Cadillac’s rebuilding process is far from over, but the brand’s president, Johan de Nysschen, is pleased with what has been accomplished in a short period of time, according to The Detroit News.
de Nysschen moved Cadillac to New York City a year and a half ago to provide some separation from the General Motors mothership back in Detroit, Michigan. The risk has been worth the reward, according to the Cadillac chief.
Since the relocation, Cadillac has put a decisive plan into action and the positives are already cropping up.
The brand’s revenue has increased over the past two years; average transaction prices have climbed to surpass BMW, hovering around $55,000; global sales rose 40.9 percent during the month of April and de Nysschen thinks Cadillac are being parked in the right driveways for sustained growth.
“Our aim is not to park a Cadillac in every driveway, but the right driveways,” he said. “The plan is on track.”
He also reiterated North American sales are projected to stay flat until new product is launched in 2018. $12 billion is being spent to launch two new vehicles a year through the end of the decade. These vehicles will be the real test in the market, including the Cadillac XT4 crossover.
In the meantime, the NYC move is still being considered a positive catalyst for change by executives. Cadillac CMO Uwe Ellinghaus said the brand has attracted new talent from a variety of other industries to help rebuild the Cadillac brand.
“It’s working very well,” said Ellinghaus. “I can say that we were able to attract talent from the luxury automotive space as well as the luxury non-automotive space.”
Cadillac moved just 23 people to NYC when it announced its relocation. Now 120 employees staff the brand’s SoHo headquarters, hailing from the aviation, hospitality, banking and fashion industries.
Comments
It’s too soon to say anything has come from the move to NYC, other than higher costs to GM. That Cadillac has surpassed BMW in average transaction price has more to do with booming Escalade sales than the move to NYC. Naturally Johan has to declare victory on the NYC move, since it was his idea. The rational view is that it’s too soon to note anything positive from this. And of course if nothing positive is seen, Melody Lee will be arguing that Cadillac’s “turnaround” might not show an improvement for another 10 years – great way to give herself job security.
“Our aim is not to park a Cadillac in every driveway, but the right driveways,” he said. “The plan is on track.”
I garage my cars so I guess JDN hit. I bought my final Cad last year. Good job!
That “right driveways” thing is somewhat offensive, snob cultivation. Is your money green enough for Cadillac? Are Cadillacs only to be owned by those who know all the right people, and take all the right pills?
Pretty much. Money is money, and you can usually tell who has money by their house, and the cars that are parked in the driveway attached to it.
People judge others all the time. It’s something that’s existed long before Cadillac was conceived, and it’s not something that will be up-ended by having Cadillac revert itself into a shallow clone of its past that nobody can remember anymore.
Call it snobbery all you like, but Cadillac’s don’t belong in trailer parks, and shouldn’t be seen as a retirement reward from 40+ years of factory labour.
It was never an issue of America vs. the world, but of moneyed individuals wanting ways to display their wealth, be it cars, clothing, race horses, estates, artwork, wine, and so on. You might want to research how Cadillac was a part of the world back in 1920’s, when they really were at the top of their game and worthy of ‘the standard of the world’.
All Cadillac had to do was lower their standards once back in the late 1950’s, and it was all over for them. While you’ve accepted this lower standard as an acceptable position of Cadillac as an object of status, others will not.
Sure, there are some Boomers like yourself who are hanging onto the idea of Cadillac as the prize at the top of the Slone Ladder. But that model only works if you honestly think you can save money for decades and retire a millionaire; hopelessly unrealistic, even more so if you’re a life-long blue collar worker.
You’ll be quick to downplay Gen X, Y, and Z for not sharing your impression of Cadillac, and quick to shame them for expecting more of Cadillac. But if you are unwilling to demand more of Cadillac, and you yourself are unwilling to raise your standards to meet the new Cadillac, others will. Don’t start crying if Cadillac has the balls to elevate its standing to levels were it becomes a status symbol for other generations other than your own.
But knowing you, you’ll just default to the tire ‘America vs. the world’ argument, as you can’t seem to understand that YOUR OWN COUNTRYMEN might want some way to display their wealth, and yet can’t find a suitable way to do it with an established American luxury vehicle.
Grawdaddy, thanks for the well-written but wrongheaded diatribe aimed at me.
First off, Cadillac in the 20’s made the best mass production cars, which may also have made them status symbols. But you can’t claim that everyone who had a Cadillac cared about it as a status symbol. I realize that you are fixated on wanting to “display your wealth”, which frankly goes along with your nouveau riche background. Not that there’s anything wrong with striving in life, and you’ve mentioned that you are proud that you are from a family of modest means, yet you are proud to be living “big time” compared to them. Personally I consider showing off wealth to be like doing an end-zone dance after scoring a touchdown (I’m not sure if they do that in Canadian football) – it’s unnecessary, you made the touchdown. You have the money, and as Forrest Gump said that’s good – one less problem to worry about. To me, money is about being able to do what you want to do, not about doing an “in your face” dance to other people about how I’ve got what they don’t have.
Believe it or not, some people have bought Cadillacs because they are nice cars, because other cars did not give them the same kind of driving and riding pleasure as a Cadillac. Do some people just care about “status symbols” when they drive? Absolutely. But the point is that being “exclusive” alone does not drive a lot of sales or profits. GM is in business to make money, not to make an artistic statement. JDN seems to think the goal of Cadillac is to be exclusive, I say the goal should be to make great cars that no one else has, and sell as many as they can at high profits. Obviously there is a judgment call on where to price a car, but given the massive fixed costs involved with developing, testing, tooling, marketing, etc. a car model, you can’t be too “exclusive” or you won’t make much profit (i.e. your fixed costs per unit sold will be too high).
In terms of past exclusivity of Cadillac vs. modern times, the reality is that people in general are much richer than they used to be. For example color tvs and air conditioning were once very rare and exclusive, now they are common and that’s a good thing. It’s not the 1920’s any more. A much larger segment of the population can afford Cadillac, just as a much larger segment of the population can afford BMW, Mercedes, Audi. Cadillac would be foolish to try to put exclusivity at the same level today that it held in the 1920’s. Personally when I see someone else driving a Cadillac, I think “that’s cool, they can enjoy a great car too” rather than “that sucks, I wanted to be the only one”, but I guess you have a different way of looking at things.
I like what I like, I enjoy what I enjoy, and I don’t care if someone else thinks I’m “cool” to have those preferences. Nor do I care whether someone knows how much money I have. I don’t buy things to “show off wealth”. For example, I probably have a better stereo system than the vast majority of people. Yes it costs a good bit of money. But I don’t have it to show off wealth, I have it because I enjoy it. Same for the cars I own. And I don’t think I’m the only one with that point of view. Cadillac can sell a lot of cars to people like me. Of course if they price them at Rolls Royce levels, they can forget about me as a customer. Not because I can’t afford Rolls Royce, but that’s not how I would choose to spend my money.
I don’t consider myself to be a “boomer” either. More of a post-boomer. I think of the boomers as being the generation of Vietnam and Woodstock. I was barely 9 years old when the Tet Offensive was underway, and only 10 during the Woodstock concert. Now I did make a reference to the 1976 song “Life in the Fast Lane” in my previous comment, but I thought most everyone would have known that song regardless of age. Probably I was wrong about that.
And I don’t view things in terms of “America vs. the world”. I have observed that there are various car types and preferences in various parts of the world, and that makes sense given geography, laws, and culture. When I compare American cars to German cars, it’s not about “us vs. them”, it’s an observation that cars well-suited to short trips on the Autobahn may not be the best for traveling typically long American distances on American roads. Japanese cars on the other hand evolved with high gasoline prices, so it’s not surprising that their cars do not typically have the high power of American cars. Now I wish that American cars, especially Cadillac, would focus on reliability the way the Japanese have done (especially Toyota/Lexus), but that doesn’t make me see things in terms of “America vs. the world”, it’s just an observation.
I’m all for free trade and the free exchange of ideas and best practices. However I think it’s silly for Cadillac to throw in the towel on American luxury in pursuit of the German luxury fad, and I’d like to see Cadillac be Cadillac. Not with old models and old technology, but by putting their classic values forward, including the one that made the company in the first place – reliability. Rather than saying “let’s just embrace German values” and see if that works. By the way, if your buddies the status-symbol seekers think that German cars are best, they aren’t going to settle for an American brand even if the cars are identical to German ones in every way except the badge. Because – by your thinking – the badge is everything anyway, it’s the status, not the function. So Cadillac can never win by being German, only way forward is to be Cadillac. And if more people can afford real Cadillacs with real Cadillac values (not cheap de-contended, cramped, underpowered, hard-riding frauds), then all the better – I’m happy for them.
JdN displays a lot f arrogance for someone who is not moving metal.
Cadillac has been historically held back by GM’s Midwestern culture, but JdN understands how luxury works. You have to be exclusive to be aspirational. Ferrari and nearly all legit luxury product makers deliberately restrict supply for pricing power and the long term-health of the brand. In the same way, a 10 year old S-Class will cost nearly as much in maintenance as the monthly payment cost it’s owner, which is by design; MB doesn’t want a bunch of gold rim S-Classes at the Dollar General scaring away new S-Class buyers.
TD, thanks for what I assume is parody. Cadillac has been historically held back by Midwestern culture? Really? All those great Cadillacs and dominance of the luxury market could have been even stronger, if not located in the Midwest?
Midwestern culture has produced – among others – Henry Leland, Henry Ford, Walter Chrysler, Thomas Edison, Wilbur and Orville Wright, and Walt Disney. Today, all the major motor/tractor businesses are in the Midwest – GM, Ford, Chrysler, Harley Davidson, Caterpillar, John Deere, Cummins Engine, Navistar International, etc. And New York has produced – what exactly? The New York Stock Exchange? The Fulton Fish Market? How exactly does New York compete with Midwestern innovation, let alone keep Cadillac from being “held back”?
Ferrari’s brand is healthy because they hold back supply? No, because they make beautiful cars with race-car dynamics. Ferrari sold 4.4 times as many cars last year as 40 years earlier – has that hurt the brand?
MB’s S-class costs nearly as much to maintain as to own, and that’s by design – the owners prefer it that way, to make it more exclusive? Seriously, I can’t imagine some S-class buyer saying “I not only love paying over $100k, for this car, but I look forward to paying nearly as much in maintenance, it’s soooo exclusive!”.
I say you don’t build a brand by exclusivity and high maintenance costs, whether that’s in the innovative Midwest or elsewhere. Leland founded Cadillac on reliability, not exclusivity or high maintenance costs. “The Cadillac of” meant the best, most attractive, most innovative. It’s only when they tried to become more German that they lost their way (the Cimarron, the V8-6-4 engine, the Catera – all were about “fighting the Germans”).
I don’t see where the move to NYC is going to do Cadillac any good, but I’ll reserve judgment until some NYC-designed Cadillacs actually come to market. JDN is declaring victory in NYC before anything has happened. Remember that Lincoln/Mercury had the bright idea of moving to California in 1998; they realized that was stupid and moved back to the Midwest in 2002. Cadillac is likely to make the same decision eventually, and it will be fun to see Melody Lee kicking and screaming over not wanting to leave Manhattan.
Don’t be so defensive about the Midwest and try to look at it objectively. The Detroit based auto industry has been in decline for 50 years because of it’s failure to innovate, and your attitude is representative of why it has done so. This deep resentment and almost proud misunderstanding of how the luxury market works has resulted in the Germans, Japanese, and now Tesla taking in huge amounts of revenue in the NA market. GMs engineers can make great Cadillacs, but Mary Barra was smart enough to realize that neither she nor anyone in Detroit has the executive talent to do the right things for Cadillac. In fact, Cadillac’s biggest obstacle is that it is seen as part of the past, part of the old guard, and part of staid and plain GM. If anybody can fix it it’s going to be someone like JdN, who will hopefully get Cadillac on the radar of mainstream luxury buyers despite it being part of what many tastemakers see as a symbol of American industrial decline and arrogance.
JcN is arrogance personified.
I don’t know about the Catera, but the Cimarron and the V8-6-4 engine were all about cost-cutting, not being more German. Sure, on a size basis, GM tried to get something to compete at the compact level, but like American automakers’ approach to luxury from the mid 70’s to early 2000’s, it couldn’t compete thanks to cost-cutting through cutting corners.
Nobody can deny this.
This is why whenever I hear the terms “American Luxury” and “German Luxury”, I’m curious to know what the person means and what time period they’re referring to.
Curtnik, well of course the Catera was meant to compete with the Germans – it was in fact a German car. Designed, engineered, and built in Germany. All Cadillac did was slap a badge on it. It was not a beloved car, and ironically its problems and shortcomings drove formerly Cadillac buyers to.. wait for it… German cars.
The Cimarron was meant to compete with the BMW 3 series. Yes that seems like a joke now, but that was Cadillac’s answer to the Germans at the time.
The V8-6-4 engine was Cadillac’s response to the higher fuel efficiency of German and Japanese cars, at a time that fuel prices in the US had increased dramatically. The idea was to get the power of a V8 with nearly the fuel efficiency of a 4 cylinder, via turning off 2 or 4 cylinders when not needed. The technology of that day couldn’t make it work, but Cadillac released it anyway, further tarnishing the brand.
Thus Cadillac’s biggest problems of the late 20th Century were all caused by trying to be more like the Germans.
As to what German luxury vs. American luxury means, you could do an internet search. Basically the German manufacturers put a premium on “handling” (sharp turns at high speeds) at the expense of a comfortable ride. German drivers tend to like to “feel the road”, where American drivers traditionally felt that luxury meant freedom from bumps and shocks. The differences mostly evolved from the different road conditions in Germany vs. the USA, as well as the greater length of trip common to the USA.
American luxury has traditionally meant a big roomy, comfortable riding, strongly powered car, with luxury trimming and the latest electronic entertainment gadgets. German luxury has traditionally meant a semi-sports car with some luxury trappings. Unfortunately Cadillac misinterpreted its reliability problems as a desire for a more German-like ride, and associates a comfortable ride with old people who will soon die off, never to be replaced by other old people.
Instead of selling roomy comfort as a first-class ride, Cadillac has thrown in the towel to the German “sport ride” a la Coke giving up in 1985 and imitating Pepsi (until Coke came to its senses a few years later, and started making real Coke again, and became the dominant cola again).
Drew, in modern specifications, what is American luxury? What kind of engines, technology, drivetrain, etc.?
Or better yet, what kind of car on the market is the closest to representing American luxury?
Curtnik, “American Luxury” is a set of values best embodied by Cadillac when it was the US luxury car leader for many decades. The specifications change but the values do not. I have mentioned these many times, but here we go again:
American Luxury/Cadillac values = roomy, smooth-riding, strongly powered, genuine luxury such as real leather seats (not vinyl as in the base ATS and CTS!), up-to-date consumer electronics/amenities, ease of driving, leading edge/brash styling (generally with straight lines vs. European rounding), and let’s not forget RELIABILITY. Henry Leland founded Cadillac on reliability, and this has been a hallmark of Cadillacs until they started to eye the imports and cheapened their output, toward the end of the 20th Century.
As far as engines, typically “American luxury” today would mean a V8, or at least a turbocharged V6 (or better yet a supercharged V6). I don’t see drivetrain types as entirely linked to American luxury, they can be RWD or FWD. Although realize that roominess is a hallmark of American luxury, and RWD takes away some of that space. Also FWD is easier to drive in snow/slippery conditions, and since I consider ease of use to be part of American luxury, that may be a factor also. But I wouldn’t totally exclude any RWD as “not American luxury”, even though the 1967 Eldorado was a positive breakthrough in ease of driving in difficult conditions, thanks to the FWD platform.
What kind of car on the market today best represents American luxury? Well nothing from Cadillac right now, the most recent would be the DTS premium. On the market today, best example of “American luxury” would be the Lexus LS460. Yes it’s Japanese, but it comes the closest to ticking off all the boxes in the category (coming up a bit short perhaps on styling).
The LS series is one reason why Lexus grabbed the US luxury sales lead from Cadillac (after one year held by Lincoln), after the Catera disaster to rule the 1st decade of the 21st Century. Sadly Cadillac has no answer for the Lexus LS series today, instead choosing to pursue the German sports-luxury fad (which is likely to fade soon, IMO).
With SUVs on the ascent, Cadillac’s investment into Alpha and Omega seems almost wasteful.
Without sedans Cadillac and Buick Aveair should dominate luxury while catering to unique demos.
My money is still on Buick.
Johan de Nysschen will say the world is flat if it will save his job and knows he has done a horrible job with Cadillac as it was a mistake to cancel the CTS coupe and wagon variants as well as not developing the ATS; Cadillac sales in the US is in a death spiral as the only thing saving de Nysschen’s job is Cadillac sales in China.
Well, part of being a corporate clown is to regularly pat yourself on the back (and, of course, the “team”), but right now with US sales stagnant the growth is all China, and perhaps that will be in the end what Cadillac is all about. The CT6 is barely shipping 1000 cars/month since its intro a year ago, and the CTS and ATS are in the same dormant volumes as well with the old, stogy XTS slightly bettering them both. The Escalade is getting long in the tooth, but it and the new XT5 are currently carrying the brand in the US. Certainly Cadillac is late to the party on SUVs, and their intro in the next couple of years will help, but everyone else is doing the same thing and it’s unlikely Cadillac will stand out, particularly with their “price it up” strategy. Cadillac Houses are an inventive way to show the Corporation that you are thinking out of the box, but in the end the only people buying cars in NYC are the limo drivers – pretty much the same error Hillary made in her rush to failure.
I would hope the Cadillac team would spend all of its time on the vehicles – features and styling that set them apart, or at least at the front of the line. The strategy has to be clear, but currently it’s muddled between luxury ride and the V-Sport racers – and sadly the current base CTS is neither, so everyone has something not to like about it. The CUE systems are glacially slow about getting to prime time, and the whole brand lineup looks like clones done in slightly different scales. Putting a goofy shift knob system on the XT5 and CT6 are not the way to differentiate yourself! Get back to basics – make great vehicles and the rest will take care of itself.
CT6 is a 60k fullsize luxury sedan and the fact that it has outsold the smaller CTS in some cases speaks volumes. it takes probably 3-5 years to develop an all new model. the current line up of sedans and the only CUV the XT5 are not johans work. they have invested little money into the current line up because the money is being spent on the next generation of cars that are being developed under Johan. he has a plan, and you cant judge the result until the plan is executed.
While I wish Nysschen and Cadillac continuing success, I find offensive elitism in this comment _ “but the right driveways,”
JdN is making excuses for low sales volume.
If you like Cadillac and buy one, your driveway is the right driveway period! No need to get in a hissy over semantics. Anything you buy whether, luxury or non is for your enjoyment not others.
Well the truth may hurt some but for Cadillac to mean something it needs to be a car of class and culture. The at one time were that kind of car when only the higher classes could afford a V16.
Cadillac got to the point just anyone could buy one for nearly the price of a Buick. This is not my opinion but what actually happen to my Buddy who went to. Buy a Regal and the dealer put him in a Coupe Deville for the same price.
You can not price down image and petitgree.
If Ferrari would make a series of cars priced with a Camaro it would damage their image. Porsche did that with the 924 an 944. Sure they sold more cars but they hurt their image and did not make much money. They went back to higher prices and while they sell fewer cars they make more money.
A key part of a car with a top image is that it is a car everyone wants but only a few can afford. No poser here just people of means.
You can call it being snobs but the truth is a Cadillac needs to be a car desired by all but only afforded by those who really can afford one. No more May Kay give always.
I do not direct this at anyone as my comments are just the way it is. To be honest I make a decent living but even I should not be able to afford a Cadillsc flagship if it is built and priced right. I should want one but it should be afforded by only those who really have real funds.
Scott3, Cadillac has always been a mass production brand, not hand-built, extreme exclusivity, etc. Built on extremely high standards, but not a Rolls Royce or Ferrari in terms of limited market and extreme high price. Cadillac wouldn’t be in so many songs if it were as limited in availability as you imply.
Porsche is now owned by VW, and they sell the Cayenne SUV/wagon/thing. I see a lot of them. I don’t know if that’s hurting their brand or not, but I wouldn’t praise them as a bastion of exclusivity. BMW makes the i3, which looks pretty much like a joke to me (for a BMW), looks more like a “smart car”. MB makes plebian trucks and vans. Saying that Cadillac needs more exclusivity is just cheerleading for JDN, who is on the wrong path in raising prices beyond what the content justifies.
Yet I do agree with you somewhat, in the sense that Cadillac should not cheapen the brand by selling cramped, de-contended, underpowered vehicles. You can buy an ATS now starting at $34k, as long as you accept vinyl seats, halogen headlights, cheap stereo, no sunroof (which might get recalled anyway), etc. And of course the 33.5″ rear legroom. That should not be a Cadillac.
So JDN is talking out of both sides of his mouth, trying to make Cadillac “exclusive” with higher prices, then selling cheap cars that should never have the Cadillac brand. I guess it’s either a way of “competing with the Germans” or offering “entry level Cadillacs to young people”. This is simply a glorified extension of the Cimarron, but at least that had real leather seats. The Cimarron is where Cadillac started to go wrong.
But I don’t think you understand automobile economics if you think GM should make Cadillac a brand with Rolls Royce exclusivity. Henry Leland’s goal was never to be extremely exclusive, just extremely well-made. Does Cadillac need to return to Cadillac values? Yes. Does it need to price itself out of reach for all but the 1%? No and that wouldn’t be Cadillac.
“But I don’t think you understand automobile economics if you think GM should make Cadillac a brand with Rolls Royce exclusivity.”
Drew, your comment speaks volumes. I agree totally. I have owned both Cad and Roller purchased new. I speak from experience not theory. There is absolutely no comparison. They are two different vehicles.
If deNysschen is actually attempting to make Cadillac another Rolls-Royce he needs immediate medical attention.
My impression is that JdN blows smoke trying to hold on to a job for which he is woefully unqualified.
JDN Is not targeting Rolls by any means but he is trying to make a car that is more exclusive than a common Chevy.
There is space for cars with more limited sales that sell at a higher atp that make tons of money but deliver an more exclusive experience than Cadillac has had to offer in the past few decades.
You want to convince people that this is a special car then you do not fleet them out like a Town Car was and you do not discount it down yo a Malibu price line the 300 is today.
As for now what smoke? Name one total new model JDN has presented yet that was started since he arrived? Well you may want o note none because it takes 5 years min to do so and he has not been here that long yet.
We first need to let him deliver his product that starting this fall will bring the first model. Then watch the many others that soon will follow. Then and only then can we intelligently judge his efforts. He may suceed or he could fail but to be fair we need to see the new products to really judge.
To pass judgment now is nothing but ignorant and short sighted as to how the industry really works time line wise.
To hate his product is like me saying your appearance is troll like even though I have no clue what you look like. Would that be fair for me to say? No! The same applies here.
“You can not price down image and petitgree.”/sic
scott,
Using that logic the ATS sold be discontinued immediately with all existing stock dispatched to the crusher.
People with significant net worth do not even think of Cadillac.
There once was a time they did and the goal is to restore that image and exclusivity.
Or do you just want to keep selling to Jack with the astronaut pen at the Boca Vista retirement community.
They did it before and with time investment and the right product this can return.
Scott3, I’ll bet you a beltless trenchcoat that Jack of astronaut pen fame did not buy a new Cadillac. In fact the point was that when Jerry gave his parents a new fully loaded 1996 Fleetwood, his parents were suspected of embezzlement of the Del Boca Vista community funds because the thought was that they couldn’t otherwise afford it. And they didn’t believe that a comedian could afford it either.
But so what if they did wind up with a Cadillac, thanks to their son or even buying it themselves? How do you personally benefit from keeping a nice car from others? I really don’t understand that mentality. A great Cadillac is not just something for “old people”, it’s like 1st class seats on an airplane. Sure very few young people fly first class, but it’s not as if they would turn down a 1st class seat and say “oh that’s just for old people”.
You on the other hand seem to want Cadillac to be only for the people who fly exclusively on private jets. Sorry but the economics don’t dictate this being possible, also that’s not Cadillac’s history (except maybe in 1933 when they sold fewer than 7k total Cadillacs and nearly ended the brand as a result).
Drew my point here was a group of old people who remembered when Cadillac image matter still treasured it even after it was squandered on a Caprice make over.
The problem today is many of the older people today remember the abortions of the 80’s.
I know the episode well and the Cadillac was a punch line for the joke. Real image builder huh?
Cadillac should not be for just the old and dying they need to return to the successful and thriving no matter the age. They need to be attractive to those who have succeeded and be held up as a reward for those who made it. Not just someone who won the lottery or sold enough Mary Kay.
No private jets needed here but we will take them. The buyers should be all first class ticket buyers though.
If you recall they feel Jerry is not making that much money and they feel bad taking this car from him. They also sell it for $6,000 because they think that is all he paid. That at the time of the show was a car over $20K if I recall. Jerry had to pay $14K to get it back only then Jack drove it into the swamp.
This was never a compliment to Cadillac and was really a commentary on the image of Cadillac intended or not.
You can not discount Luxury.
Scott3 wrote “at the time of the show was a car over $20K if I recall”.
Actually no. According to Wikipedia, a new 1996 Fleetwood BASE model was $37k. So a fully loaded one, as Jerry bought for his parents, likely would have been over $40k. And that was 21 years ago. A CPI based inflation calculator shows that as $63k today. Not exactly a cheap car for the everyman.
The point of the Seinfeld episode wasn’t that Cadillacs were cars that every old person owned, the point was that this was quite an expensive car at that time. Also noteworthy is that in 1996, Cadillac was still the number one selling luxury car in the USA. A year later, the Catera was introduced, and even though it was a German car masquerading as a Cadillac, the Catera greatly hurt the brand.
Two years after that, Cadillac lost its spot as the number one selling luxury brand in the US, never to regain it (at this point). But in 1996, the time of that Seinfeld episode, Cadillac was still riding high as an expensive, sought-after, yet top selling luxury brand – the best of all worlds. Unless of course you think that it’s better to try to offset $2 billion development costs by only selling to certified celibrities like Kim and Kanye, instead of those darn factory workers you despise, who finally saved enough to retire in first class style.
“No private jets needed here but we will take them. The buyers should be all first class ticket buyers though.”
The rear cabin and the front cabin arrive at the gate at the exact same time.
“There once was a time they did and the goal is to restore that image and exclusivity.”
Scott, I am aware of that. I grew up in Cadillacs. There was a time owning a Cadillac was considered to be something special. The right driveway was anyplace the owner kept the car. BTW Cads were garaged not drivewayed.
Got to get those poor old guys like Warren Buffet out of the Cad. Tarnishes the brand. Need move V-Series types who are afraid to park the car for the repo man. Upscale!
Warren has do so much for Cadillac.
He has made them the car of the Cheap Skates.
Scott,
It’s not the customer’s responsibility to “do something for Cadillac”. The ball is in GM’s court to build a luxury car. Clearly Cadillac top brass loss the plot and the rest of GM never was luxury.
I buyer seeking a luxury vehicle would be well advised to look elsewhere.
If Jack or anyone acting on his behalf has the purchase price of the car why not? Cadillac is trying to sell with questionable success a production vehicle. That’s all Cadillac is. No more. No less.
Paying customers do not degrade the brand. GM’s penny pinching does.
Get the freakin’ plastic out of all the Cads for crying out loud. I still remember the first time I tried to put the sun visor down in my current one. It took both hands to rotate it down. The feel of cheap plastic is unforgettable. Too small to shield from the sun driving due west at sunset. I felt for the extender that is no longer there.
Leather seating surface is just that. The rest of the interior is cheap plastic.
My all time favorite is the deck release. You have to be double jointed to use the remote or close the trunk. I should say slam the lid shut. Just a cheap car with an inflated price.
Luxury buyers know the difference and look elsewhere.
I think “the right driveway” means people who will be loyal regular buyers, possibly with more than one.
If they want cars in the Escalade, CT6 Premium + CT8 price ranges, that is OK, but Cadillac still needs cars
in the ATS, CTS, XT5 price range or they will run out of wealthy buyers. Cadillac also needs to update the
models a year or two sooner. Mercedes always seems to have a new model ready. That keeps buyers
interested, rather than having to lease basically the same car/suv after the lease ends.
“I think “the right driveway” means people who will be loyal regular buyers, possibly with more than one.”
Art, early on JdN tweeted (another Twitter president) that seniors and urban customers tarnished the brand. Later he tried to clean that up referring to Cadillac loyalists.
Since JdN dissed Cadillac buyers out of the gate I don’t think our driveways are the right ones.
Art, you make sense. JdN does not. He should get his lies together or bring a car to market that sells.
Insulting buyers, especially Cadillac loyalists won’t help business. Seniors I kinda get, but I’m still not sure what he meant by “urban customers” and how they tarnished the brand.
The brand was definitely tarnished by slow, crappy cars.
Curtnik,
JdN also referred to Volt buyers as idiots. Makes ya wonder how desperate GM was when they picked up this guy?
JdN’s exit from Audi was abrupt with little detail. At Infinity his only accomplishment was to relocate the headquarters. Why GM wants a snake oil salesman to run Cadillac is yet to be seen. Time will tell if the decision is a good one.
Hopefully it will work out well.
JDN can quit wasting his time on Driveway Patrol – the fast depreciation of his metal ensures anyone who can wait a couple of years can put one on their concrete. He’s reminding me more of Hillary’s campaign, trying to price his iron so high the “deplorables” won’t get them! GM should send him out to pasture and just make Cadillac their Premium brand, and if they do well, they will automatically compete with MB and BMW and the like.
Ron,
Cadillac retains very little value. I was ready to unload mine in less than 90 days from purchase. The value is so low Cadillac refused to give me a ballpark figure. I will try to suffer the 4 year b2b warranty then I am out. Never thought I could be so dissatisfied with a Cadillac.
All those decades of Cad ownership and now I learn my driveway(s) is wrong. Ha ha!
Susan & Drew – excellent comments from you both!
I think we’re homing in on the issue here – JdN is really an elitist corporate weasel (from South Africa – who would have guessed!) who has to blow smoke up everyone’s shirt (!) to keep his job, and since he’s trapped in a GM Assembly world for his products it’s going to be impossible to be boutique (his words) and profitable. If he thinks getting the high transaction price is the way to go, quit making any vehicles for less than $75K and see what happens – then we stupid seniors and urbans will have to look elsewhere, and amazingly we’ll find that MB & BWM are making products that fill the bill nicely. I’ll predict what ultimately happens – Barra/Reuss will finally wake up and realize they got the wrong guy with the wrong strategy and shut down the Hillary House in NYC (no deplorables allowed -please bring photos of your driveway before entry is allowed) and get back to the basics – making the premium brand of GM vehicles that a fair number of consumers want and can afford. It’s probably unfair to blame JdN for all of this – his GM handlers have grand illusions and are willing to maybe even lose money in an attempt to satisfy their corporate egos. Sadly, I look forward to another decade of nonsense at Cadillac Village. Out
The problem is Cadillac lowered their standards. They once were the standard of the world and today they are not even the standard of Creston Ohio.
The right driveways are the peopke of means that define the image of the car. Cadillac was defined by corporate leaders, public leaders, celebrities, and Elvis. The degraded to become the retirement car for some factory worker.
Sorry but the reality is for too long Buick people were buying Cadillac and today they can get mad but they are not Cadillac material anymore.
Some of you here need to look up the old Cadillac ad called Penalty of Leadership from 1916. This really set the tone for the golden era of Cadillac when it was a product for the leaders in their fields not a reward for selling make up to a woman in a Dolly Parton wig.
BMW got from that odd fringe car of the 60’s to what they became by working on image and getting the tight buyers interested. They built and cultivated an image that was not yo a bunch of codgers who were only up to buy one more car before their last tide in a box in the back of of another Cadillac.
The reality is when you want to sell a more exclipusive image cars you want everyone up want one but only a few to have one. That is what builds image.
Scott, a very good analysis!
Sadly, today much of that “image” is leased, like a tux for the prom!
Scott3, you can long for some mythical “golden age” (1916 advertising, the 1920’s as the best era) in which you never lived (nor did any of the rest of us), but it’s laughable when you make statements like “Cadillac was defined by corporate leaders, public leaders, celebrities, and Elvis”. Also rather offensive as well as baffling when you write things such as “Sorry but the reality is for too long Buick people were buying Cadillac and today they can get mad but they are not Cadillac material anymore. ”
I think you fail to understand both basic automobile economics as well as the profit-seeking motive of corporations. As I’ve mentioned many times, GM is in business to maximize profit, not to make some sort of artistic statement about being desired but our of reach for everyone but the 1% (or maybe it’s the 1% of the 1%).
Perhaps in the 1920’s Cadillac could make a profit by being ultra-exclusive, given that cars were simpler and fixed costs of each model were relatively low (which is why there were so many more car companies back then). Today’s car models require massive initial costs in design, engineering, testing, tooling, marketing, etc. You can’t ask that each buyer show their “celebrity card” prior to purchase (BTW, would an Elvis impersonator be allowed to buy a Cadillac, or only the real Elvis?). There just won’t be enough sales to make it work. I think there’s a failure among some participants on this website to understand fixed costs and marginal costs, even though it’s very basic. Someone here (I forget whom) said that high priced cars always make huge profits, without regard for unit volume. It simply doesn’t work that way. Maybe it did in the 1920’s to a greater degree, but this is not the 1920’s.
Speaking of not the 1920’s, I’ve read that Cadillac used to not market to, and even in some cases (most cases?) refused to sell to African Americans in that “golden age” of Cadillac exclusivity. But in the early 1930’s, with Cadillac facing possible extinction due to rapidly declining sales, a Cadillac service manager named Nicholas Dreystadt (a German immigrant who had apprenticed at Mercedes-Benz) convinced the company to sell and market to African Americans as a way of keeping Cadillac alive. This apparently worked, and Dreystadt went on to head Cadillac, and later Chevrolet.
The lesson for me in all of this is that yes – Cadillac needs to return to and maintain its core standards of making extremely high quality, mass-production cars. No cheapening, no de-contenting, every Cadillac should be a “real” Cadillac. Cars of such high quality should be priced accordingly. But this idea of only selling to “the right people” – is silly, offensive, and not really possible anyway.
Tell me Scott3, what are “Buick people”? Is it about money or something else? Do you look at a crowd of people now, and mentally divide them up into different strata, “Buick person”, “Chevy person”, “Kia person”, “Ahhh… a Cadillac person, a leader or celebrity, maybe even Elvis!”. Now should Cadillac be offering a cramped, hard-riding, de-contented base ATS at $34k (as they do now)? Not in my opinion, because it’s not a real Cadillac IMO. But if they can offer a real Cadillac at $60k or whatever, what do you care if someone you call a “Buick person” buys it? Again GM is about making money, and Cadillac apparently has found that when you try to get too exclusive about “the right driveways”, not only can it be offensive but it can potentially end your profits and put you out of business.
Drew, we need more vinyl seated mini Cads purchased third hand on the side of the road. You and I are clueless about Cadillac. We are behind the times. No hope for us 😉
“Cadillac was defined by corporate leaders, public leaders, celebrities, and Elvis. ”
Elvis? You forgot Johnny Cash’s Psychobilly Cadillac. Ha ha!
As for your mocking various Cadillac drivers please remember that a sale is a sale. Cads aren’t exactly flying off the lots.
Ron that is not myth that is how it needs to be. Image, performance, quality and luxury/technology today need to be class leading if you intend to lead. Then no matter how the critics like you spin it the truth prevails.
Also you confuse volume with profits. Yes you need volume for a Chevy to show a profit but not st Cadillac.
Even at the volume Cadillac sells now they account for over70% of all car profits st GM. Only the trucks have s higher profit margine.
A well run luxury division lid added income and is like printing money.
Cadillacs mission is much like most luxury cars to sell in modest volumes st much higher ATP and roll up the profits.
Iit cost very little more to design and build a Cadillac than a Chevy but the proper image and technology permits you to sell the Cadillac for 2 to three times the price of many Chevys.
This is called maximizing profits.
“Even at the volume Cadillac sells now they account for over70% of all car profits st GM. ”
Scott3, where are you getting this? GM does not break out profit by brand. Also you seem to be forgetting that development costs spread over fewer units means higher costs per unit.
“Cadillacs mission is much like most luxury cars to sell in modest volumes st much higher ATP and roll up the profits”
Yes but at some point if you price the car too high and sell too few units, you lose money on the model, or you don’t make very much. Even at over $110,000 per car, how much money did Cadillac make on the XLR overall?
There’s obviously a formula of Total Profits = (Volume x ATP) – (Fixed costs) – (Production costs per unit x Volume). The only way to overcome the massive fixed costs (design, development, testing, tooling, marketing) which today supposedly starts at $1 billion per model and goes up from there, is to generate enough volume to offset it. There’s a point at which raising prices will reduce sales to the point where net profits will fall or even go negative. You can’t just say that high priced cars generate massive profits.
Drew let me set you straight on many things you are skipping over and not considering in the big picture here now that I am off my phone.
First off Luxury can not be sold like a Chevy in large volumes of a few cars. That is how we got there to this point now is it not?
Second you can not sell high volumes and create the image you need for a luxury car if just any old person can buy one. Porsche nearly squandered their image with the 924 and 944.
Third you formulas leave out much on how Cadillac really operates as in cost and other issue.
Cadillac is not a independent company. GM is trying to make people think that but it is still a division. Being a division has many privileges. Cadillac does not have to own plants, They do not have to own a test facility, they do not have to have a large tech center, they do not have to develop many of the in car systems they have like HVAC, Onstar, power seat mechanisms, Steering system, Product platforms, Axles, I could go on much more.
Cadillac also has the buying power of GM where they can cut deals to cut cost of parts by volume for all these shared components.
Yes they have some expensive property in NYC but it is not that large as their staff is very small compared to Benz and BMW or even Audi. Their engineering staff and design staffs are small as are their marketing. It is a very efficient operation.
Much of the cost is spread over the other lines GM has with Chevy and even GMC.
They run things much like a race team with two or more cars do. The first car say is Chevy carries the largest load because of the volume so they pay the most for the plant space and other cost involved. The second team is brings in as much or more money but because of the first team it does not carry the heavy load of all the cost as the first team eats most of that up.
This is why most race teams have two cars many will get most of the expenses out of the way with the development of the first team. They then have a second sponsor bring in more money and only have the cost of some extra personnel, some shop space and another truck and equipment at the track. The same crew at the shop builds all the cars and they remain the same.
In the end they bring in 2/3 more money at little investment. This is why every major MFG has a luxury division. They Make Money!
Now lets look at Cadillac’s Future. As it stands now they are making money even loaded down with dying car sales. But what are they working to bring to the market? SUV and CUV models that GM is one of the best at making. This puts them at a great advantage and they can use the same GM platforms and the same lines to build them and use their small staff to make them different enough to justify stupid prices people are paying. Just look at what the Denali does for GMC.
Okay here is another example. Porsche a well know sports car and luxury car company. They make no less than $17K-$18K per unit sold with an average sale price of $99K per unit sold. That is around 18% Benz and others are doing the same. They make more than a small Chevy cost! These are current numbers as of March.
How is Porsche doing it. With SUV models. Yes it has been controversial but it also has been very profitable. This is why Cadillac is moving this direction. Porsche also does a poor job of hiding the VW it is based on too as they even look very similar in shape and size in each model yet people buy them. They weigh in around 6,000 pounds yet people buy them.
GM is working on a similar plan to use GM platforms to make SUV models that will sell much more than their siblings and as we have seen with the an Escalade people will pay stupid money because they like them and they have a image they approve of.
Sure Cadillac is not giving up on the cars but they no longer have to carry the load as they once did as the market has changed. This in the long run is a good thing as it will make the cars where they can take more risk and do some more interesting things with them. They can even specialize them more.
As for sharing models they have learned their lesson as they will not longer do things in a poor way like the money pit XLR that was too much Corvette yet even with the changes.
Hummer is a good example of platform sharing where the H2 was a Tahoe and the H3 was a Trailblazer where people paid a lot more for them yet they were mostly still a Chevy under the boxy skin. People loved them and still many love them today as used prices are still up where most others are not. A H3T can still bring $20K-$35K in good condition today.
None of this is going to happen over night. These first new models that come out will be JDN’s first showing and they will lay a foundation. Each and every model and refresh will build upon this. This is a marathon not a sprint and with the existing profits it is sustainable.
Might also note they are growing sales in other countries like the middle east and China that also help support the venture.
They first need to build this foundation to earn the respect and image to increase the cost of future products as time goes on. It took GMC years to build the Denali line to where it is and now it is a cash cow.
Might also toss in here GM has slashed cost in building product, Mary has done a hell of a job as we have seen record profits even before cutting Opel over the last 3 years and this will only continue. GM is doing well at this. Toyota while still profitable has let their profits slide 20% down in the same time. Also Ford still has work to do as they are not making the same profits due to high cost inside their company.
VW has managed their empire well but as of late analyst have been wondering if they can keep it up in the face of declining sale in the global market. The Diesel thing was thought to have been a major hit to them but they came out well. They will pay off the loan leverage on Bentley and they may sell Ducati if reports are true.
The long and short of it is Cadillac is kind of a different deal and should not be looked or treated as the normal company.
Also we are not dealing with the same GM anymore. It is a shame all auto stocks are down because of the interest in tech stocks. They try to mask it with the autonomous cars and other tech developments but most are not biting. This also is why they are investing so much in artificial intelligence.
Cadillac is not going to be in any trouble anytime soon. Will all this work out. Odds are it will but it is not going to happen all in one year with one model It will take 10 years to show much growth and by then the results should be clear.
Does JDN have all the answers. Well no one here can say unless you have some inside line. We will just have to see what he does. He has been given more power than anyone has had in decades and their has been more continuity than in many decades as Cadillac has been a revolving door of yes men.
The present cars like the CT6 and XT5 do not represent the JDN products as they were pretty much done before he arrived. The CT6 was a Mark Ruess car done under duress. He never got the support he wanted to do it the way he wanted it. Hence it is not the flagship.
The trip to NYC for Cadillac was more about putting up a barrier to prevent some at GM from getting involved. Even Harley Earl hid many of his projects to prevent management from molesting them till they were done. He had hidden locked studios for a reason.
As for Cadillac with the computers GM has they could work from every and anywhere.
I have never said Cadillac needs to be Rolls but I do say they no longer can be a Lincoln or Chrysler class car if they want to max profits. This will take time, investment and growth. It also will take some independents and trust by GM.
Where as Chevy lives and dies on a model like the Malibu to make money on the cars Cadillac is not like that. The margins now are enough to support it but they too will have the SUV and CUV models to also take the leads and supply the money for the future of some really interesting things.
I see many people here upset because they may not be able to afford a new Cadillac. Not to be mean but many of them are people that should not be driving a Cadillac including myself. I make a good living but I am not Cadillac material even as much as I like the CTSV.
There was a time only people of real money bought a Cadillac then they started building more and more and kept the prices much lower ratio wise than they had been in the past. That lead to the fiasco we have watched since the early 60’s. Cadillac went from being a Rolex to a Timex.
Now they should work their way back up and go as far as the market permits them. If they are successful to build a excellent image then they should ride it as far as the public permits.
Again it takes time. Just look at Audi as they stated in the 70’s had the 5000 set back and are now just really getting the acclaim they have been seeking. But they too have made money all the way.
Ford had planned to shut down Lincoln. It got a reprieve and why it is making money now. Ford is happy in the Acura, Lexus and Buick class for now and some inside still fight to get the funding that GM gave Cadillac. Ford found a Platinum model Ford was not enough to replace the Lincoln as few would pay $50K for a Ford. But give them a Conti they may pay more and it cost so little more to make the Conti over the Ford.
That is it and you can agree or disagree for all I care. What you want has already been a plan they followed to failure add in the market has changed as we will see the product change with it to make the money.
Cadillac will see much success and even some failures as not everything from anyone is always a home run. But GM and Cadillac are in a good place to pull this off.
Even Jag for year at low volumes build really crappy cars but yet they thrive yet today. Failure here is not easy.
Even Tesla holds a great image and yet has turned a profit. The marketing magic there is what was captured and that is what Cadillac needs to capture in technology and style.
Scott3 wrote: “First off Luxury can not be sold like a Chevy in large volumes of a few cars. That is how we got there to this point now is it not? ”
NO IT IS NOT. The point where we are is that Cadillac had been the top-selling luxury car in the USA for many decades until 1999. Today it is the 5th best selling luxury car brand in the USA, with half of MB’s total.
2016 US luxury market share (source: Statista).
Mercedes-Benz: 16.4%
Lexus: 16.0%
BMW: 15.1%
Audi: 10.1%
Cadillac: 8.2%
I thought JDN was hired to help restore Cadillac to number one in the USA, or at least increase market share, as he did at Audi. I’m pretty sure he wasn’t hired to make Cadillac “more exclusive” by further reducing market share. Apple Computer didn’t get to be the world’s most profitable business by making products so exclusive that only “leaders and celibrities and Elvis” were allowed to own them.
How we got here is due to the perception that Cadillac is no longer the best mass production luxury brand. Not that Cadillac was selling too many cars. You say that you should not be able to buy a Cadillac yourself. If you don’t think you are good enough for a Cadillac, why are you posting on this website?
As you say Scott, let Cadillac only sell to “leaders and celebrities and Elvis” the way they did in the 1920’s (even though Elvis wasn’t born until 1935). Today’s equivalent I guess would be Kim Kardashian and Kanye West, yes let them be the only ones to own a Cadillac. The rest of us should only be able to strive to own a Cadillac but never own one. We are not worthy!
You still don’t get the economics here. You are far too fixated on the marginal profit margin, as if maximizing that is the goal. The equation I gave you shows that as volume increases, fixed costs per unit decline. You can’t declare that some company makes $20,000 per car (or whatever) until you know the actual number of sales. In other words, total profit margin (all costs in), increases with sales volume. And of course higher sales mean that profit per car is multiplied by a higher number.
Now of course the higher you price the car, the higher your marginal profit per car. So it’s a balancing act, where do you price the car to where TOTAL PROFITS on that model are the highest? Price the car too high, and you won’t get either the lowered fixed costs per unit or the total volume you need to maximize profit. Price the car too low, and you can’t make enough marginal profit per car, even at high sales volumes, to maximize profit. The key is finding the right price. But before that, the task is to make a great car and sell it to the public. The people who can afford a real Cadillac, regardless of their background or celebrity status.
Where it all went wrong was with flops like the Cimarron, the V8-6-4, the Catera, etc. The net result is that Cadillac went from number 1 is sales volume to number 5. GM didn’t like that. JDN is here to increase Cadillac’s luxury market share, not lower it. And at the same time increase profitability. GM couldn’t care less about “celibrities”, so I don’t know why you do. I don’t think I’ve encountered anyone as fixated on supposed social stratification as you are.
And you still haven’t told us where you got the “70% of GM’s car profits are from Cadillac”, but I guess in your mind you don’t have to.
Thanks Drew for trying to set Scott3 straight – you took the words right out of my mouth!
This is why I’m concerned that even with high pricing, the CT6 will bleed Cadillac dry at volumes of only 1000 cars per month. It probably cost at least $2 Billion to launch, and it may never turn a profit before it needs to be replaced/updated. Scott3 is right that on the assembly line the parts don’t cost more than a Chevy, except for higher content, but Chevy divvies out their $2 Billion development costs over 50,000 trucks a month!!!
Ron GM works together much more than that. In development the cost are shared and in some cases the added investment of Cadillac has made cars like the Camaro much better than they were back when Chevy had to foot the bill alone.
Cadillac contributes to the investment for development and Chevy provides the volume. It is a match made in heaven for an Accountant and product planner.
We will continue to see more of this but yet strikingly different Vehicles on these platforms.
This is not the first time Cadillac wanted only the “right” people. Mr. deNysschen’s comment reminded me of another time sales were down. At that time Cadillac wanted to be exclusive by refusing to sell Cadillacs to African-Americans.
Fortunately there was a European born exec who realized that a sale is a sale. He learned is trade at gasp Mercedes-Benz.
https://www.forbes.com/2009/04/30/1930s-auto-industry-business-cadillac.html