Ex-Infiniti boss Johan de Nysschen has helmed Cadillac for just over a year now and he’s remained firm in his resolve to position the brand as a luxury leader, one capable of matching and exceeding the very best Germany has to offer.
To get there, Cadillac must be seen as a brand of equal merit, which means it can’t depend on discounts and reduced pricing to for the sake of sales volume. Rather, the price of a new vehicle must remain firm in a bid to attract well-heeled buyers willing to pony up extra coin for a premium ride. A concept traditional Cadillac buyers are having a hard time accepting, and an idea that German luxury brand customers are apparently dismissing, as Bloomberg’s David Welch explains in a recent report.
“The problem is that CTS – which is actually a really good car – was gettable at $350-400 a few years ago and people are coming back when their lease is over hoping to get that kind of rate,” he tells Bloomberg’s Betty Liu. “And now the car is $500-600 a month and dealers are trying to get them into the ATS, which is a lot smaller.”
Consequently, the price fluctuation has left consumers in a bind: either pony up more cash for the same vehicle they had or pay the same amount for a smaller vehicle. As a result, some customers simply look elsewhere. But this isn’t a short-sighted strategy.
GM brass remain convinced of de Nysschen’s plan to play the longview game and build more profit into each vehicle. Meanwhile, “dealers just don’t want to wait (for consumers to come around),” says Welch.
Check out the full 3:30 news brief from Bloomberg TV below.
Comments
As a marketing person, I look at the red in the Cadillac logo. It gives me ideas. Suppose you were to replace that red with —
— BLUE. This would signify a petrol Cadillac not meant to go around race tracks. An affordable Cadillac. At a trim level beyond your finest Buick. Simply breath taking but a car that won’t come close to breaking the sound barrier. Cadillac Blue prices would bring in buyers who can afford a Buick but want EVEN a little more.
— GREEN. This would be a Cadillac Blue with Volt/Bolt technologies. Here someone who gives a crepe about the planet can have their Cadillac and not eat their ozone too. (This option is key because some day this might be the ONLY option for Cadillac. Might as well phase in now.)
— RED. I know — replacing red with red makes no sense, but the implication does. The Cadillac Red is the Caddy of jaw-dropping, What Caddy seems to live for now. Sales would be respectable but not everything — since Red would rely upon Blue and Green to stay afloat.
Um, this is an INSANE idea.
Of course it is. Especially since Cadillac is already doing 2/3rds of it. Red = Cadillac doing what it already is doing. Green = having maybe another car beside the ELR.
Blue = an entry level Cadillac that ‘real’ Cadillac snobs can still look down at as not a ‘real’ Cadillac. This is the only signficant change.
What I consider crazy is Cadillac dismissing an entire class of customer to be ‘cool’. Funny but the country I drive around in has lots of grey haired Cadillac drivers. They don’t give a crap about racetracks. If you noticed they’re Sunday drivers.
My idea addresses this by recognizing there are two types of customers. Buick is doing this right now with it’s megahit Encore, a car which isn’t aimed at the Sunday drivers at all.
If you think it’s impossible for GM to have a company that sells cool cars to some people and more basic cars to others, perhaps you’ve never heard of Chevrolet.
You are pitching something similar to Benz strategy with AMG and Maybach. Inn a real way, Cadillac already does this with the V series.
Cadillac does a terrible job with marketing. Caddy has a highly limited line up. Cadillac runs from it’s history in an effort to unkink a still damaged brand. Cadillac must further refine design language and end it’s recent flirtation with conservatism given that the industry is finally taking risks as we see with Benz and a reinvigorated Infinity.
I still question whether Cadillac will ever enjoy BMW – like success. GM has infused billions into the brand yet failed to yield even Buick sized gains. Should Cadillac not catch on by 2020, GM should consider transforming the division into a niche division partnered with Corvette in China. Everyone seems to forget that Buick/GMC prices garners luxury sized prices that if grown will bolster The General’s bottom line.
“Cadillac does a terrible job with marketing.”
Indeed.
I’m trying to understand why a Chevy Volt is a good idea whereas a Cadillac Green Volt isn’t.
It’s a long-term game that is very much worth playing.
You’re taking about turning around a neglected brand that has been making shit for 2-3 decades and had been making decent-good product for a decade, no more. How long have BMW, Benz, and maybe Audi been building great product and building their brands on top of that? At least 2-3 decades. So clearly it won’t be over night that everything will change.
Also, as profitable trucks become less popular, where everyone will look to make up the portability difference is with high-profit luxury cars. Enter Cadillac. In other words, it’s a do or die scenario for GM with Cadillac: succeed and make good profits into the future, more than today. Fail and the company becomes significantly less profitable.
Keep the long-term nature of the game before suggesting some BS.
Cadillac should stay their current course. This is a long term plan and until sales volumes move higher better per vehicle profit is an excellent consolation prize.
Slashing prices is a knee-jerk reaction to lower than expected sales.
Doing that would not improve the bottom line significantly if at all and would erode residuals while devaluating Cadillac as a brand.
Per dealer sales volume is down but their profitability should be the same or higher. They maybe selling less CTS ATS and XTS’s but more SRX and Escalade ‘ s that they do not have to whore out to move.
To grow s brand you can not discount you way there.
You need to contiue to grow the products not discount the price.
The CTS they are turning in is the old signs platform while good it is now where what the Alpha offers today.
If you want to improve your image you can not continue to shop Walmart. The same goes for Cadillac buyers as you can not improve your image with discounts.
As they continue to improve the products this will matter little.
Cadillac also is not a slave to volume as they are making money even at the vlumes they have now, they can wait it out.
I’m also a marketing guy and I agree you Cadillac should not be offering huge discounts on their cars, but they should offer their cars at reasonable prices. I think Cadillac makes a GREAT product, I’ve bought or leased 14 new Cadillacs, starting with a 1980 Coupe DeVille. I believe Cadillacs are every bit as good as Mercedes, BMW and Audi. But I don’t think that’s the general consensus. Unless you read Motor Trend Magazine you would never know that the CTS was Motor Trend’s Car of The Year. If Johan De Nysschen wants Cadillac to be perceived as a premium brand he needs to do a much better job of marketing his product. Raising the price just isn’t enough. And raising the price $10,000 to $20,000 is just dumb.
To gain share in any market you MUST offer a product that is as good as or better than the completion for less money. That’s Marketing 101.
They’ve got the right products, but they’ve pushed the pricing too far too fast. My 1014 CTS Luxury Sedan listed for $11,000 more than my 2011 CTS Premium Coupe. A 2014 Premium Sedan is about $20,000 more than my 2011 Premium Coupe. That’s just too large of an increase in 3 years.
If the prices were reasonable they wouldn’t need to discount them. That’s my story and I’m sticking to it !!!
You need to understand that the second generation CTS was a tweener, playing the entry level price role with a mid-size body sacrificing technology and nimbleness. Having one car play two roles is not going to work in the long-term and GM is finding that out in a hard way now.
The current CTS is now a full fledged mid-size sport sedan. And although it is more expensive, you still get a lot for the money. Consider that huge degree of engineering, authentic materials and technology goes hand to hand with the current price of the CTS. Even the Luxury-Premium models had a $2K-$3K slashed with more standard features this year.
So, you say Cadillac “can’t rely on discounts and reduced pricing for the sake of volume.”
But a banner ad, cut and pasted from this site just now, promises the following:
“Whopping “August Only” Discounts! Get a 2015 Cadillac Internet Price.”
So what’s it gonna be? First class luxury, first class dealer experience and service?
Or “Whopping Discounts”? Aside from the realities of sheet metal not moving, just the phrase “whopping discounts” smacks more of Mattress Giant or Crazy Eddie’s, than a top of the line (all the way around) Cadillac experience.
Currently on one dealer’s site: ELR (MSRP $78, 685), sale price $49,900.
3.6L V6 AWD CTS: was $55,965. Now $48,065.
AWD ATS: was $39, now $35. SRX, was $47.7, now $43.The only thing holding firm is Escalade.
So – he’s not “remaining firm” in his pricing (this is just online, before driving a deal, free service, whatever), and doesn’t have the product yet to back it up. Look, I know he’s had a year at the helm. But he’s talking out of both sides of his mouth. Declining volume and markdowns don’t equal more profit per vehicle.
The product isn’t good enough, the dealership experience isn’t good enough, the service isn’t good enough to draw a line in the sand. And unless things happen fast(er) he’s going to get hammered by the dealer council, and management, and shareholders, and find himself in coach on the Dombrowski Express.
“Currently on one dealer’s site: ELR (MSRP $78, 685), sale price $49,900.”
To be fair consensus seems to suggest that price was always ludicrous.
Not a mainstream car and not a product of those Incharge.
I expect the ELR to go away this year.
Uwe himself placed the ELR in that xenophobic failure of a launch commercial, n’est-çe pas?
Just sayin.
That’s beside my point. I’ve seen too many sources mystified at it’s ridiculous price. So my point is that if ELR is now almost $29K cheaper than offered — car critics would say half of that never should have been asked for in the first place.
The ad you’re referring to does not sound like an ad from Cadillac corporate/brand. It sounds like an Internet sales manager’s banner ad via Cobalt trying to attract site traffic in hopes of getting leads.
The discounts can be a dealer waving or cutting the delivery fee… or something else entirely, but it’s most likely the same language used every month and the month swapped out for the current month. You never know until you actually click on it.
That pretty much invalidates your entire comment.
PS: the product IS good enough. The dealer experience… until we see some real quantitative measurements on that, is anyone’s guess at this point. Service is actually good. Look at the latest national SSI indicators.
You’re welcome for that little bit of edumacation.
Doesn’t Cadillac marketing need to exert control over everything from brand to retail?
Provide dealers with a template where offers can be made in the same voice as brand, consistent typography and photography?
You can still turn up the ‘sell’ without stooping to ‘whopping savings’, or Sizzlin Summer Sales event.
Lexus and Porsche, for example – and even GMC – they manage to do sales in the brand voice/typeface/photo-graphy. Cadillac needs to manage the entire funnel if they want to come off as super premium.
And if corporate/brand is unaware of less-than-classy efforts (like I said, that whopping thing came from this website), they need to do some chiropractic work with the entire organization to get it in alignment.
They DO control the funnel. But dealers are always free to modify it at their will, or run additional campaigns. It’s the equivalent of one dealer delivering a bad experience on the floor… They have the freedom and choice to do so. Same thing on the web. So you saw one dealer using shitty/cheap/attention grabbing copy. Whooptie doo. How do we know BMW doesn’t have an equivalent? Is what you found representative of the entire brand? Rhetorical.
What you don’t seem to know or understand is that GM has one of the best digital marketing strategies and partnerships in the industry (Cobalt). The entire things is really cool, from dealer websites to dealer digital marketing, to the way those integrate with national. But the problem is still that dealers are dealers and are free to do their own shit. This isn’t a GM problem. It’s an industry-wide problem with dealers, who usually don’t have the OEM’s best interest in mind, especially in the long term.
Also, this website seems to display ads from all kinds of providers and has nothing to do with Cadillac.
He’s not talking out of both sides of his mouth. He’s dealing with small back country dealers and multi-dealers that are ignoring what he has to say. I heard it straight from his mouth too. He doesn’t like it and the dealers who are still doing that and preventing him from moving Cadillac forward are going to get the boot eventually. He’s resolute, he has a big job on his shoulders, and I stand behind him. Cadillac is a great vehicle, but the brand needs some help. That means stop selling it to Farmer Joe for $15k less than MSRP, and take a whip to the backs of your terrible service departments. He’s made leaps and bounds with the product in the year he’s been in. The additions being made are FINALLY catching up with (and passing) the German competition. Last generation Cadillac’s were a fucking joke! They couldn’t compare to BMW or Mercedes. None of this is De Nysschen’s fault. Dealers who couldn’t sell a luxury vehicle if they had a knife to their throat will try to blame him, but in reality they should just be selling Chevy’s and chewing tobacco. He wants to make Cadillac classy and desirable. That means some people will fall by the wayside. Some of those will be consumers, and some of those will be dealers. I do agree that the timeline needs to be much shorter, however. People have online access now and when you start talking about something word spreads quick. I feel like we’ve been waiting on the V series models to come out for YEARS now and they still aren’t here. That’s my only complaint.
I fully agree with you on everything you wrote with the exception of product. Johan has yet to intact any change in product. If he did, we wouldn’t have such a shortage of crossover models or lack of features like auto-dimming wing mirrors on both sides of the car (ATS and CTS).
Takealookatmenow: what model years are the ATS and CTS you’re referencing?! Those sound like 2013/2014 models that have received final payout. The ELR doesn’t count. If you want to count it, let’s go talk about the Benz B Class.
The fact is these are 2015 models and by the end of August they will be last years models.
All mfg sell off products at year end in the Cadillac segment.
What many are crying for here is Buick pricing for Cadillac year round.
Cadillac can not go back. They have stated the product is all being revamped. Even the latest product the ct6 is no longer the projected flagship.
Even the present models will see major revamps.
The truth is even some areas needing addressed they still are good cars and are still cheaper than the others in class.
This is a time of transition that started last year. The first Johan changes are due in 2017. Not much of a way bringing model changes any sooner.
Ex-Infiniti boss Johan de Nysschen plan to over-price Cadillac to attract well-heeled buyers willing to pony up extra coin for a premium ride is foolish and self destructive. Raising the price of something does not add value. Actually Mercedes and BMW has actually lowered their prices over this last decade. Cadillac was known to be less expensive replicas of the world most expensive cars. Cadillac bench marks should be Bentley and Roll Royce at a Cadillac price. American expect high quality luxury and increase size at an lower price point. Our homes, clothes, energy, and cars have a lower price point. Cadillac can do this by economy of scale and ingenuity. GM corvette V8 and Caddy’s Northstar V8 are two of the finest engines in the world. They both cost significantly less to build than other comparable engines because of economy of scale. Caddy build a car equal to the Bentley at a XTS price point and you will regain you long deserved world class leadership.
Read more: http://gmauthority.com/blog/2015/08/cadillac-dealers-reportedly-continue-to-wait-for-familiar-sales-volume/#ixzz3i02xwnvn
I like de Nysschen’s plan. I personally believe a well-outfitted caddy is about $3-5k cheaper than a comparable bmw or mercedes. It is often a better deal. The seats are better and I believe the interior design and quality are nicer than audi and bmw (mercedes still wins on interior). The current battle is about perceived quality and luxury. I think Cadillac should keep prices high, but offer more at that price point. For example, would it be so bad to produce the CTS in only the 6 cylinder models? Every cadillac should have leather – no fake stuff. I believe audis have leather in all their cars at the base price. And in nice colors. Every caddy should have a slick exterior. Red or white should not cost another $1k. Every car must have sexy LED lights. If you allow people to buy cheap ugly caddies, you are showcasing a cheap and undesirable brand – the roads will be full of ugly-ass brown ATS’s with regular lights and no grunt at a red light drag. Nobody wants that. Look at Jaguar – they don’t sell cheap cars, but all of their cars are beautiful and luxurious. You can’t get a jag with a 2.5L 4 cylinder. People respect jaguars as a result.
You get what is going on !
This is a transitional time were cars will continue change vs staying were they are.
Every model here now will upgrade or be replaced in the future. The changes will be dramatic and make the cars more compelling.
We will see cars that are not just good enough but we will see better cars.
No faux luxury trim and engines and no faux owners.
This also is a race of not volume but profit per unit too. In this segment you can be well down on the volume list but dominate in total income.
Simple it is about making money.
Enough with the rhetoric about higher ATP’s! These new Cadillac stores are expensive and largely empty. They need the new SRX or whatever they will call it now and 2 more CUV’s right away. CUV’s sell! Tiny ones, big ones, doesn’t seem to matter? How many affluent neighborhoods have you driven through where the sedan or coupe is a Mercedes or BMW, but the utility vehicle is a Chevy or even a Hyundai? How else can anyone explain the success of the tiny Buick Encore? Few seem to care that it’s a Buick.
Have you noticed that every time sales figure come out , we see Johan on the internet having to explain himself . So as sales continue to tank its the same ol response , just wait , …, mean while Cadillacs old customer base is going else where . Selling fewer cars at a higher price point isn’t working in this economy . All the fanboys will argue this , but it doesn’t work . Cadillac NEEDS a high volume vehicle to bring in customers and if they are happy with the experience they may well come back and buy that more expensive vehicle .This is how you rebuild your image . 😉
I’d be curious to know what the dealer’s feeling is on the impact after the sale under JN’s plan? If JN doesn’t need to move volume and in fact, sales volumes decrease this ultimately has to mean less customers for the service and collision areas?
If I were a dealer I wouldn’t be happy with this aspect.
I actually check auto trader daily and my local cadillac dealer waiting for CTS prices to drop lol.. guess they don’t like me…. but I’m not in a rush we Wil see who holds out the longest!
I think it’s time for a halo car. I should be able to drive a cheap $35k car but feel like it’s comparable to a $120k car. Audi has the A3 and the R8. BMW has the 2 and the i8. Mercedes has the CLA and the AMG GT. Infiniti has the Q50 and the [Nissan] GT-R. Jaguars have that sexy F type R which makes their upcoming XE very hot. Ford has mustangs and that amazing underground GT project. Cadillac has no Halo car. In the early 2000s we got the Evoq which turned into the XLR. Even Chevy has the camaro which gets the same V8 engine as the famous corvette. We need a halo car for caddy! Even if you make only 100 and sell them for $250k a pop, we need a poster-worthy, overpowered, overpriced halo! While we’re on the subject, combine the GT, R8 and Ferrari 488. Drop that LT4 into the middle of the car and we’ll call it a day!
Although I do agree with you wholeheartedly, I have to discount Infiniti/Nissan while the GTR does not have sister model with Infiniti.
The deal is this Cadillac is not going to change with one model in one year.
Second it will take some real engineering, it will take solid marketing but not by just anyone. It needs to be someone with passion for the product too. Too many marketing major end up with people selling product they do not understand or know. I expect to see much more change in 2016 model year.
Finally we need to continue to see strong leadership that is willing to do what is needed not the easy thing. They need someone strong like Johan has been to make some difficlt changes not blink and continue to stand up to those in GM that are still fighting for the old culture.
This is going to be painful at times and take time to complete due to the time it takes to make these changes.
We will be arguing about this for a couple years. But we will see the changes over time with each year. 2020 should bring full new product under the be management.
Scott,
The first and very first change needs to be top-notch product–and don’t tell me they have that now because they don’t! When they have top-notch product, the importance of marketing decreases. If you have a great or best product, it tends to sell itself.
Martin it is close but it needs to be better to be the best.
Yo be the standard you need to set the benchmark not match it in s budget.
The CT6 is closer but we will get a CT8 the will be spot on.
The ATS and CTS will get a revamp soon to address the short comings.
Cadillac is not where it needs to be but the people and money are in place to take them where they need to be. It is only s matter of time.
Also they do not have to volume leaders here if they can turn the profit on unit sold. This is not about volume but profits.
Scott,
Not even close on being top notch. Pricing it so does not equal reality.
Look at Consumer Reports reliability ratings. My experience with my $55K ATS corresponds with reports of other subscribers. I wish I would have kept copies of all the recall notices and there is another one coming. The DIC unit had to be replaced in its entirety, the blind side warning unit on right side replaced, service dept. just ordered 2 pieces for front I believe ball joint units that were worn. This is top of the line, relatively easy driving, superb maintenance. You can qualify this as near top notch, but I term it near the bottom. This is further confirmed by J. D. Power initial 90 day report by owners. I believe only two or three luxury brands below out of eight and Cadillac was even trumped by Lincoln! There is so much work for them to do and they need to start turning the ship around now and enough of this wait for this vehicle and that vehicle because they are losing customers that are never going to return.
I need someone to explain economies of scale and covering fixed costs. How are you going to cover fixed costs with less than 200,000 units a year–if they continue as they are going? I guess the attitude is fixed costs are a necessary evil for all the other GM divisions but Cadillac is exempt?
Mild refreshes as the Escalade got, are not the answer(you still have have $75K+ monster with a third seat not usable for anyone but children). Not a problem in 3-seat Lincoln! Mild tweaks for next years ATS is not the answer either.