Cadillac will once again feature a new chief executive after General Motors suddenly ousted Johan de Nysschen. The automaker replaced him with GM loyalist, Steve Carlisle, who most recently led GM Canada.
However, Morgan Stanley analyst Adam Jonas thinks GM could go further and actually spin-off the Cadillac brand. The move Jonas detailed in a Tuesday report with Markets Insider is not unlike what Fiat-Chrysler Automobiles has done with Ferrari. Though, Ferrari and Cadillac hardly hold similar brand cache.
Still, Jonas and Morgan Stanley value Cadillac at $15 billion if it were an independent business.
“We continue to see Cadillac as a distinct and highly valuable business that can increasingly justify and independent existence potentially outside of the GM parent/group structure,” he said. “We believe that Cadillac is in a position to potentially report results as an independent business not unlike Maserati at FCA or Ferrari before that.”
Morgan Stanley also commended the move to oust de Nysschen. Newly minted Cadillac President Carlisle reportedly was heavily involved with GM’s digital strategy, which the bank believes is encouraging.
“We expect that his leadership can accelerate Cadillac’s potential in the Auto 2.0 ecosystem, potentially delivering unique connected experiences to drivers and passengers,” Jonas said.
Comments
Congratulations Alex Luft, this article is going to get over 100 replies because it’s controversial around here lol
My vote is to sell it.
Cadillac would not thrive if completely independent.
Think of the enormous cost to develop chassis, engines and transmissions for refreshes or redesigns. That is why even bitter rivals like GM and Ford get in bed together to develop these things.
If Cadillac did not have GM to contribute the necessary components and the deep pockets to continually refresh and redesign models their vehicles prices would go up dramatically or these changes would not happen as often.
Think about M-B a few years back that bought out Chrysler. It wasn’t because Chrysler was making a lot of money or would help their image, it was to get economies of scale to drive down component prices along with diversifying their business portfolio.
These days car companies are consolidating and not splintering off for good reason.
That is because every rational person understands that the GM Board is the worst thing for the Cadillac brand.
Cadillac should means “The Best.” Full stop. Not “the best Chevy”.
You said it!!!! The mismanagement this once storied brand has suffered simply cannot be recovered in its current state as a “GM luxury brand!” No matter how much GM improves as a whole! I’m all for the idea of Cadillac becoming an independent luxury brand! It’ll be better for both GM and Cadillac! Chevy, Buick and GMC can stretch a little further up market (pretty much what they’re doing now with their current crop of vehicles), and Cadillac can be free to venture out into the tier-1 space it was always destined to be! Besides, with all the tech and platform sharing they have to do, it’s creating too much overlap in pricing and content within the GM brand as a whole! And I don’t buy the whole idea of there not being a lot of cross-shopping among these brands! Bottom line is that Cadillac has the potential to be great, but they’ll only remain “good enough” under the GM umbrella…..And the foreign brands will continue to own the market!
Well here is the problem. You can spin Cadillac off but they will still need GM for tech and systems support. They will still need platforms and share driveline items like transmissions and the like.
Now is that going to cost more money or will it keep the cost the same as they are now?
GM can just let Cadillac be independent and let them do as they have been trying to separate themselves from GM to a point and make their own decisions. If GM would not let them do that then I do not see a spin off.
It would be funny if GM did spin them off and they brought JDN back. LOL!
I just do not see Cadillac as being independent enough yet to be their own deal. If they had more time to separate they may have been ready but the board may just set this back.
it is a shame Wall St tried to influence automakers. They meddle in things like this but yet still invest in companies like Tesla that has yet to make a dividend and also can’t even get a car into production reliably over 3 years.
They and Washington are just so corrupt.
People are so hyped into investing in what someone might do and seldom reward those who actually do it. It is like the collector car market. Everyone wants the next Shelby to the point they throw away money on cars that will never see a dime. At Wall St they invest in tech for the next Apple whey 90% of them fail.
While Ferrari as a spin off was a risk at least they had their own factory, engineering, design, wind tunnel, foundry, test track, race team, tech center and more. Cadillac has an office in NYC and a new designated engineering and design staff. No factory, no platform other than the Omega, No tech center, no wind tunnel, no etc.
I just don’t see it happening unless GM is willing to do this and they will have to still be fully committed to helping them. If you have to do that you should keep the keys.
Wall Street is just being Wall Street. Encouraging companies to make piss poor decisions so they can create hype and profit off it. The profits BMW, Audi and Mercedes bring in to their respective parent companies is significantly more than any mainstream or “affordable luxury brand” out there. The GM shareholders would be absurdly stupid not to want to get a slice of that pie.
That being said, the GM board or the shareholders clearly don’t drive a Cadillac let along actually own one. Do they think that Daimler would allow Mercedes cars to ship with parts bin parts as Cadillac has? Do they think Audi got to its current position in the market by being slightly more expensive Volkswagens or are the cars simply better in every single way? This is the problem with American companies and Wall Street, they’re short sighted and don’t see the bigger picture. The only solution for Cadillac would be for the board to stop holding Cadillac back.
So far, the current lineup honestly doesn’t look bad. The CTS could use a mid cycle refresh, the ATS needs to be updated yesterday, the crossovers are in a good spot, the recently refreshed CT6-vsport looks really nice and the Escalade is clearly doing well. The only thing I can complain about really is the alphanumeric naming scheme, I would’ve just stuck with the old formula (ATS, CTS etc) and just build off of that instead, but that’s purely subjective. Another thing is that Cadillac missed a huge opportunity by not introducing electric variants of some of their existing lineup, although someone will probably state that the market for electric cars is growing at a snail’s pace and the market demand just isn’t there yet.
You know who would have been the perfect leader for Cadillac to do this? JDN! The GM Board will never allow this spin off, especially now with their puppet leading the division. The GM Board doesn’t have what it takes to run Cadillac.
Well Toyota did it for Lexus and recently Hyundai spun off Genesis .
Cadillac as a business on it’s own only worth $15 Billion dollars still needs GM if only because of the supplier side of the business . The contracts that are negotiated with major suppliers can cover anything from screws to carpets and the more that is ordered the cheaper the cost .
GM needs Cadillac , it’s so integrated in the company as their luxury brand and Cadillac moving things to New York should tell us that that experiment didn’t work so well .
This sounds to much like the Roger Smith crowd that wanted Saturn to be a seperate company under the GM umbrella and in the end $3 Billion+ in capital was lost . But it did set Roger up with a very healthy retirement pckg .
isn’t lexus still part of toyota and genesis still part of hyundai? how is that a spin-off?
I don’t think you understand what it means to be spun off.
I would be real suspicious of an “analyst” from Morgan Stanley; they are probably just fishing for the IPO business. If a well respected, independent automotive analyst recommended a spin off, then it might be worth investigating
It worked for FCA’s key-chain and branded merchandise division. I mean Ferrari.
I can see this happening via FCA style, while Cadillac would be “independent” to Wall St the structures, engines, platforms, etc would still be GM.
Cadillac doesn’t need to be an independent company. They need their autonomy back, like all of the divisions should. GM was at their best when the rivalry was strong among the divisions. Roger Smith’s corporate GM engine and creation of the BOC group and CPC group crippled this company and they’ve never recovered.
Platform sharing has been going on for a long time but the divisions engineering groups made it work. I would like to see the return of the brand autonomy and the pride and passion that go with building Chevrolet, Cadillac , Buick, GMC, Oldsmobile and Pontiac.
While I agree they did well In that era the problem is times have changed.
Higher cost for development, technology and engineering has made nearly impossible to run that many division and maintain good profits if you do it right.
GM dropped the multi dedicated engines for each division due to the ever increasing cost. The truth is they should have killed Olds, Pontiac, Buick and never started Saturn.
Buick has redeemed itself with. China that no one saw coming.
Hummer should have been a GMC model and Denali has saved them.
The truth is most MFGs need only two brands. The more you add the more the cost add up to were the profits just do not increase at the same rate. They also need to be more effective on the Global market. China has saved GM as with out them they would not be as well off as they are today. They may not have gotten past 2008.
Today just to do an engine cost as much as it used to cost to refresh an entire line.
I miss the old days too but they. Just are not the same as today.
I completely disagree that China, a cesspool market saturated in counterfeits, did anything whatsoever to “save” GM “past 2008”. If I recall correctly, and I have the receipts to prove it, it was the American tax-payer that bailed out General Motors and Chrysler with $13.4 billion in interest-free loans!
As for “spinning off” Cadillac, all I hear is a Communist Chinese plot to steal the pinnacle of American luxury on the cheap after the brand is bleed for cash; much like they stole Hummer for pennies on the dollar — $150 million, to be exact. No thank you!
Dumbest idea ever.
Why? Just because GM management fired an ineffective division executive? This is a terrible idea on many fronts.
Also, this “analyst” is most likely attempting to make a name for himself and blogs like GM Authority have taken the bait. Pay no attention.
Yoshiaki, exactly. The reason for this “Cadillac should be spun off” agenda is to create the illusion that “the problem was not JdN, the problem was GM”. That’s ridiculous. Cadillac would suffer without GM, and GM would suffer without Cadillac.
Investment bankers are always putting out ideas of “why don’t you spin this off” or “why don’t you merge with somebody”. Why? Because they make big fees when they get a piece of that business. This guys doesn’t sound like he understands the economics of the auto business. Would Lexus be better off if it weren’t part of Toyota, or vice-versa?
Nice to see that most of the commenters here understand the reality of the situation. Cadillac was #1 in US luxury car sales while it was part of GM, and that’s not a coincidence. Meanwhile the independent luxury brands like Duesenberg and Packard couldn’t survive. And today technology is much more advanced, and economies of scale much more significant than they were then. Really bad idea to spin off Cadillac, but some will pretend that such a move would vindicate JdN’s failures.
By the way, in the decades leading up to WWII, the leading US luxury auto brand was not Cadillac, but Packard. Packard as an independent company did not have the financing and the shared technology and production that GM was able to put into Cadillac, and as a result the brand couldn’t keep up with technology changes or efficient production vs. the competition.
Furthermore, Packard’s luxury image suffered when they felt it was necessary to introduce cheaper, smaller cars – also under the Packard brand name – in an attempt to get a quick financial fix. And that image reduction hurt sales of their top-tier, higher profit models.
It’s interesting that the two topics on GMA Cadillac today are about spinning off Cadillac and making small Cadillacs, given Packard’s history and eventual failure as a brand and company. I don’t think that Cadillac wants to repeat that particular history.
Drew, those who do not learn from history are doomed to repeat it. I would add, that those who do learn from history are doomed to watch others repeat it.
Yoshiaki-
I disagree with your assessment that JdN was ineffective.
He was there only 4 years so all but maybe the XT4 product decisions were set in stone before he got there.
He tried to change the culture for the long term.
Even Project Pinnacle and the ‘ Dare Greatly’ ad. campaign were not failures.
Changing a long entrenched culture takes time and guts.
He dared to try and that ruffled some feathers but saying he was ineffective is hardly fair.
Would be a colossal mistake. The shared platform/engines/engineering would be a clusterf###. This little exercise in marketing would not sell one extra Cadillac, and more than likely less. Cadillac can’t survive on its own.
By the time GM realized it how bad a mistake it was, Cadillac world be owned by Chinese conglomerate. Then an analyst at Goldman Sachs would say… You know Ford has Lincoln, what GM really needs is a flagship brand.
Agreed! The whole idea of “spinning off” Cadillac reeks of a Communist Chinese plot to steal the pinnacle of American luxury on the cheap after the brand is bled for cash; much like they stole Hummer for pennies on the dollar — $150 million, to be exact.
No thank you!
Cadillac is in the best position to be spin off as a separate company given that it only has a small handful of vehicles which share components and platforms with other mainstream GM products as this was the primary reason why Johan de Nysschen was terminated as JDN wanted Cadillac to be even more independent from the rest of GM.
Like for the Opel’s sale, again, the analysts say all the new foolish ideas from their brains! For winning a few dollars on the shares price, it will take many time (or foolish ideas) to GM to catch up on Google or Apple. The next ingenious idea: stopping to produce and sell cars…
WOW….as a loyal GM buyer from the 60’s am I that out of tune???? If brand loyalty is gone & bottom line is prime…then who knows where any of these GM cars will be in 2 to 5 years?? Where we go is defined by a lot of unknowns yet no thought to history. Most of us realize the bottom line but how much $$$$ has been left at the foot of these geniuses ??? Time to regroup
Cadillac is a marketing division–not a car company. It would be impossible to spin it off since it is so integrated into GM’s design, engineering, purchasing and service entities. You might as well just sell the brand like RollsRoyce to BMW. VW bought the car company and the brand Continental.
Analysts are like poachers. They suggest this in the media to sway the people like marketing. Someone said it works well for another company but not GM. Think about the GM infrastructure…. someone else said costs. Cant imagine the billing nightmare.
IMO, Cadillac SUV line is great. Now the cars are different and should be divide the segment into affordable and luxury and end it with the v series. Which I would make it more sutle.
Affordable should start under the Buick Regal and cap just a bit over with those options. Luxury should cater to a more gentler ride with more bells and whistles that are different or better marketing firm that can beat the imports at it’s own game…marketing to non informed zombies that think if it’s built off shore that’s way better than what a U.S. worker is capable of ever achieving. Yeah i know… another debate.
And lastly, don’t play around with hp to weight standards… add more hp/tq to the v series to carry all that comfort. Meaning, make it a luxury go dam fast car and not a sports car. It should have luxury feel that makes you feel you spent a big penny and when an import wants to play in their ‘sport’s car, say by by…
Look at Audi, BMW, and Mercedes-Benz, experts in marketing this concept. Audi more so in the last 4 years. Sales rocketed. Refined luxury with go fast speed. No sports car theme. Leave that to BMW and the Japanese. They sell way more on BS marketing. Tons of crap.
Like I started this thread, analyst – shut up and go analyze world hunger.
GM, shit or get off the pot with marketing and re branding and adjust those prices. Don’t let dealerships hike prices.
Just 2 cents.
It’s thoughts like yours, grandpa, who are killing Cadillac. Us “young folk” don’t want barges with Corvette engines to compensate. I’m a Cadillac owner in my late twenties BECAUSE the brand’s sedans/coupe compete directly with Audi & BMW. If my ATS Coupe -which I enjoy HPDEs* in- was FWD and as fun to drive as a 40′ Bayliner, I’d be in an S5 or 4-Series right now.
*HPDE = High Performance Driving Event. They probably didn’t have those back in your day.
OH! And “Look at Audi, BMW, and Mercedes-Benz, experts in marketing this concept. Audi more so in the last 4 years. Sales rocketed. Refined luxury with go fast speed. No sports car theme.” ???? The ONLY reason I even know that Audi exist is because they won Le Man’s… 13 TIMES!!! (out of 15 tries). THAT is the reason I’d by an Audi over any other “luxury” brand, so what are you talking about by saying Audi has “No sports car theme”?!?!?!?
imo the things that crippled Cadillac is quality . although styling and quality have greatly improved lately the stigma of the past haunts the brand -remember the 4-6-8, Cimarron , diesel engine, Allante, oil leaking northstar engines ,Catera (bad memories ) but that was in the past. spin off Cadillac ? absolutely not !!!!!!