Cadillac’s Growth In China Means ‘Flexibility’ In The Midst Of A New Product Hiatus
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Cadillac President, Johan de Nysschen, has been outspoken on allowing the brand time to turn things around for good. However, that patience has been met with some pessimism from dealerships clamoring for new products, especially crossovers, in today’s market.
Automotive News reports Cadillac sales are expected to increase this year over 2016, but the real helping hand will be the brand’s rapid growth in China.
Deliveries of new Cadillacs in China grew a whopping 46 percent in 2016, while that figure fell three percent here in the United States. However, it’s not all bad news. While China pays the bills for Cadillac, it buys time for the brand at home to put together a truly competitive portfolio of vehicles coming in the next couple of years.
“We are moving Cadillac from having this very strong U.S.-centric focus to having a global focus,” de Nysschen said in an interview. “The time will come when we will sell more Cadillacs in China than here.”
But, he also went on to say Cadillac wasn’t taking it easy because of growth in China. The brand is still focused on the U.S., which remains its number one market.
“I never consider that we have breathing room,” he said. “I would describe it as it gives my team some flexibility.”
The first of Cadillac’s new products will likely come with a 2018 Cadillac XT3, which will slot below the 2017 Cadillac XT5 as a compact, luxury crossover. However, waiting 18 months for it has some dealerships uneasy.
“We’re in the retail business. We live and breathe month to month and weekend to weekend,” said Bill Wallace, owner of Wallace Cadillac in Stuart, Fla. “There is a lot of product out there on the horizon, but nothing very soon.”
Cadillac previously confirmed it would undergo a product hiatus following the 2017 XT5’s launch. Since then, the XT5 has become the brand’s best-selling vehicle here in the U.S.
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Cadillac has had a lot of flexibility based on the higher ATP. They have been making money and not losing money at the corporate level.
Now on the dealer end that is where the issue is. They are the ones who will feel the pain. But many also sell other brands so only the stand alones will suffer and they are the ones that we really would like see thrive.
I suspect we will see a Cadillac debut at the NYIAS this spring for a January 2018 availability.
That will make it about 18 months since the XT5 debut in late spring 2016.
I realize SUVs are the hot product in the current market, but in addition to new SUVs, I would love to see Cadillac develop a new Seville and a new Eldorado. I think both could be built on the CTS platform. They should be both sportier and more luxurious than the current CTS. The Seville could be a “Low Roof Sedan” similar in concept to the Mercedes CLS. The design should incorporate suicide rear doors and 4 bucket seats. The Eldorado should be a 2 door version and incorporate hidden rear doors, similar to the rear doors used on some pick up trucks. The ones that are not full 4 doors trucks, but have jump seats in the rear. The Eldorado should also have 4 bucket seats.
The Eldorado makes sense being a 2 door model and built on the Omega platform. That would fill a void in the line up and spread the Omega platform around a little more but why a Seville?
The prior Seville (STS) was a sporty mid-sized sedan which is what the CTS is.
It would be redundant to make a ‘Seville’ to cannibalize CTS sales.
Jamdown is correct. The CTS essentially took the place of the STS while the ATS took the spot of the Gen1 and Gen 2 CTS. Its obvious in price and the exact same size the current Alpha CTS has versus the Sigma STS. It begs the question: WTF didn’t GM just name the ATS the Gen 3 CTS.. and the CTS the STS? The XTS is pretty much a better DTS, while the CT6 was orig gonna be called the DT7
I just recently took delivery of my 5th CTS, a 2017 V-6 Luxury Sedan. Its a great mid-sized luxury car, but it is not the “Ultra Luxurious” car that the Seville was. BTW I also had a 2002 Seville SLS, V-8 FWD Sedan. It was probably the least favorite of my 15 new Cadillacs. It was nice, but not particularly sporty or Ultra Luxurious. It was a big comfortable car, but not as special as a Seville should be.
@ FrankR. I have to disagree slightly. Yes.. the old Sevilles were more luxurious but lack the real “sport” that has become the staple of the actual segment. In terms of BOTH luxury and SPORT, the old Sevilles simply were a one trick pony. That is not to take away from it. In its time that was the norm for luxury. The Seville along with the Mercedes counterpart were both JUST luxury. But that is the thing. The market is not what it once was 20, 30, 50 years ago. Cadillac sales are lagging behind competitors because it is, going back to the headline, without the necessary vehicles to compete in all areas they do. Seven (7) Vehicles versus Mercedes having sixteen (16) for instance.. and I believe 8 of those Mercedes are SUVs, the hottest selling type of vehicle in any segment
Also.. U say U have a ’17 CTS V6 Luxury. I currentyly own a ’16 CTS-V. It is fully loaded and when comparing it to the competition from BMW M5, Benz E63AMG, and Lexus GS-F I found the luxury amenities in my Cadillac to better than BMW and Benz, and on par with the Lexus. When it came to “Sport;” Cadillac destroyed them all.
I agree with you regarding the Sport component, but still feel that the Luxury component can be ramped up a notch or two. It goes without saying that a modern Seville would maintain the dynamic attributes of the current CTS and possibly incorporate the features of a CTS-V Sport, as standard equipment with the option of adding the V package. The overall look could be sportier, as mentioned in the style of the Mercedes CLS, Suicide doors would just make it cool. The interior should have 4 bucket seats, like the Porsche Panamera. I believe it would be a winning combination, especially if it wears a real name…Seville.
That kind of luxury died in the 80’s about everywhere. It went out with the bench seat.
It by many is seen as old, outdated and just cheap.
Like the new style or not it is where most of the market is. It is not German it is just the Luxury market. In fact almost all segments today cars are expected to handle as well as ride.
The global market now dominates and they will have to deliver what is expected. It is not chasing the Germans as much as the Germans just defined where the global market is going and they gave them what they wanted. They have evolved much too. Compare a Benz or BMW of the 60’s and it is not what it is today.
Sales in the U.S. , plus great sales in China, gives Cadillac a large development budget to work with. Within GM, Cadillac does not have to fight for any necessary funds for their ongoing product expansion and improvement programs.
Developments within the Cadillac continue to be very dynamic.
We must remember the global foot print here.
Models introduced must appeal to the American market but also continue to engage the Chinese market and grow in other markets like Europe and the Middle East.
So doing more CUV model here will work but yet you will still need the cars that appeal else where.
I expect you will see Cadillac touch many areas of the market with a global vision in mind. They will balance the offerings to get the most from investments.
Seville, Eldorado, whatever. They’re dead Jim. Cadillac uses an alphabet soup naming convention now. Multi-syllable names are a quaint reminder of the past. As Cadillac embraces the next generation of potential buyers, those names will seem even more ancient and irrellevant than they are now.
The elephant in the room being ignored is the potential for a looming trade war with China. If that were to come to pass, you can bet iconic American brands like Cadillac would suffer. The government controls the market there, not the consumer. (Though they would prefer the populace isn’t agitated as civil unrest is frowned upon and dangerous to the strength of the Communist party.) Regardless, if anti-Americanism were to prevail, GM can pretty much kiss their Chinese sales profits good-bye for the foreseeable future.
The current administration axed any hope of participation in the TPP today –it wasn’t in effect and had never been ratified by congress anyway. This is a clear signal to our trading partners that the old way of doing business is obsolete and bigger changes are on the way. Both US & Chinese economies would suffer in different ways if things get ugly. The difference is the Chinese economy isn’t wired tight to begin with and it wouldn’t take much of a push in GDP to collapse; the US economy is more resilient. The threat of upending the Chinese economy and the fallout to their society is a major bargaining chip the US has to wield. We just print more money and dig the hole deeper to bury our heads in the sand, anyway.
Right, wrong, or indifferent, the next few years are going to be mighty interesting to watch as events unfold.
China has room to work as while they will make threats they need us as much as we need them anymore. They can not go it alone as if they try to cut us off they will have lost most of their consumer markets.
Now in the future if we do not correct things now they could be a big problem if they can be self sustaining with their own markets. But right now they can not do it..
The Chinese economy is only surviving on their currency manipulation.
Besides if they cut us off where will they seal all their intellectual property.
I expect some pushing and shouting along with threats but there will be a deal struck that will work better for us till they cheat on it.
The only radical wild card is if they make treats to the other Asian countries but I am not sure how well that will work as they are not dealing with people anymore that are afraid to take a stand. This will not be a repeat of Syrian mistakes.
Our big threat is like it was with Russia till they were let up. We can hurt them economically and now that their people have tasted the better life they are more incline to rise up or to go against the government. The governments problem is they are very outnumbered by their own people. While China has been learning how to grow a controlled capitalism they still have to face the social aspect of it. Gorbachev has to learn this too. The problem is they let the hard lines back in while they were trying to learn the social aspect.
GM earns several billions a year from their joint ventures in China with projected growth to continue for 15-20 years.. At the same time, the only China made cars exported to the U.S. are GM’S Buick Envision and a new Volvo Luxury Crossover.
In Japan, GM is not allowed to build a factory and faces many restrictions to import cars to Japan. In turn, the Japan owned car companies still export many luxury models into the U.S., can own and operate non Union assembly plants in the U.S. and take all of the profits back to Japan, without restriction.
Countries like Japan may have more to worry about with regard to the new Administration.
I agree with post posts. The vast majority of the automobiles produced in China are intended for the Chinese market, which has huge growth potential. @bobp: The CT6 Hybrid will be exported to the US in limited quantities.
There’s a storm brewing between the US and China over sovereignty issues regarding their South China Sea claims, which have been upheld by the Hague tribunal. Coupled with our “meddling” in internal Chinese affairs regarding our accusations of currency manipulation, the US in their eyes is pursuing an antagonistic policy stance which could easily erupt into a government-led wave of anti-Americanism. In turn, American products sold in their country (and made by their own people) could suffer greatly. This is where GM could (worst-case scenario) lose their sizeable infrastructure investment in China. The British learned this the hard way with the opium trade awhile back.
Presently, the Chinese don’t innovate – they imitate. Over the last thirty years, the Chinese economy has been transformed by Western manufacturing technology. With a huge labor pool, and central planning it has become a manufacturing powerhouse. Every year, the quality of their goods increases, and when they reap the full rewards of hoards of educated engineering students educated abroad, they will surely become a technological force to be reckoned with. As the West teaches them how to build quality durable goods, vehicles and aircraft, (all huge segments of our economy) we also stand to lose in the long run, as markets we once dominated dwindle.
The Western policy of (hopefully) liberalizing China by transforming their centrally-planned agrarian society into a consumer-based economy has partially worked, but Communism is entrenched there now and is evolving away from the North Korean propaganda-spouting style of old, but still permeates every segment of society.
We thought the internet would be the Great Equalizer by allowing the free flow of information. Instead, the Chinese have the most censored internet (think Great Firewall of China) in the world. This could ultimately backfire for them socially.
What does all this have to do with GM? Plenty.
Tomorrow, the Big Three Automakers meet with the new administration. Not surprising this meeting is scheduled for the first week’s agenda, due to its high importance to US automakers.
The media is mainly reporting their (US automakers) concern with “the Mexican Situation.” Little is being mentioned publicly regarding China (though I’m sure it’s at the near-top of the meeting agenda.)
Mexico is pretty manageable from a US perspective. They have more to lose than us, so they’ll grudgingly go along with whatever The Plan turns out to be. China on the other hand, is a much more complex issue, with a military component of the equation to consider as well as a population that could be easily tipped over if the economy soured and they turned on the government.
With both countries, GM has a lot at stake, and the ramifications, from international goodwill to higher sticker prices for consumers ultimately affect all of us.
Like I said, the next four years are going to be interesting to watch. . .
What do you think?