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New Compact Luxury Entrants To Blame For Slumping ATS Sales?

When Cadillac first rolled out its compact luxury competitor in 2012, the ATS, it intended to bring the fight to established rivals such as the BMW 3-series, Mercedes-Benz C-Class and Audi A4. Sales of the ATS in 2013 were confidence inspiring, but Automotive News says the numbers have since tapered off due to new entries that are even smaller than the ATS, such as the Mercedes CLA and Audi A3.

Through May of this year, ATS sales have slumped 20 percent. Prior to his departure earlier this month, Cadillac’s U.S. sales chief, Bill Peffer, admitted the segment has since gotten a little more cutthroat, with consumers becoming tempted by the $30,825 entry price of the front-wheel drive CLA and A3, both of which carry a $29,900 entry price.

“It’s a very crowded and competitive segment. There are new entries in there all the time,” Peffer admitted to AN at the New York Auto Show in April.

Cadillac will begin selling the coupe variant of the ATS shortly, which it is hoping will increase interest in the model range. The brand also put forth the ‘Crimson’ special edition earlier this year, which features several unique sporty features and a limited-edition color scheme.

Apart from sales, Cadillac is having a small crisis within its upper management. Peffer left abruptly after less than 10 months on the job, becoming the third head of the brand’s sales operations to leave GM in two years. Additionally, it has been said that Caddy’s global chief, Bob Ferguson, has been spending most of his time lobbying in Washington following General Motors’ ignition switch recall.

Sam loves to write and has a passion for auto racing, karting and performance driving of all types.

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Comments

  1. I find it interesting that the CLA proves that rear-wheel drive is not the be all and end all of luxury cars. It’s really about the look, the status and the price. More people would probably benefit from the increased interior space that front-wheel drive offers than those actually use the performance benefits of rear-wheel drive.

    Anyway, if you look at individual sales, it would seem that the ATS actually stole some sales from the CTS last year, and now that the CTS has been redesigned it may be stealing some back.

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    1. The CLA attracts a very different luxury buyer. The kind of person who would normally buy something like a modern Buick or a Lexus ES, but if they can get the same gear with a prestigious Mercedes badge on it? Why wouldn’t they upgrade?

      Cadillac does not need to cheapen itself again to attract the same kind of buyers it was attracting in the 80s and 90s. That’s what got it in trouble in the first place.

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    2. I’d add that RWD isn’t the end all be all for luxury cars in the segment in which A3 and CLA compete in, simple because it’s a totally different kind of customer. Move up a class, and priorities start to shift big time, with a bigger emphasis on a superior sporty driving experience.

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  2. It certainly is a competitive and crowded segment. And while the ATS has many things going for it, GM needs to pick up its game if its going to compete. It will require not only very good/great products (which GM is continuing to get better at, but Im worried about styling issues) with very good/great quality (getting there, but still more work to do) but also very smart marketing/segmentation (a real struggle for GM right now).

    As shown by the ELR pricing debacle, and the sooner-than-expected flatlining in the ATS, GM really needs to figure out its marketing. To combat these “$29,995 luxury” models, they have a particular challenge/opportunity: they don’t need to do it just with Cadillac. If Buick is going to truly be a meaningful “near luxury” brand, these is something it should take on. It can focus on FWD cars & CUVs that staying in the $25-$35 range. They have shown success in this area with the Encore and to a lesser extent the Regal.

    It will be a tough job, but that’s why Barra & co get paid the big bucks. While dealers may complain, a sale for GM is a sale for GM — whether it is Buick or Cadillac.

    I think Cadillac should continue to focus on the high-end (e.g. LTS) for cars while adding a wider range of CUVs — which I think they are doing. But they need to be doing it more quickly. I mean the ATS was released two years ago and they are just now releasing a coupe (not to mention no V). There needs to be something every year.

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  3. Two extra cylinders can correct issues like this, quickly. No puns intended.

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  4. GM needs to put the 8-speed in all of their RWD Cadillac cars, especially the ATS range in order to increase performance and mpg ratings. This will definitely lure more buyers.

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  5. I highly doubt that the Audi A3, BMW 2 Series and CLA are steeling sells from the ATS. IMO, the damage is done within Cadillac. I found that odd since sales of the A4, 3/4 series had been growing in volume while the C class had been steady or reducing with their sub-entry level stablemates. So sound like to me people are waiting for the coupe to come out, marketing is weak and dealerships are not pushing the ATS out the door aggressively enough due to weak sales.

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  6. They need more mainstream marketing. I haven’t seen an ATS commercial in a while. They started out great with their journey around the world campaign out of the gate, but now marketing is nonexistent.

    Get the word out there about the ATS. More importantly, market at and during demographic appropriate events/timeslots. You’re not going to sell an ATS during a NASCAR race, but you might during golf, tennis, hockey. You’re probably not going to sell the ATS to the average Duck Dynasty demographic, you’ll have a better chance with the Mythbusters demographic.

    Basically, I just think not that many people know about the ATS. If people don’t know about your product, how can you sell it. We want kids to be putting up pictures of the CTS-V, ATS-V (whenever that comes), CTS Race Car, etc, not the BMW M or Mercedes AMG cars.

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    1. This is true, but Cadillac is too busy trying to push ELRs, under the mistaken impression that the ELR gives them prestige (it doesn’t), and that that prestige will increase sales overall (it wouldn’t).

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  7. “tempted by the $30,825 entry price of the front-wheel drive CLA and A3, both of which carry a $29,900 entry price.”

    Translation, please?

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  8. This is quite surprising, seeing as to how the ATS is actually a great vehicle. One thing that strikes me is seeing as to how the last generation CTS sat in that ‘tweener” position in the compact luxury sedan segment, it was regarded as quite a bit of car for the money. Definitely a great value. But now Cadillac has a legitimate compact sedan, but it’s not garnering the same sales and appeal as the last CTS. Could it be that customers of the last CTS would rather hold on to the “tweener” vehicle they see as a better value? Or is it simply the overwhelming, tempting new luxury compact entrants in the segment?

    Either way, things need to change for Cadillac and the ATS. Some nice features that could possibly help spruce up sales would be an 8-speed or perhaps the availability of a dual-clutch transmission, more engine variety and more interior volume.

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  9. I really think many are reading too much into this. While things like a 8 speed would not hurt it and the other ideas are not going to change what is going on.

    My hunch is that the car is lagging because they are offering one model. You have just a 4 door sedan and a couple engines. There is no V sport, No coupe option, No V series option etc.

    Also I believe the CTS has taken the wind out of the ATS sales. People in this class often would pony up the extra money for the larger CTS. Lets face it the two cars look alike and act alike but the CTS is just more of everything and if you can afford it what would you buy. Just look at the sales of the CTS and it tells the story.

    GM just needs to get moving with the ATS and get the coupe out and convertible.

    A V8 is not going to simulate sales that much and the V series will help but it will still be a small portion of the sales.

    I really think a well priced V sport version with a Turbo 4 pushing 350 HP would be a good direction to go for a V sport and leave the 400 HP plus engine to the TT V6.

    GM just needs to get some excitement into the car and keep building on it with new items and excitement.

    I expect a wagon here by the time they are ready to go back to Europe but not before then. They will need it in Europe and it will help support a low volume sales of the car here.

    Also it is going to take time to finish building the Cadillac image. One and two models will not do it as it takes time and more models and excitement to do this. They will get there but it will take time.

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  10. I still stand by the notion that the dealers don’t know what they’re doing with this car.

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    1. “Oh man, GM really screwed the pooch with this ATS! Nobody we have on our past clientele list is going to buy a 4 cylinder compact Cadillac.”

      That’s because everyone on your past clientele records are 65 and older, and you’ve only ever known how to sell large N* powered cars to people in their 60’s. If GM could shadow a BMW or Audi dealer and actually learn how to sell such a car, then maybe GM’s dealers wouldn’t be labour under the impression that the ‘trad luxury’ buyer doesn’t exist anymore and that the dealers are chasing a buyer who doesn’t exist based on decades old sales practices that once pushed loads of Devilles out the door.

      I can easily see a dealer calmly pointing a prospect at a new CTS because they know the markup is higher. When the prospect says the new CTS is too rich for their blood, older and inferior white 2nd gen CTS on the back lot suddenly becomes “just the Cadillac you need”.

      Tesla is onto something by strongly promoting the store model instead of the dealership model. It’s not like the store model is alien to GM (re: Saturn). If GM ran a Cadillac store, there would be no room for insolence and misdirected sales pitches aimed at pushing buyers into cars they don’t want replete with needless and non-value added markups. All of the ATS’s marketing and sales would be coordinated globally, and no store representative would treat the buyer like a mindless willing tool that can be pushed towards a product they didn’t want.

      I also blame dealers for perpetuating the myth of luxury as a value proposition. Something that I fear is a legacy practice of their upbringing having sold old FWD G-bodies on price and not on features or content.

      “This Deville is JUST AS GOOD as the S-class, and it’s $20K cheaper to boot! Will throw in paint and fabric, 3 years of oil changes, tickets to a regular season major sports event, and you’ve got yourself a swell ride and a deal that can’t be beat by a Mercedes!”

      ‘Just as good’ is not the same are ‘Best’, something that Cadillac is suppose to be, and the distinction between them is something that I don’t think a single GM dealer is aware of.

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    2. I respectfully disagree with this opinion. As a 38 year GM dealership employee, and a current Cadillac salesperson who has sold many ATS and CTS models, it’s my opinion based on interaction with my customers, that the car is great ,but too small, for traditional Cadillac buyers, who are moving into XTS, CTS or SRX instead, and secondly, the base decontented ATS is lackluster compared to Audi and the MB. We can only sell what they send us, and what we need is a RWD car 2.0 Turbo (the 2.5 is terrible) with CUE and fold down rear seats at a $29,900 price point, and maybe a better “leatherette” seat surface. The base radio looks 20 years old. The rear seat fold will at least add utility to the smallish back seat (and footwells).
      I agree with another poster or two that the marketing is now non-existent, after opening strong with the Cadillac vs the World series of commercials. The ELR commercial was a terrible misuse of funds for a low volume car, Furthermore, there are strict rules about advertising and wording of discounted Cadillac prices to maintain image and we can only do so much to move the needle by advertising. The car is exceptional and exciting to drive, but we need a better content at a lower price point to bring in younger buyers moving up that can replace the older generations that are diminishing. j
      Just one man’s opinion.

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  11. CTS had taken back customers. Unfortunately, Caddy isn’t growing as quickly as needed meaning ATS and CTS are eating one another alive. The cars looking do similar doesn’t help matters much.
    The real question to ask is why isn’t Cadillac growing faster on it’s home turf.
    PSAs DS line is now seeking over 200,000 units globally with a far smaller line up and what would seem to be weaker identify.

    Cadillac needs a more diverse line up; solid marketing so that the brand stands for SOMETHING, really anything will do at this point. Also, Cadillac should reexamine the naming scene, possibly revert back to traditional naming or an alpha numeric scheme that actually means something–LTS sounds like a cross between a religious cult and a new sandwich at BK.

    Buick should be handling the Audi 3 bellow $30,000 space while protecting Cadillac from Lincoln (a brand that I’ve mocked until realizing that they market their overpriced Fords better than Caddy does it’s authentic engineering).

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    1. The issue is that anyone who owned a Cadillac in the 90’s and into 2k’s know that they are absolute garbage, so why spend 40k+ on a car that is worth 500 bucks after 5 years.. It’s not a good investment for a car buyer to buy a car like that, especially at a marketed price that is comparable to much better built and engineered.. not to mention backed cars.. The Shortstar and Northstar engines were absolute garbage, should have been recalled for a mass issue with head gasket issues, over heating, and electrical problems.. Don’t get me wrong.. they were big, comfortable, fast, and very nice to drive, as well as be in.. and had GM fixed the issues, and recalled the cars to correct all the problems with those northstar engines, i would be lined up to buy a new caddy.. But the fact of the matter is that they don’t stand by there products.. (proof is the massive lawsuit that is taking place right now, with what is it, 2.6Million recalls?) which as a result will likely ruin them.. So while i will say, hey that is a sharp car.. i would buy a new Lexus, BMW, or Audi any day before i bought another Cadillac..

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  12. I think the CTS may be stealing some sales away. I also agree with Grawdaddy that dealers do not know how to sell these vehicles. A Convertible and Wagon should be coming to help increase sales. I do think that some of the engines choices are not up to par with competition in terms of efficiency, power, and NVH.

    VVT, SIDI, IVVL, and VTM

    Standard- 1.6t I4 with 230HP and 245-260LB-FT
    Hybrid- 1.6t eAssist I4 with 235HP and 250-265LB-FT
    Diesel- 2.8tdi I4 with 225HP and 350-365LB-FT
    Luxury Standard- 1.6t I4 with 230HP and 245-260LB-FT
    Luxury Optional / Performance/Premium Standard- 2.0t I4 with 290HP and 310-320LB-FT
    Performance/Premium V Sport Optional- 3.0t V6 with 360HP and 370-380LB-FT
    V- 3.6tt V6 with 445HP and 460-480LB-FT

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  13. Cadillac needs a car below the ATS. Something that’s red-blooded and dynamic, which isn’t Buick’s current forte. Buick is more about being approachable luxury and impressive content for the money. And the fact the ATS and CTS are trying to “do the same thing” (capture a similar audience) doesn’t matter. There’s a significant price gap between the two, not to mention size. This is basic brand and vehicle hierarchy 101. The products are there… the ATS and CTS are far more dynamic than comparative BMW offerings. But BMW, its dealer network, and its marketing have managed to maintain a constant brand message and bring in a specific customer over the past 40 years. Cadillac is still refining what it’s been doing for the past ten, and it’s showing.

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  14. Anyone notice how the media is all over Cadillac on this but yet say nothing about Lincolns death spiral. Lincoln may be in the end stages as their reworking is not doing well at all and yet they jump all over this car that has only produced one new model so far.

    With the coupe just to appear it is like someone is trying to sabotage the ATS before they get to the next step.

    I am not a conspiracy guy but there are times you have to wonder.

    After all the air bag misinformation and the media not giving full disclosure. Also the truck sales being down due to weather and the lack of incentives it is appearing to me that someone is working hard to discredit GM at any chance anymore. When they get discredited like on the truck they vanish. Note of late the air bag thing seldom gets mentioned because there is no more story to tell and the public has lost interest. Also it did not effect sales.
    Now they are on the recall bashing but say little about the other brands. Even the new Airbag recall is getting limited action.

    I am not saying this is what is happening but it makes you think and watch to see how things are handled on other GM topics vs the other brands.

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