If you haven’t heard, GM’s Cadillac prestige luxury brand is in the midst of a top-to-bottom overhaul that includes rebuilding the brand, expanding the product line, and transitioning the customer base into one willing to pay top dollar for what are starting to be recognized as some of the world’s best luxury vehicles. Those efforts are all well underway under the watchful leadership of Johan de Nysschen, and early indicators are showing that the strategy is working.
In November, Cadillac had the highest Average Transaction Prices (ATPs) among full-line automotive luxury brands, according to J.D. Power PIN Estimates. That amount was at roughly $55,000. ATP suggests lower discounts/incentives and higher prices compared to competitors, both of which serve an indicator of the value consumers place on a vehicle and often suggest greater price tolerance and vehicle desirability.
What could be considered even more impressive is the fact that Cadillac managed to increase Average Transaction Prices while also posting a 17 percent increase in global sales volume to 23,214 units, meaning that the grow it’s experiencing is entirely on the top side of the business (as a result of increases in sales volume and sales prices).
The GM Authority Take
All we can say is nice work, Team Cadillac. The transformation of sales volume, brand image, and product excellence won’t happen over night, but it will happen eventually, at which point the effort will be very much worth it to the bottom line of parent company GM.
Comments
I bet this news will not keep the people off Cadillacs back, just let the process happen!
Cadillac had no bargin offerings like Benz CLA our Audi 3.
Cadillac volume is weak but yes a few people will always pay full price.
I’m still unimpressed. Cadillac had been turning around since 2001.
A vehicle in the subcompact/entry compact space is coming:
http://gmauthority.com/blog/2015/01/cadillac-boss-de-nysschen-promises-a-rwd-sedan-slotted-below-ats-opinion-desk/
When you have been ignoring or straight up damaging a brand for decades, it will take time to undo the damage. In the case of Cadillac, the real turnaround has only just begun a year ago.
I can picture the subcompact being a 2-series/2 gran-coupe competitor, but the A3/CLA? Buick has the Verano, Cascada, and a possible hatch to compete with those. The XT5 ought to be the last FWD-based vehicle in Cadillac’s lineup.
The sub ATS model will be RWD, roughly the size of the current ATS and it will be a sedan; a wagon/hatch is possible. The ATS replacement will move upmarket in size and features, and the CTS will move slightly upmarket from there as well. Domino effect of up market moving. Look at the way Mercedes has done this with the CLA, C, E, and S, plus crossover variants of each.
I’m agreeing with you. What I’m saying is that Cadillac doesn’t risk cheapening their image because the true entry-level luxury cars are covered by Buick, while BMW, Benz, and Audi had to release their cheaper-feeling fwd offerings to pick up younger buyers. When you count Buick AND Cadillac, GM beat the German 3 to the punch by miles. Instead of having an entry-level subcompact and sometimes a crossover, GM has had an entire lineup for almost a decade. The CLA/A3/(upcoming 1 Series) and their CUV equivalents are actually Buick competitors.
What this means is that Cadillac has way more room to move even their subcompact upmarket.
The CLA and A3 are hardly ‘bargain offerings’. Subcompacts that start at $30K are expected to be damn good subcompacts. Expect a CT2 to start around such number.
it woen’t happen overnight……im guessing it will not happen till 2020
The lineup should be complete by 2020, but it will take time to get sales volume to grow 10x, which is what Cadillac really needs.
Even Cadillac executives are not expecting a 10 fold sales increase at any time. Cadillac is selling at approximately 15000 units per month. If they double that to 30000 units per month while keeping ATP’s strong and incentives down Cadillac and GM executives will throw their elbows out from patting themselves on the back so much.
At 30K units per month they would be right there with BMW, Mercedes and Lexus in NA sales volume.
Cadillac selling at volumes like Chevrolet is not feasible or desireable if you want any kind of prestige or exclusivity.
That is only because the Esclade makes up so much of their shares of sales. .If the ATS actually sold like a 3 Series it would be way less.
Correct that the Escalade makes up a good chunk of that ATP number but as significant as you think because the Escalade is basically been flat in sales in November while Cadillac as a whole is up 17% meaning that other vehicles are driving the higher ATP compared to November 2014.
Things are not always as they initially appear.
Once again, $55K sounds stellar until you take the 13,390 sold and break out the “inflated” Escalades and ELRs. If you take the “pool” of $736,450,000 and extract the 2,981 Escalades at a conservative $86K and the 67 ELRs at $65K, leaves a pool of $475,729,000 for the remaining 10,342 vehicles with an ATP for those of $46K. Not all that fantastic when you consider that you can’t get even get a loaded ATS for $53K-$61K! Can’t get much of a CTS, SRX or XTS for $46K.
Need to delve into the figures before starting the ticker tape parade!
The Escalade sells for what it sells. How is it “inflated”?
Inflated impact on $55K ATP.
The Escalade doesn’t count because of what? People pay for it with magic beans instead of cash? Is it a Cadillac?
Let me check? Yep.
Also “I’m still unimpressed” from a few post above? What would impress you?
People burning their 3 series in the streets and Mercedes announcing that it was leaving the US market 2 days after the CTS launched?
Hows the luxury car brand you run doing?
Everything counts, never said it doesn’t whole point of post is things are not as rosy as one figure! ATPs for everything but the Escalade are not great!
Martin, you only used NA sales figures in your calculation and the article is about the worldwide sales of 23,214 units. The Escalade and the ELR make up even less of a percentage of the total sales for Cadillac worldwide so that will drive up the average to the $55K.
Also, by your analogy then the majority of BMW and MB sales are 2 Series, CLA, A Class, X1, etc. and not 5 Series or E Class which are well over the $55K of Cadillac’s average.
All manufacturers have a mix skewed towards the lower priced and therefore higher volume models. All the report is saying is that Cadillac’s mix is a little higher average.
Don’t hate. Congratulate!!
Hi Jamdown
Saw the info in the article being worldwide and just assumed oversight and really was NA. With that being said, Redo of the figures for worldwide results in revised ATP excluding ELRs and Escalades of $49,334. To put that into perspective, CTS starts at $43,560, XTS at $43,295 and a typical ATS awd 2.0 LUXURY for about $45,900. Those figures are less current incentives. Improvement yes, but still a lot of room for improvement. Doesn’t look like a lot of “loaded” cars are moving out the doors to me.
You are correct, on BMW and MB, their transaction prices should be lower than Cadillacs since a very high percentage of their vehicles are either 3 series or below and MBs are C class.
Once again whole purpose of my original post is one number tells nothing. You need to delve deeper to get meaningful information.
Cadillac needs additional SUV/CUV quickly and I hope they have them on the market before the market shifts again.
I agree that there is some room for improvement but what you are missing is that based on the formula used to get ATP Cadillac still did better overall than its competitors last month. That is a good sign.
There is absolutely room for improvement in the volume area and SUV/CUV’s are very needed but that all takes time.
There was only so much capital available 2-3yrs ago when those commitments had to be made to make the models you are referring to available now.
Unfortunately the market may change somewhat before those vehicles get here but I do not think so. I think that the crossover craze is here for the long haul.
I was at my Cadillac dealership today for warranty work and a recall on my SRX . Their customer service is the best I have ever experienced in my lifetime . I drove in ( had an appt. ) the service bay and before i got out of my car the service technician was at my door and greeted me by my first name . Not Hi Mr. X , but my first name . The service bay is all white and the floor is so shiny clean , I was impressed . We talked for a few minutes and I was off to the new waiting room , it looked like the lobby of a 5 star hotel . They have done alot to the dealership since my last visit approx. 2 years ago . After my “free” donut and cup of joe I headed to the showroom to stretch my legs . My sales man greeted me , and every one else I came in contact with were very nice and a hello with a smile .
I headed for the Escalade to sit in it and it is an impressive SUV , then around the corner sat a 2016 CTS V-Sport . I’ve seen tons of pics but not one in person . It is one sic looking vehicle . Carbon fiber on the two vents on the hood scoop , and the front and rear air dams . Calipers were red with the Cadillac name on them and here is the kicker….. it was painted metallic white frost in a matte finish . its a $10,000.00 option ! ! The sticker was just shy of $90,000.00 . Definately not in my price range , which is a shame .
All I am trying to get across to some of the naysayers is Cadillac is turning things around . Its not going to happen overnight . But before you start bashing the division , walk into one of their dealerships and get a hands on with the current vehicles in the portfolio .
Customer service is something Cadillac wanted to change and atleast in my local , they have done so . And the product is light years ahead of what it was even 5 years ago . I have owned 2 Escalades a 2005 and 2010 and the 2015’s are SO much better .
And if you don’t like Cadillac then keep wasting your money on some of the Japanese junk that is out there . JMO
Cool, I’ve heard that they’ve upped their customer service game at Cadillac dealers, that sounds more like a full on V you sat in, not a V-Sport.
I don’t believe it has anything to being naysayers, but everything to do with reality. The automotive market is super competitive and you have to be the best and not second or third and constantly having someone making excuses that Cadillac is changing and improving. During the improvement period, you only continue to lose customers who go elsewhere with many to never return.
Is the new Escalade better than a 2005 and 2010–definitely! Is it as good as it should be–No! To shave costs the new Escalade is based on the pickup trucks and is still lacking an IRS relegating the third row useless for all but children. How do I know, I owned two relatively recent full-sized GM utes and the third seat is for kids only. One of those vehicles was previous series Escalade. Sad, since adults fit comfortably in Traverse/Acadia/Enclave.
When the new Escalade was rolled out, this should have been a primary change. Almost all road tests have pointed out this glaring deficiency.
I agree that to win new clients and maintain a loyal following you have to be the best in your given segment but now of this happens overnight. Any of the top brands in luxury segment took decades to be where they are now and unfortunately for Cadillac is was decades of neglect that got them to the point they are now. It will take long past 2020 to gain back some semblance of respectability in minds of many of their prospective clients.
Yes during that improvement or rebuilding period there will be lost customers to the competition but what is the alternative? Should they not try to improve? Should they cede the market?
Only earlier this year was the necessary financial commitment ($12B) authorized. Now it will take time to bring those products to market. It will take billions more after that is used up also.
Ragging on Escalade for not having IRS is really a moot point. The Escalade still leads the large luxury segment in sales and is near the very top in ATP even with the P/U truck roots and solid rear axle.
Yes Cadillac piggybacked on existing hardware but in doing so it saved engineering costs so that every $90K Escalade sold is like printing money for Cadillac.
Simply put, at the time, there was not a suitable full sized chassis available that would handle a vehicle that size in all of GM. They didn’t have the money to build one from scratch and with the volume I don’t think they would have.
You could argue that the Omega platform could have but that would alienate a large part of Escalade customers that need the towing capacity that you get from a P/U based platform.
This is the major point rather than aiming to be the best there is always an excuse. Enough build the best and the customers will come in mass instead of incentives at the beginning of the model year and subsidized lease rates rampant already!
I am not disagreeing with you on the ‘be the best’ for the rest of the Cadillac lineup but there is a legitimate argument that in the full sized luxury SUV segment, the Escalade is the best. And they didn’t need no stinkin IRS to get there.
Only earlier this month did Cadillac start even advertising for the Escalade and it has minimal incentives running currently.
You are expecting all this change yesterday and it just doesn’t work that way.
We could discuss infinitum but there is not total agreement that the Escalade is the best. CR doesn’t think so and rates the new Escalade rather poorly. And before ranting that CR doesn’t know what they are talking about (some of which I will agree) they raise some valid issues and CR does have an impact on buying decisions, probably more so than the automotive magazines that tend to be patronized by enthusiasts. Everyone needs to realize that the vast majority of automotive buyers are not enthusiasts and are looking for a good-looking reliable vehicle. With that being said, I have received this week I believe the 6 or 7, maybe more recall notice on my 2014 ATS Premium. I am on a first name basis with my dealership service crew just like GM PDT but for all the wrong reasons.
There is no more effective marketing tool than product. If you build a fantastic vehicle it will basically sell itself without the joggers and vehicles floating over Manhattan.
You are right we could discuss ad infinitum but my point was not about the Escalade having the best ride quality, CR rating or interior layout but rather that they are extremely desireable and command an incredible ATP for what amounts to a glorified Tahoe. I truly believe that is what is keeping Cadillac financially viable while they fill the holes in their lineup and await a higher brand awareness.
Instead of saying the Escalade was the best in the segment I should have said that it had the highest sales volume in the segment which considering its humble beginnings means that it is a significant profit generator for Cadillac.
Sorry to hear about your trouble with your ATS. All the wrong reasons to know the dealership staff.
How do you find their facility? I know one of JdN’s mandate is an improved more luxurious pampered dealer experience and facility.
The service staff at the Cadillac dealership has almost made the too many service visits on my 2014 ATS Premium tolerable. Have been dealing with them and their adjoining Chevy store since 1972–believe that says it all!
I really do want Cadillac to be successful but am not convinced the sense of urgency is there and no I’m not taking about tossing $12billion dollars at it.
My nearly $55k ATS is borderline junk. In addition to the 7 or so safety recalls, I’ve been back for a delaminating windshield 2 nd week owned vehicle since it was delivered with a delaminating windshield; dic replaced; right blind side alert mirror replaced–wouldn’t shut off even when car was; steering knuckles replaced; key fob replaced–stopped working. Lord knows I want to like this car but my patients have been tested. Gorgeous vehicle with spectacular handling. With that being said, Situation must change now with no excuses of wait for the next iteration. Most customers facing a situation similar to mine would have walked possibly to never return. FYI maintenance and care of vehicle is meticulous!
Totally agree with you that new Escalade is sales success but with a little more attention to detail–such as real need for IRS, they could blow the competition away!
That is patience testing for sure. That is an inordinate amount of problems and time sapping issues to have to deal with on any new product especially one meant to be premium and that expensive.
Quality and execution (along with the obviously filling out the product portfolio) are the main things missing at Cadillac.
I am not sure though what they can do about these issues other than some correction in the next generation. They can work on their part procurement process, supplier relationship and assembly process but none of that happens overnight as it requires also a change in internal corporate culture. I do believe that is happening but I tend to agree with you that it is not happening fast enough.
I suspect there will be a refresh bowing at the next NYIAS but that will not address issues like what you have mentioned.
I am in total agreement with what you say. The current product situation problems are the result of everything you detail.
I’m sure there is room for dealer improvement but all begins with the product and its quality. I could care the less about leather furniture in my dealer’s lounge or lattes at the coffee bar. I want the vehicle to work and be reliable so I can minimize the time I spend at the dealership.
You are correct my patience have worn thin and the current course of my vehicle may make me a patient at a mental hospital.
According to article on Escalade in today’s Automotive News following ATPs for Cadillac models in November: ATS $36,945; SRX $39,935; XTS $48,788; and CTS $52,075. For reference here are prices for cheapest model, RWD or FWD for each less current incentives: ATS $32,700; SRX $36,600; XTS $44,290, and CTS $45,050.
Sure looks like a lot of “cheapo” ATS and SRX rolled out the door. For that matter couldn’t have been to many “loaded” XTS and CTS since a cushion of $4,500-$7,000 doesn’t move you too far up the model chain or buy a lot of options.