Cadillac critics tend to focus on the fact that the brand isn’t growing as fast as its rivals — BMW, Audi, and Mercedes-Benz — in the luxury car sector. Interestingly, what most of those critics don’t mention is that the brand continuously has the highest Average Transaction Price (ATP) in the U.S. luxury car sector, meaning that customers are not only willing to, but actually are paying more for Cadillac vehicles. Putting away the sales comparisons for a minute, let’s explore how Cadillac contributes to GM’s bottom line.
In 2015, Cadillac sold 278,000 vehicles globally. In the United States, it had an Average Transaction Price of $52,000. Assuming the $52,000 ATP for all 278,000 Cadillacs sold results in $15 billion in revenue (278,000 x $52,000. In other words, Cadillac contributed roughly $15 billion to the $152.4 billion in revenue GM earned in 2015.
So, assuming an average profit of $4,000 per vehicle, Cadillac contributed a net profit of $1.1 billion to GM’s $9.7 billion in 2015.
So despite Cadillac sales not being anything to write home about — which will likely continue being the case until the lineup is fully built out — the prestige luxury brand still plays a vital role in GM’s growing financial prowess. And that should only improve over time as Cadillac continues filling huge gaps its product portfolio to include a full range of crossovers, an entry-level compact model, and other new vehicles to challenge the competition head-on. And by then, Cadillac should be well on its way to its objective of selling 500,000 vehicles by 2020.
Comments
If the profit is roughly true to the amount, that is good news to Cadillac and expect this year’s profit to increase with new help from CT6 and XT5.
This why they are a investing into the brand the way they are. Also this is why Volume is not as important right now.
They will grow models and expand sales over time and only increase the profit picture.
Now they could do like Chrysler and discount the cars and sell more but not make as much money,
With each model and each additional feature and item on these cars it will increase the value and it will increase the ATP adding to more profits in the future,
While they do need a specific volume they are not tied to it. This is how luxury brands compete mostly on profits realized not how many you sell.
When you make large ATP like this you no longer have to sell the models like you do Chevys where volume is needed.
Let’s see what the real profit per car is when you take the Escalade and XT5 out of the picture.
Of course it will be lower. What’s your point?
Expensive SUV’s and crossovers drive the ATP up. Sedans are not selling very well overall right now. Thank you for the revelation.
Don’t know why people make stupid comments and observations like that. It is not the 80s anymore and last time we check, the Escalade and XT5 are Cadillacs. Don’t know what your point is but you also feel that way that Mercedes, BMW, Audi, Lexus, Infinit, Acura and Porsche should take out their SUVs and see what the profit per car is as well.
278,000 sales with an ATP of $52K would be closer to $14B than $15B on my calculator? I know what’s a billion dollars?
I’m not really certain that ATP of $52K is for global sales, I might be wrong. Have a suspicion that is ATP in US.
I’m going to take issue with your “assumption” that there is a $4K contribution margin per vehicle–that is only an assumption. That would have been a margin of 7.7% in 2015 an I “assume” that probably didn’t happen since there was an article in Reuters 2 days ago where JDN said he had 10 years to get the contribution margin to 11%.
Let’s be frank about the ATP also–20.5% of all Cadillacs sold domestically in 2015 where $80K Escalades.
Amazing on all counts. Me wonders how Ford hits its near record profits without a strong luxury division. I’m generally curious about GM profits minus the Tahoe, Suburban, Yucan and Escalade? Or profits minus Buick? I wish GM would break profits down so we could see Chevrolet (vs Ford) profits.
Volume is what is helping pay the bills right now . All you have to do is look to the SRX , that alone tells the story .
The goal of 500,000 units sold by 2020 isn’t going to happen . That figure is assuming global sales increasing with a hiatus of any new product other than the XT5 and CT6 . The fact is a robust sales of the CT6 because the XT5 is replacing a model that has been growing almost every year the old SRX . Thats only if the CT6 sales are phenominal .
A third of Cadillacs revenue is coming from China , and there is the Lincoln Continental coming soon as well . That is a car built for Chinese tastes , which will be something brand new to compete with the CT6 . China seems to be excited that the Continental is coming , where here in the states the interest isn’t as big .
No way is the Global ATP the same as the US; it is not even close! Escalade is 20% of US sales; in the rest of the world it is about 6%. (we all know Escalade is what drives Cadillac’s US ATP price so high) I’d put Global Ex-US at about $40,000 tops, as the vast majority of sales are ATS and SRX’s.