Cadillac critics tend to focus on the fact that the brand isn’t growing as fast as its rivals — BMW, Audi, and Mercedes-Benz — in the luxury car sector. Interestingly, what most of those critics don’t mention is that the brand continuously has the highest Average Transaction Price (ATP) in the U.S. luxury car sector, meaning that customers are not only willing to, but actually are paying more for Cadillac vehicles. Putting away the sales comparisons for a minute, let’s explore how Cadillac contributes to GM’s bottom line.
In 2015, Cadillac sold 278,000 vehicles globally. In the United States, it had an Average Transaction Price of $52,000. Assuming the $52,000 ATP for all 278,000 Cadillacs sold results in $15 billion in revenue (278,000 x $52,000. In other words, Cadillac contributed roughly $15 billion to the $152.4 billion in revenue GM earned in 2015.
So, assuming an average profit of $4,000 per vehicle, Cadillac contributed a net profit of $1.1 billion to GM’s $9.7 billion in 2015.
So despite Cadillac sales not being anything to write home about — which will likely continue being the case until the lineup is fully built out — the prestige luxury brand still plays a vital role in GM’s growing financial prowess. And that should only improve over time as Cadillac continues filling huge gaps its product portfolio to include a full range of crossovers, an entry-level compact model, and other new vehicles to challenge the competition head-on. And by then, Cadillac should be well on its way to its objective of selling 500,000 vehicles by 2020.