Cadillac’s new products, such as the CTS and ATS, are more than capable of bringing the fight to German competitors from Audi, BMW and Mercedes-Benz. The brand’s vehicles are now on-par with or better than the competition, however you may have noticed the prices reflect that. Recently appointed brand chief Johan de Nysschen told Automotive News that Cadillac’s pricing will have to remain high going forward if they want to compete with foreign luxury brands.
Cadillac’s U.S. sales have dipped 5 percent through to August this year at a time when the luxury car market has seen an 8 percent spike in sales. The brand recently had to idle its Grand River Assembly plant for three weeks due to an abundance of unsold product on hand, the majority of which are CTS and ATS sedans.
Cadillac dealers are blaming slow sales on pricing the vehicles around the same level as BMW, Mercedes-Benz and Audi. They say high prices have turned off buyers, but de Nysschen said that the legacy buyers used to lower prices will have to be turned away if they wish to attract buyers who usually purchase imports.
“We cannot deny the fact that we are leaving behind our traditional customer base,” de Nysschen told AN. “It will take several years before a sufficiently large part of the audience who until now have been concentrating on the German brands will find us in their consideration set.”
GM President Dan Amman has given de Nysschen more power than previous Cadillac brand chiefs, allowing the South Africa native to run nearly every aspect of the company, from working with the dealer network to sales, product planning, engineering and design. de Nysschen, who is partially credited with turning Audi into a strong luxury brand, said Cadillac must operate as a complete separate entity from other General Motors brands and make separate decisions in regards to products, marketing, and sales.
“Nobody who goes to work at Mercedes-Benz, BMW or Audi works on a part-time basis for those brands,” said de Nysschen. “They are absolutely 100 percent immersed in annihilating the opposition.”
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WTF does “must operate as a stand-alone entity and make decisions on product development, sales and marketing and in other areas outside the sphere of the other GM brands.”
No car company with multiple divisions (esp VW’s Porsche or Audi) makes decisions on its own. The way Mercedes and Audi have come to dominate is they are sharing platforms, engines, factories with “lesser” brands. They rely on features and marketing to make them distinct in the customers eye. Hell, there was just an article a couple days ago on how Maserati’s best-selling new cars have engines from a Chrysler Engine plant in Trenton, MI.
Someone better get this new guy a sales chart and show him the sales of the Cadillac Escalade, which wouldn’t exist if there wasn’t a Chevy Tahoe and GMC Yukon.
I’m going to assume this is just marketing-type propoganda, and he knows all this, but on its face it is wrong. Cadillac should look & feel distinct to the buyer, but the only way for it to get the supplier prices, features and scale it needs is by properly fitting Cadillac’s products in with the rest of GM. Moving ~20 execs to NYC will do nothing except drive up the expense budgets of GM.
What “lesser brand” is Mercedes sharing its engines, platforms, and factories with?
The way Mercedes has come to dominate is not by part sharing, but by fulfilling the demands of the luxury consumer. To give them the best possible product without equal, and to do so consistently for many, many decades. So much so that it is an expectation of them to build cars that are exceptional and leading; in segment, technology, engineering, product, and image.
As for the “Traditional” buyers, them and their demands of a luxury car simply do not drive innovation in ANY of the 5 above sectors. Traditional buyers are merely content with a large car with leather seating; features that even Kia can offer. Subsequently, their demands of a luxury car are limited and reached a zenith 40 years ago during the Malaise era. Those that wanted more from their luxury cars bought Mercedes and BMW’s throughout the 70’s and 80’s, and later on bought Lexus’.
Cadillac and the lazy pseudo-luxury buyers dragged their heels through the mud of “it’s priced good enough for me” mentality, crippling both the public’s impression of an American luxury car and of GM’s supposed premiere automotive nameplate.
TL;DR: Work harder to get the finer things in life. Cadillac is stepping up their game. Why aren’t you? Nobody is going to lower the bar for you, unless you think the bar for a landau roofed 2010 DTS is low enough for you to say to the world “I have arrived”.
In what universe is Cadillac going to be close to Mercedes — in terms of variety of product and world-wide reach — within the next decade? That can be the model for certain products, but not for the overall brand.
Go look at Mercedes product lineup, http://www.mbusa.com/mercedes/vehicles ; Caddy is tiny in comparison.
MB doesn’t need to share parts with a lower division b/c they are HUGE by themselves. MB sells about 1.5 million vehicles worldwide; that’s 7 times what Caddy does. MB literally has ten times as many vehicles as Caddy – from $29,990 to $229,00. Smilar about BMW.
The only way Caddy is going to grow, significantly, is to leverage the large resources of GM in a unique way. I understand the Caddy guy needs to puff out his chest about how special and different Caddy is — that’s marketing (and hopefully accurate). But Porsche and Audi and Lexus grew by focusing their product & marketing & design on being something unique in the larger lineup (which the new guy seems to be doing) AND realizing the only way you’ll have the resources and profit margin to do that (e.g., so you can price your product right) is by fully leveraging platforms and parts of the larger organization. Go look at the smash hit Porsche Macan — that wouldn’t exist is they weren’t a part of VW.
Also, he (and the rest of GM mgmt0 better have a plan for taking those “traditional” customers somewhere (e.g., Buick). GM is not in any position to lose customers who are willing to fork over $30-$50k (often in cash). It’s completely fine for *Caddy* to leave their traditional customers behind, but they need to figure out a way to get them to Buick (or even Chevy, e.g., high-end Impalas).
I get where he’s coming from, but at the same time it is foolish to write off legacy buyers. Case history: Oldsmobile.
They should be raising prices gradually so that it doesn’t scare off the buyers that have been keeping Cadillac in business. Also, having prices that are cheaper than BMW and Mercedes could give those owners an incentive to investigate Cadillac when it’s time to purchase a replacement vehicle. At this moment in time, Cadillac does not have the status to lure those buyers on name, and even though the product may be on par or even superior, people still need an extra nudge to come into the showroom.
This path will work but it will be more painful and take longer. But in the long run it will pay off more. You want image and exclusive you have to make it such and higher content and higher price is part of the package. The down side is it will take longer to build up new buyers.
Discounting may keep sales up but does little for the image or improvement of the brand. Take a look at the Chrysler 300 right now with the deep discounts and they are not gaining ground on anyone. Sure you sell more cars now but you limit future earnings and reputation.
I have been split on this topic and while I am not sure how I would call it if I were in charge I can see the non discounted way though the tough love road would pay off later.
As for old legacy buyers there will be a host of new Buick buyers to take care of them. This is not the first time for this to happen as around 59 and later many defected to Buick 225 because of cost and styling. We saw that in our own family.
The truth is for Cadillac the future is not in their traditional older retired Boca Vista retirement community buyers. They are after the active younger professional buyers. While it will take time these buyers are replenished often and generally buy every 1-3 years. The past Cadillac buyers retire and buy a car to use till they die or till the N star blows a head gasket.
Right now the key is to lose the dancing robots and market the real features of these cars and just what they can and will do. The refinement and performance needs to be shown and made clear, Also a it needs to earn a reputation for quality but that will come with time. Added image will come when we do get the flag ship too that will help cast light on the lesser models too.
Yes, no, typical marketing hype blended with arrogance, no, yes…
Alfa recently talked about its autonomous ‘skunk works’, so this talk of the Cadillac brand suddenly taking on the responsibilities of a division is pretty timely. Lincoln Motor Company is another example.
Caddy already is run differently than the rest of GM (reminds me of the grand intentions behind budget brand Saturn). GM is a damaged brand presenting Cadillac as indie is wise.
This does not mean that the SUVs and platforms will not trickle down. This will be important, especially to Buick/GMC which is in a solid position to pick up traditional Caddy buyers.
Driving off traditional Cadillac shoppers is a risky move. It is but the most recent indication that Caddy is on par with a new marque set for the 21 century.
My only disagreement regards price. I do think GM would be wise to follow the early Lexus pricing model. Since Chrysler is no longer luxe, the 300 is no threat.
IMO, the pricing of the current Cadillacs is justified.
Cadillac has to start pricing their cars accordingly immediately if they want to be considered as a premium brand than a value brand. I am glad that Cadillac is sticking to its current pricing and it will pay off in the long run. As excellent today’s Cadillacs are, they are worth every penny.
I’ve driven a Cadillac for the last 43 years….nice to know as a legacy buyer I can be written off so casually. Until I read this article I was ready to swallow hard and pony up….now…..I’m not so sure. What arrogance and stupidity!!
“Cadillac can go fuck themselves. I’ll buy something else.”
Like what, exactly? Since we already know your financial boiling point is beneath that of a Cadillac and the rest of the established luxury marques, we safely assume that can settle nicely into a Buick, an Acura, a Lincoln, or even a Hyundai Genesis. All of them are quaint, low-ball, second tier cars for those with limited aspirations and means.
43 years of ownership means nothing; nobody was going to give you a medal or a pat on the back for that “achievement”, nor should you expect that Cadillac exist to serve you and those who see luxury as a value proposition.
Cadillac is stuck between a rock and a hard place: “the rock” being the traditional buyers being forced to consider other luxury alternatives, thus losing critical sales. This is definitely a huge risk for Cadillac. When it comes to remaining profitable, they need the sales. The best way to remedy this in my opinion would be for Cadillac to broaden the lineup with more affordable vehicles. Since a sub-ATS sedan is on the way, room can also be made for more variety of crossovers. In addition, this also provides a reason for vehicles like the Cadillac XTS to remain in the lineup: to appeal to traditional buyers. With these types of vehicles, they can have a little leeway with pricing, selling them low enough to get customers into showrooms.
“The hard place” is Cadillac’s inability to entice the luxury market with the latest products, which many acknowledg are competitive with the leading luxury brand offerings. The key is definitely time, as the image development and brand cache cannot happen over night. I personally agree with Mr. De Nysschen’s approach in this regard. For Cadillac to lower the pricing on their products would in turn mean lowering the content, which would ultimately lead to undoing everything they’ve worked hard to accomplish for the brand.
This is where marketing definitely has to step up. There has to be stronger incentives to convince customers to go Cadillac. They severely lack this now! Magazine publication, newspaper articles, and spotty internet user reviews will only get Cadillac so far, but at the end of the day, a stronger advertising vehicle is needed to trumpet the advancements of today’s Cadillacs! That vehicle has to be the advantages Cadillac has in favor of the competition!!!! Why aren’t we seeing this?!!!!
Actually, Superior Design and QUALITY will bring customers to Cadillac. Poor quality in the 70s was Cadillac’s iceberg. It may take some time, due to the damage done, but Design and HIGH QUALITY will win in the end. In the meantime, give some incentives to get the ball rolling.
My mother in law was a legacy owner.
Here is what she wanted and liked. Floaty ride, white walls. power everything. Big, boaty an boxy.
Where did she drive her car? The mall, Amvets, Yard Sales, Bingo etc.
Now that the prices went up she is a Buick and Chrysler owner now.
Lets face it I love my mother in law but she was not the image or kind of owner Cadillac wants or needs if they want to improve their image.
The reality is Cadillac wants people that go to the country club not the trailer park and that is just what many legacy owners are. Not all but many are. It looks bad when you have owners who own cars that paid more for the car than the house or in this case Double wide.
The reality is not all of us are Cadillac material. Harsh but true. Porsche tried to sell cars to everyone in the 80’s and paid the price with the 924 and 944 as they gave them great volume but damaged their image and in the end made little profit for them per car. They cut the cheap cars and reset with a higher priced low end car that is still not cheap and it has taken time but they have recovered the image and the profits.
I think BMW found this in America as they are careful with selling anything cheap here anymore. Audi needs to use care with the A3 base model as it could do a lot of damage if not managed right.
He’s smart to be picking up on current marketing: Alfa has its “skunkworks” so not to have its image tarnished by the other FCA mass market brands; Lincoln is now the Lincoln Motor Co., a Ford make believe division as opposed to brand.
GM is a damaged brand and has no reputation for Luxury. It is wise to give Caddy the illusion of independence, and then make clear that Cadillac platforms and know how are shared with the lesser GM brands.
The traditional base shoppers will migrate over to Buick. Cadillac is for all intent and purpose a new marque and must organically develop. I do think that the new kid on the block, so to speak, should use targeted discounts to the brand’s advantage to stimulate growth, as GM has been doing with Buick. Buick has been smart with the brand’s yearly price increases and this may serve as a good text book business class lesson, as suggested by the Coke CEO.
I agree to build a good company with the proper image you must tough it out to build a good base.
While discounts make logical sales growth short term you pay a long term price. It is kind of like skipping lunch and dinner to lose weight.
No one ever said the transformation of Cadillac was going to be easy. The first step was to really build a world class car and then the trick will be to convince the public it finally has a car worthy of the price and reputation.
I see too often post elsewhere that people love the Cadillac’s but would not buy one because they do not trust their products. This is what they need to change this perception through marketing the cars. This will take time and investment. The rewards will come down the road.
Benz and BMW know Cadillac is real now as they are watching their every move. Now GM just needs to convince the public.