Just recently, residual forecaster ALG assigned 36-month resale values (residual values) to the 2017 Cadillac XT5 of 54 percent and to the 2016 Cadillac CT6 of 46 percent.
In other words, ALG predicts that the XT5 will be worth 54 percent of its purchase price after 36 months (and a predetermined mileage amount), while the CT6 will be worth 46 percent of its original value. Though the rates are respectable, they trail those of competing vehicles, which could put Cadillac at a competitive disadvantage when it comes to leasing.
To make its lease rates more competitive, Cadillac may potentially need to pay into a lease program for both vehicles. Doing so decreases the cumulative amount of the lease, thereby decreasing the downpayment and/or the monthly payments for the buyer, but also diminishing the brand’s profitability of each model.
Reflecting on ALG’s values, Cadillac President Johan de Nysschen stated that the rates for both vehicles are good enough to allow Cadillac to offer competitive leases, while acknowledging disappointment.
“I believe that they should be better,” de Nysschen told Auto News.
Even so, the division’s chief said that he is confident that residuals will improve over time as Cadillac continues to exhibit discipline on incentives and along with a rigorous focus on remarketing of used cars, particularly Certified Pre-Owned (CPO) vehicles.
Comments
$27,000 for a CT6 after 36 months… sorry, don’t buy it.
A G8 GT still commands a $20,000 price tag in many parts of the country. There is no reason a CT6 – with a powertrain warranty – will be only worth that much, even with the base motor.
Johan should take a page from a certain Donald and call out ALG. They seem to be using XTS as a barometer for the CT6.
A brand new model with unknown demand… that’s mostly the reason for the lowered residual. Should change for 17-18 MY.
I don’t understand why people get bent out of shape when dealing with resale value, if you only keep a car for 2 years then sale it then that person should take a beating on the resale value.
Resale value has zero impact on the buyer if you keep the vehicle for 8 to 10 years or more.
the article talks about leasing. Based on the (IMO) very poor residual, the lease price for the car will be poor.
This will in turn, force Cadillac to discount the car or artificially inflate the residual to make a lease more attractive; the ladder is the likelier of possibilities.
So when it comes to a lease, yes it matters.
Also, many people lease a car and after a year, hate it for many different reasons. By having a poor residual, the trade in will also be reflected and make getting into a new car MUCH MORE EXPENSIVE
Where as a car with great residual (toyota 4runner), will have great trade in values because of the residual. So if a person wants to get out of a 3 year lease, 2 years into it; they can by trading it in at a minimal or net zero loss.
Well resale is part of image. At this point Cadillac is still rebuilding it’s image.
On the other hand the lower resale prices will permit some people to give the car a try and find it a good car and over time will attract more people buying. I know several ATS buyers who got good deals on lease turn in’s and are now fans of the car. This over time will create customer coming back and increased demand.
I wish people would grasp that repairing a company like Cadillac is not a 5 year and several new model plan. It takes time, investment and even better product. Even after we get the new cars in 2020 they will still need more time and nurturing for the public to see them in a better light.
It is like a restaurant. One good meal there is not going to win them a 5 star rating. It takes years of repeated good meals to earn the trust of the public and critics and build a proper image.
The alternative is to discount your way to the top and we know how well that does not work. There is no easy or quick way to the top. It takes time hard work, investment and patients.
It is like in the movie Guns of Navarone 2 where they try to blow a damn with a small bomb. It goes off but yet the damn fails to come down immediately. The bomb constructor just said patients. Let nature do her work.
His bomb weakened the damn and the weight of the water over a little time brought it down. This is how this works. You build a better car and then you have to let nature take it coarse with the public.
“Cadillac is re-inventing itself” is often-repeated as if this was a new concept. It’s not.
Cadillac has been re-inventing it self for over twelve years now. . . With JdN, this is A&S 2.0.
How many decades will it take to change it’s brand perception? (I personally like the 2.0 direction.)
CCC
Yes, the “reinvention” has been ongoing for over a decade. Unfortunately, it has been a half-assed one. Why?
1. Poor product planning:
– Severe lack of crossovers in a market where even the worst crossovers sell by the boatload
– Late entry into specific segments (ATS only arrived in 2012-2013… even though the segment it is in is the largest by volume globally
– Very late entry into premium full-size sedans (CT6)
2. Half-baked product content. For instance, the lack of auto-dimming passenger-side mirror on ALL Cadillac (and GM) models. Check out our ATS wish list series for more: http://gmauthority.com/blog/gm/cadillac/ats/
3. Poor marketing: there are still zero commercials as to why someone should buy or even consider a Cadillac over a German or Japanese luxury car.
4. Terribly-executed product launches: the ATS and third-gen CTS were riddled with huge incentives and a lack of “right” product mix (snowbelt states were getting RWD-only vehicles, low content, etc.).
5. Lack of an engaged, enthusiastic, or knowledgeable dealer network
Combine all of those together, and you get a half-assed “re-invention”. This appears to be changing with JdN and company, although:
– The CT6 and XT5 still don’t have an auto-dimming passenger-side mirror
– There is ZERO marketing or communication about Cadillac vs. competition
– The crossover onslaught is coming late (though better than never), and appears to be based around FWD chassis (not where Cadillac should be)
– Many features and details offered by BMW, Mercedes, Audi, Lexus are still missing in Cadillac vehicles, even the newest ones
Hopefully Cadillac’s recently-increased independence from GM will accelerate the re-invention… but it’s no small feat, either.
Alex all you state is true but you left out the root cause. It all goes back to the lack of money GM had before the chapter 11 and then the revolving door of managers and people at the top of Cadillac post bail out.
This is why I have been more optimistic with JDN in place and the moving of Cadillac away from GM.
As it has been Cadillac has not has a strong leader for a long time. Most were insiders put in place that were afraid to work against the old school leaders or make make a career ending mistake.
Today we have outspoken bold outsiders that are here to do a job and are not as intimidated as past insiders. The only strong help they have had was Mark Ruess and he was even challenged by the board and others. JDN is his pit bull that he can trust to fight for the needed things at Cadillac.
While Cadillac has gained ground it did not move as far or as fast as it needed and right now sits with much improved products that still needs work in detail areas.
While things are not perfect we are at least on the road to recovery where as Lincoln is still struggling to recover from the lack of attention from Ford being forced into FWD Ford platforms that will do ok but will never prove as profitable in the long run of beneficial to the company as the trickle down from Lincoln to Ford as Cadillac to Chevy has been.
Right now there is a real void going on at Cadillac because they are not dealing with models they fully want to support as they do not represent what they are fully working towards. JDN is here but stuck with someone elses product. It is difficult for Cadillac to promote these models hard for a couple years and then say forget that and now we have even better than what we told you was good.
Even the CT6 is like the XTS where it is here now but all the people in charge really had nothing to do with it nor really want the car as it is an awkward fit.
I have pondered that could the CT6 be a new CTS at some point and the CT8 become a flag ship and the ATS resized to take the place of the present CTS and ATS models? It would help the leg room and Trunk space in the ATS if they did. This would also open space up under the ATS for the smaller car but not as small as they would have had to do. Just a thought.
These projected residual values seem about right. It’s going to take time and consistent quality improvements for Cadillac to get nearer to values of the European cars…where quality has long been the benchmark.
Makes me want to wait 36 months and buy either one which I’m sure are very nice vehicles. I have an ATS Performance and my wife has the SRX Premium which we are very happy with and I’m sure the CT6 and XT5 are much improved over my Cadillacs. If Cadillac maintains the current rate of improvement they just may surpass the competition in resale value. I think they’ve equaled them in quality and performance.
I think all Caddys are all half-assed especially with the same Art and Science that’s been rehashed for over a decade now.
Nothing to do with design. Everything to do with product planning, business strategy and execution.
Almost every manufacturer and especially the luxury ones have a continual and evolving design language that can be traced back at least 10 years. Just look at BMW, MB, Audi, Acura and others.
Residuals are based on the quality of the vehicle , how many were produced , and the ” image of the product ” . The XT5 and CT6 haven’t even hit the road yet and people are ” trying ” to figure out what they will be worth after 2 – 3 years . You may be able to ” guess ” what there worth if you want to see what other cars are worth in that segment . It could be lower or higher than the average .
Cadillac needs to get away from leasing every car they produce . Studies have shown that most people that lease fall into two categories . One , is the person that couldn’t afford to buy one outright and two, is the person that wants the latest in technology wanting to drive a new car every couple of years .
Leasing to that first group doesn’t do much for the companies image . It’s the same as the folks that bought houses they couldn’t afford but got loan rates close to zero and when the recession hit in 08 they lost their house because they couldn’t make the payment and tons of houses went to foreclosure and dragged the rest of the industry and other peoples homes down in the dirt .
However buying a car that has come off of lease is the hottest segment right now . And in 2017 the market is suppose to be flooded with them . And why not, you get a car usually with updated techno and has low miles with a decent warranty . I’ve bought this way before and liked it so much I turned around and bought a brand new one.
People need to wait until these two new vehicles hit the showrooms and wait to see what happens .
Perhaps, if they were to change the Caddy logo again–that might help! eg
I hope you were joking?
The issues here are much more complex than Emblems, Marketing and Styling.
I hope you were being ironic.
If you don’t own, or haven’t owned a Cadillac, shut the f–k up. I am on number 11 and well satisfied with every one of them.
Cadillac shouldn’t take the same steps as the Germans by not keeping the same f-king design theme for 20 years.