or GLK-Class.
As such, a sale of an entry-level model today translates into a sale of a higher-end model tomorrow.
And therein lies the disadvantage for Cadillac: by not having a subcompact sedan (and possibly a coupe) in its line-up, it’s not only missing out on sales today, but it’s also missing out on attracting a new wave of luxury car buyers that translate to sales of other, more expensive Cadillacs in the future. In many ways, the longer Cadillac goes without a model in this segment, the longer it will take to recover lost sales, and customers in the medium- and long-term.
Yet, as we mentioned before, Cadillac is, in fact, working on a subcompact vehicle. It will be based on the highly-acclaimed RWD Alpha platform and will slot under the ATS. But the car really can not come soon enough. We just hope that the strategic mistake of delaying the vehicle today won’t bite Caddy well into the future.