There’s no question that today, Cadillac is making the best vehicles it has ever built. In fact, some would say that the newest Cadillacs such as the ATS and CTS are better than their competitors from German and Japanese luxury brands such as BMW, Mercedes-Benz, Audi, and Lexus. But is Cadillac doing everything it can to sell its best-of-breed vehicles? We don’t think so. In fact, the division can make this simple change to grow sales in a valuable way in the short term.
That one simple change? Targeted conquest incentives.
In other words, an incentive for BMW, Mercedes-Benz, Audi, and Lexus owners to purchase a new Cadillac. You’d think that Cadillac would already have something that simple, but it doesn’t.
As of this writing on Friday, March 20th, 2015, every single incentive that Cadillac offers in the United States is for existing Cadillac owners. That’s right, there isn’t a single incentive designed to attract owners of vehicles from competing luxury brands.
| MODEL | LOYALTY INCENTIVE | CONQUEST INCENTIVE | OTHER INCENTIVE |
|---|---|---|---|
| ATS SEDAN: | $1,000 | NONE | NONE |
| ATS COUPE: | $1,000 | NONE | NONE |
| CTS SEDAN: | $1,000 | NONE | NONE |
| SRX: | $1,000 | NONE | $1,500 BONUS CASH* |
| ELR: | $2,000 | NONE | NONE |
| ESCALADE: | NONE | NONE | NONE |
| ESCALADE ESV: | NONE | NONE | NONE |
- An example of Cadillac’s current loyalty incentive: $1,000 towards lease or purchase of a 2015 ATS for current GM owners and lessees
- *Cadillac SRX incentive is available to Cadillac and non-Cadillac owners
That is not to say that customer retention/loyalty isn’t important. To the contrary — it’s vital to maintain the brand’s “base” customer base. But unlike BMW or Mercedes-Benz, which are well-established in the luxury space, Cadillac is the challenger in the arena — not only does it need to “maintain” its customer base, but it also needs to attract new customers, those who are new to the luxury car market in general or those who it lost over the last several decades. And the way to do that is to offer:
- Unrivaled product
- Exceptional sales, service and ownership experience
- Tempting incentives to owners
- Irresistible incentives to owners of competing makes and models
These inventives aren’t about “giving away the house” or lowering ATPs. They’re about attracting new, much-needed customers. So until Cadillac adds #4 from the list above to its sales playbook, it will continue to experience negative growth in key markets like the United States (with all the negative repercussions), while rivals like Audi, Mercedes, and BMW grow at its expense. Here’s to hoping something changes when Caddy “relaunches” its sales and marketing during the Oscars this weekend.
Comments
Agreed.
What doesn’t help is how GM believes they now have a great product they can charge the same prices as the Germans on a 1 to 1 basis. I know GM wants to recuperate the costs for development fast, but like the old saying “Rome wasn’t built in a day”, Cadillac SORELY LACKS PEDIGREE to stand up to the established Germans (and I argue, even Lexus has a stronger brand image than Cadillac.) I know Cadillac is done playing the value card, but I still feel Cadillac jumped the gun in MSRP too quickly & steeply. A recent visit to the 2015 CIAS confirmed my suspicion when the neighboring BMW stand was so crowed and only 3~4 people were poking around each Cadillac on display.
IMO, today when anybody is buying a luxury car, most shoppers care more towards the image it pertains as much (or even more) than the actual product; this is the nature of the world we live in where Iphones, Dr.Dre Beats, Louis Vutton handbags and that crest on their cars are the symbol of one’s success in life. Universally a Blue/White Roundel, 3 Point Star, 4 Interlocked Rings or that silver slanted “L” symbolizes not only a car, but a lifestyle. Cadillac, as much many car reviewers, enthusiasts, supporters & me personally love them, does not carry the same weight as the badges mentioned above.
Like ‘Poolside’, I digress.
Having a conquest incentive is a nice idea, though as I stated I’m not sure if the monetary value is high enough to pull away buyers from the allure of the luxury import brands. It is something that De Nysschen can consider…
I think that Cadillac pricing the way it is today is fine. In fact, comparably equipped Caddys are less expensive than comparable BMWs, Benzes, and Audis. There’s your value proposition right there. What we should be concerned about is that most people don’t know about this value.
Also, there’s no use in attracting a customer base at a low price only to then raise it when it comes time for them to buy their next car. This creates customer dissent and dissatisfaction.
And as you said, Rome wasn’t built in a day. For Cadillac, that means it should build its new reputation based on the perception that goes along with tier 1 luxury brand pricing, rather than creating a reputation around discounted luxury cars. Look at how that is working out for Acura and Volvo (not so well).
Now, a conquest incentive to lure owners of other brands in? That’s something I fully support.
i work in nyc we compete with lexus.mercedes,and audi head to head everydaythis is a touchy subject because if we have too many rebates it lowers the precived value of the product .we need leasing programs for new and certified preowned to compete with bmw and lexus . 2015 cts msrp @55k shouldnt be 85-125 more than a e class or a series per month .
One has to crazy to try a Cadillac at the same price as a BMW, Audi, MB, etc. I have, an ATS, while a still have a 3 and 7 series. As a user, the ATS is not equal. Unless much less, I will not trade my 750iL next year for a CTwhatever, I’ll stick with the tried and true.
“The ATS is not equal” to the 3 Series. Could you elaborate?
I dont think he can. He writes like a 2nd grader
I can tell you our CTS is not equal to our 3 series.
The CTS looks better, inside and out. It “feels” better too. However, from our ownership experience, it comes down to the details.
The 3 series is much crisper- the transmission and engine FEEL better, smoother, and more “in tune”
The 3 series torque curves feel better. The power is exactly there when we need it, where we need it. On paper the cadillac has more power, but it sure doesn’t feel like it.
The 3 series is quieter. Both have sunroofs, but there’s no sunroof noise in the 3 series.
The 3 series is OLDER than the CTS, but has the right touches: ie, did you know the manual CTS will roll backwards on a hill, just like a chevy? You don’t expect that on a luxury car- even subaru’s hold the brake for you! Also, the adaptive headlights seem crisper, like you barely notice them.
The 3 series sounds more refined- Give them some gas and the inline 6 3 series sounds like its got you covered. on the CTS, In the words of my wife, “it sounds like its crying for you to stop”.
The Service Department seems much more luxurious and mechanically accurate in every dealer I’ve been to. I actually stopped going to the Cadillac dealer and started taking to the Chevy dealer instead.
I don’t even LIKE BMW, but I have to say I can see the appeal in the details… and maybe some of these issues are fixed with the newest renditions of the vehicles, but when I bought my 2nd gen CTS, it was at the time that these SAME things were being stated in the media, “The CTS bests BMW”.
With all that being said, I actually like my CTS better than the 3 series, because it has a lot going for it too:
It feels nicer inside
It is a bit bigger
Its MUCH cheaper to work on and repair
It uses cheaper gas
The cup holders can actually hold a drink
The GPS makes sense
I don’t feel like an A-hole just for driving it
I’m just saying that I can see why they are having a hard time “uprooting” BMW, and how someone can say they prefer the BMW.
actually not comparable lexsus -bmw7, audi a8, MB S class. Audi A8 and BMW 7 and the mb S class is different. (audi a8 bmw7-ser) (mb s class).
lexsus is still a long way to go to Audi, BMW and MB S class level.
Lexusus is decent but the real thing is he seriously behind other.
Lexus LS600h L President
The problem is pricing in this class is a damned if you do and damned if you don’t for Cadillac.
The problem comes in that people in this class are not looking for bargains and if they are they are buying a Lincoln.
The folks in this class want what they perceive as the best and most advanced, luxurious and technically advance car in the group. Building better and better cars worthy of the price and earning the image and prestige take time and commitment.
The problem is sure you will sell more cars short term to but then you will be looked upon as the K mart of the segment.
This is what Lexus and even the Genesis has been fighting. They are seen as great cars for the money but cars that people a retiree in Boca Vista retirement community would treasure and not the up and coming middle age manager or successful business owner.
Yes you can take the easy way out and discount cars and price them lower but the damage you do in your long term building of the image will just add time to reaching that goal.
Discounts and rebates are great if you are at Chevy but here you again have to consider all the factors and look at the big picture.
Note BMW and Audi in their time of building their image did not discount their way to this goal. Both built better and better cars each time a new model came out and while it took time they reach a point where they earned the respect and admiration of the consumer.
Right now GM has just committed to fixing Cadillac properly less than a year ago. They also have just now started proper marketing. You have to let this work and let them continue to improve the products.
While the CTS and ATS are great cars they still need to be better yet. In this segment to be as good or just a little better is not enough as you have to be a clear cut better car.
You can smear Hamburger on the kid to get the dog to play with him but once he has licked him clean he will go else where unless your kid learns to build a relationship over time.
Incentives are like Automotive Heroin. Sure they give you a short term high but they can be addictive and in the end they can be your undoing and early death.
Folks this is a long race and GM does not have to be the segment leader this year, next year or the year after in sales. They just need to make a profit and continue to improve and advance the image.
Marketing smart is the way forward not the quick rush of the discount high. You want people to want your product because it is great and will enhance their image not because they want a cheap car. God knows Cadillac has been in too many trailer parks for too long as it is.
Keep in mind if you read sales are down we are talking hundreds of cars not thousands here. Cadillac is not longer a large volume brand and does not have to live to theses larger numbers anymore.
Give them 5-10 years of full in commitment from GM and proper marketing and let that do the work. Discounts are to only adjust inventories or end year close outs.
Well said, alot of commenters on these auto websites dont understand that because they’re clearly not the target customer. The target customer doesn’t usually comment.
The SRX was never intende to go head to head with the Germans . They seen what the Lexus RX was doing and GM wanted a piece of the pie . Well they not only got a piece but took the whole pie that was Step 1 . Now GM is coming out with the replacement , the XT5 . And we have heard that there will be other XT’s on the way . When you are at war doing battle you take it one step at a time . GM needs to do battle with Lincoln as well , but that won’t be to difficult but something they need to keep an eye on . Who knows maybe the XT5 is the base model , the luxury may well be a XT6 , and the premium XT7, perfomance maybe an 8 . They may even be looking at an electric version , which is what GM was looking into withe the now SRX . Cadillac isn’t going to beat everything out there but they will choose their target and throw everything they got at it and see who is left standing . And all of this needs to be done while trying to retain their current customer base , and then get into giving the competitions customers and incentive too come over and look at what Cadillac has to offer .
Yes, I know. price is important. logically can not offer much cheaper than the much more expensive cars samat results. and due to the price can not compete with some of their cars.
the higher the level of a greater attention to the automaker will have absolutely all the smaller details. even in those parts of the unit to the eye at first sight will not or can not see anyone ever again.
lexsuse may already even videos show the finger at many problem spots. But lexsus the corresponding price. lexsus can be expensive, even compared to Audi, BMW, limousines mb
Wtf did i just read?
I now looked at the prices of which prices start. lexsus and is pretty expensive.
LS 460 President. LS 460 4.6 V8 (285kW/387hj) 116490 eur
mb S 500 4MATIC L Sedaan V8 / 335 kW 225-221 113 100eur
mb S 600 L Sedaan V12 / 390 kW 264 166 056eur
mb S 63 AMG Sedaan V8 / 430 kW 237 152 856eur
mb S 63 AMG 4MATIC L Sedaan V8 / 430 kW 242 156 156eur
mb S 65 AMG L Sedaan V12 / 463 kW 279 237 420eur
Audi S8 4.0 TFSI2 quattro tiptronic, 8-k 4HC SSA V8 3993 382 / 520 650 13,6 / 7,3 / 9,6 225 111 000eur
audi a8 w12 L ?
bmw 760li 148150 eur
bmw 750li xdrive 109680eur
People who buy these cars are able to actually certainly allow different amounts of car purchases. ls it when someone buys lexsus I believe that this person would be able to buy the MB S class or anything else. and now it is important that the GM wishes. Is the GM wants to offer its products anywhere at a higher level or lower level. It is every company’s own thing. Mb-audi bmw-level kõremal always want to be. It is a matter of honor thing. the honor of the thing, as well as company car buyer honor thing. I believe that lexsus could do even better, however, the company is sure to take this into account. Be sure you also lexsus price rise and the thing becomes more complicated. The automotive industry is a very complex and difficult world. about 50,000 eur price difference is the difference between the quality and selection of cars in a very large and complex. 50000eur some of the richest people do not have the money and if further follow-up charges or lease
Here is the deal to those who want discounts or for Cadillac to continue to compete with Lincoln.
First we have Buick to fill the role of volume luxury as a good price. They will be the good car for the good price.
On the other hand Cadillac’s role has change to become a great car and who cares what the price it.
While Lincoln is the Fake Rolex Cadillac’s has chosen to become the real Rolex and it counts to those who are the new targeted customers. Their attitude is what is your car going to do for me image wise. This car tells my story of who I am and what I am. Lets face it they could live with an Impala just as well to do what they need physically.
You discount the car it will mean that you are the guy who could not afford the BMW. Today the joke is if you own a Boxster that says you are the guy who could not make enough to buy a 911. Yes that one is what many say in 911 Circles.
Finally BMW was not built on one model in one version in one year. If you believe they were tell me where and what year. The BMW awareness did come on the 3 Series but it took a series of 3 series and years to earn the trust of many people. To be hones many of the Older BMW were rust buckets that were not exactly world class in anything.
Same at Audi as they were just upscales VW models in the 70’s and then they came out with the 5000 that started their upscale approach. It was set back with the fakes intended acceleration scare for about 10 years and then they rebuilt on a series of A series cars over the next 10-15 years.
Sorry but if you think Cadillac will win hearts in this segment with large discounts you are going to be disappointed. There is no quick easy way to the top. Even if you build the best car you still have to earn your spot as they will not just concede the segment to you. This is where Cadillac has to up their game from where they are at now. Yes they have cars as good as many of the others with their new models. But they still have models to fix and more to introduce. They also need to up their game as GM is going to let them do now to not just be as good but be better.
You do not build a car as good and discount it here. You build a clearly better car and sell it around the same price as the others. Discounts are an admission of weakness.
To win this GM will step up on the new models past what we see this year and that is where the real change will come.
I’m torn…
Audi offers $500 if you drive a BMW.
However, you know what I actually said to the dealer? “Oh, so you have to knock off $500 to try to get us to step down to an Audi”.
It was clear to me with that discount that Audi couldn’t beat BMW, unless they lowered their price.
In other words, that simple $500 competitive discount was exactly why I didn’t buy an Audi. I don’t want a brand that says “ok we’re not as good as they are… but we are cheaper!”
So while on one hand you think “a competitive discount will get someone to buy”, its important to remember that luxury buyers are NOT very price-sensitive. While $1000 might appeal to a few, $1000 also will turn some away.
“ok we’re not as good as they are… but we are cheaper!”
Strange that Audi, just getting it’s foot in the door of respectability, would take to offering conquest discounts. I suppose a small offer of $500 to select owners of competing makes is something that could be ignored in the long run in terms of Audi’s public image. It’s not like they’re offering it for decades on end so that people are conditioned to expect a $500 discount.
And that’s the rub when it comes to Cadillac; where their greatest strength was not in the cars they built, but in how it low its price was on the sales floor. That mindset “worked” to move units and make balance sheets black, but it didn’t exactly lure and tempt the luxury buyer.
They have to overcome that kind of public and administrative mindset that crippled Cadillac image for over 5 decades. Whereas Audi can offer relatively small amount of $500 and not suffer much public harm from doing so (someone is likely to take up the offer and sign), doing so habitually and with discounts reaching into the 5 digits, is profoundly detrimental to any attempt to be taken seriously.
Your statement reflects that: “stepping down to an Audi”. An established hierarchy of luxury automakers already exists in your head (I can’t fault you for that, I’m guilty too), and for you, no amount of money is enough to move one brand up the hierarchy if the substance of the product is inferior to its public image. It’s just as easy to say the same of Cadillac and it’s low on the totem pole public image, and many, many, many luxury buyers who will say the same thing as you did, AND in the face a much larger discount.
“Oh, so you have to knock off $10,000 to try to get us to step down to an Cadillac.”
Cadillac Customer Assistance Center P. O. Box 33169 Detroit, MI 48232-5169
Dear Sir or Madam:
As a loyal Cadillac customer for the last decade (3 CTS’s, 1 SRX) I am writing this to express my disappointment and dismay with the current Cadillac marketing /pricing scheme that makes little sense to me.
My lease on the SRX is up in the next month and I was planning to replace it with a CTS. In the past I had leased well equipped CTS vehicles with Performance Package. These were V6 powered and very well equipped with MSRP’s of $ 44.000- $47,000. I was unpleasantly surprised to find that a 2015 CTS with Luxury Package (even after recent price adjustments and additional options added) was a 55,000 car. This is with a 4 cylinder engine and 6 speed transmission. Desirable options for me such as mag ride, 18” wheels, heads up, and most importantly 6 cylinder engine, suddenly makes this a $65,000 vehicle.
I get that the car is now longer and “competes” more fully with the E class and 5 Series and that you now have the ATS which requires its own niche However, the precise market spot that the CTS served so well for me has been abandoned and you seemingly expect former owners to ante up 10-15k to continue with this model.
Considering the pricing of the XTS which is a larger car with V6 and many desirable options included (sorry it is not my ‘style’ and leasing support has not been very aggressive), the CTS pricing is a mystery and offers questionable value. Somebody obviously thought they could instantly mark up pricing to MB, BMW, and Audi levels. I see the marketplace has not responded favorably to this and the fact that 2014 CTS cars are being reduced $10-14,000 is not reassuring to a potential 2015 owner.
Despite my original intent to stay with the Cadillac family, it appears that the 2015 Hyundai Genesis may offer my best option. With every package offered the V6 AWD Genesis is approximately 3,000 less that the 2.0T Luxury I was looking at.
This car has 8 speed transmission, 17 speaker Lexicon stereo, heads up display, full parking and safety tech features, 18” wheels standard, is wider with longer wheelbase, has better warranty and most importantly touts V6 power.
Hyundai is aggressive in their leasing of this new car while Cadillac seems to be wringing their hand on the product with reduced production and a meager 750 incentive (March).
My intent in sending this was not to engage in a debate over the merits of the two products but simply to offer my perspective as a loyal Cadillac buyer who may be pushed into another direction because of current Cadillac marketing.
Sincerely,