Cadillac is expanding its Russian business operations, with plans to sell around 10,000 units in the market annually. To help it achieve that goal, Cadillac is expanding both its model lineup and its Russian dealership network.
To help spearhead sales, Caddy is now importing new crossovers for the Russian market, including models like the compact XT4 and three-row XT6. Both the XT4 and XT6 will be equipped with the turbocharged 2.0L four-cylinder LSY engine, plus the GM nine-speed automatic transmission with Electronic Precision Shift technology.
What’s more, the full-size CT6 four-door and XT5 crossover are both available in Russia now, while the refreshed XT5 will be available soon.
In a recent post from Wards Auto, Cadillac was tipped to expand the number of Russian dealerships to 17 total, which will help to leverage its updated model lineup in the market.
GM’s senior vice president for international operations, Julian Blisset, also weighed in on the move.
“In recent years, the economic situation in the market has significantly improved,” Blisset said. “We believe that the market will return to its annual sales of three million cars (in Russia) in due course. And we want to be part of this, so we are launching new products.”
Blisset also indicated that Russia’s economic turnaround makes it “the market to focus on” with regard to his list of priorities.
According to the Wards Auto report, Cadillac hopes to woo young buyers with trendy, tech-forward vehicles and contemporary styling.
As we covered previously, Cadillac sold just 1,176 vehicles in Russia in 2018, a 13.85 percent decrease from the year prior. So far, sales in 2019 have amounted to just 669 units total, a decrease of 13.3 percent year-over year.
However, despite the recent sales decreases, Russia is expected to experience an economic turnaround soon, which would make this expansion from Cadillac well-timed.
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Source: Cadillac Society
Comments
See, the Russian ties that Trump has are helping out! (sorry, just couldn’t help myself!)
Dan….Hillary just called. She wants you to help polish her broom……..LOL.
how is the trump pole polishing gig going?
Seems like a lot of effort and money to only sell 10k units a year?
Will that even cover Chiprian Suta’s annual salary? Not to mention building Dealerships, (brick and mortar) equipment, technicians, sales personnel and clerical staff.
So 17 Dealerships and 10k units a year? It doesn’t add up?
Some one please enlighten me.
It’s not close to being “measly”. It’s actually pretty big, especially considering the minimal effort and investment necessary.
First things first: GM (Cadillac) does not build nor operate dealerships in Russia, or anywhere in the world, for that matter. Hence, dealer facilities and personnel is a cost factor of independent dealers, rather than that of GM.
Second, 10,000 units a year is 10,000 units more than they would have sold otherwise… and they go for a very pretty penny in Russia, too.
Assuming an ATP of $50,000 USD, 10,000 units a year delivers 500 million USD of incremental revenue. In reality, that ATP figure is probably closer to $60,000, given the mix is heavy on Escalade and well-equipped models (Russia typically doesn’t get many base model Cadillacs, if any).
Hence, $500,000,000 in incremental revenue for making a few units and shipping them over to another country is a heck of a return. The incremental cost is minimal… a few executives, some managers, and a few admin-level personnel, some warranty work… and the costs probably don’t surpass $100 million a year. Heck, they probably don’t surpass $50 million annually.
Now, keep in mind that the 10,000 deliveries per year figure is relatively small. Either way, this is how you build a brand in a new market: start at the ground level, build the portfolio, build interest and customer base (sales volume), support your customers and dealers, and flourish from there.
Russia is ripe with opportunity for firms like GM and Cadillac… with a significant amount of wealthy people desiring unique, world-class products (not just in the auto sector), the market is ripe for the taking.
Exactly. Escalades here start from ~$80k with all available promotions and they’re sold much more than any other available caddy model on the market.
In fact almost everyone is waiting for new generation too, despite they’ll arrive like a year after us 🙂
Thanks for the well thought out reply, Alex.
Yes to your first point. I am aware GM/ auto manufactures don’t build the dealerships or pay the employees at the dealerships.
My inquiry was not questioning how much they make per unit, (ATP $50,000 USD=$500 mil.)
but how much profit per vehicle. $500 million is before anyone gets paid. GM, the dealers, and all of the staff. Not to mention the cost of setting up shop for the 17 dealers, and the cost of GM producing and shipping the product.
It just seemed to me that 10K units, after expenses, would not be that profitable? Maybe there’s enough to go around?
I agree on your point about establishing some history and brand loyalty to grow the business in the future.
Cadillac needs to branch out into global opportunities with every feasible attempt to keep the lights on.
is cadillac really world class?and the market isn’t ripe for the taking. it is going to be damn hard getting customers to switch from the germans. cadillac hasn’t been able to do that anywhere in the world, why should russia be different?
$500,000,000 on 10,000 Cadillac sales? That number seems to be a bit inflated. You said it yourself that they have no dealer network or manufacturing so are these shipped and distributed for free? Youll have taxes and paperwork out the you know what. Thats not profit on the vehicle thats just extra cost. Not to mention what it cost to make it. Profit margins aren’t high on these. Its a waste of time and resources. If selling 10,000 cars is so great bring back the SSR.
This is a case of over manufacturing and slow cadillac sales. So they start looking for places to put them. GM will lose money on every one just so they wont have to say their wrong.
Yes. Alex replied to my comment stating only sale price transactions x’s (10k units @ $50k). That is not taking into consideration the amount of profit GM makes on each unit-building-tooling/ equipment( which I’m aware is already in place) and, shipping. I’m guessing, 10-15-k?
And, as I also mentioned. The Russian dealers that will get in on the 17 dealership action, will need to also build, brick and mortar facilities, tools, staff, and pay electric bills!?
So. How much profit is there to share between GM’s cut, (per vehicle) and the ones financing the bills and headaches to keep the lights on?
10k units between 17 dealerships.
I’m not seeing the math working.
Long term? Maybe. But it’s a risk.
IMHO.
Maybe Alex can revisit this topic and enlighten us?
I’m still not convinced. But, he knows more about this game than I do!
Who has who’s hand in who’s pocket ???
Cat you have the right statement.
I’m guessing about $100 mil. profit to be spread around .
But does that pay the bills and profit for 17 dealers and the salary of Chiprian Suta’s.?
And, that’s all depending on the Success (growth) Caddy will have in, GOOD OLD RUSSIA.
Ah…. an old friend, indeed?
Impeachment inquiry, Mary sleeping with enemy again !!!!
Come on, ???, Impeachment or her sleeping with someone,
What bothers you the most ???
Wake me up when Cadillac starts to sell in serious numbers in Germany, Norway, Belgium, Switzerland, Sweden, Finland, France, Greece, Spain, Italy, and England,
Exactly, GM thinks they’re tapping into some market nobody else has. Its a waste of time. Next stop! Vietnam!
Its good to see GM at least try over there. Better to try then turn your back on a place because its bleak and full of more popular German models.
Maybe Cadillac could start selling Chevy Sparks in Europe. Just so they’ll have something to compete with the Mercedes A-class.
I consider that with such a model line Cadillac has absolutely no chance to get even closer to the real ones. The present models have no “American flair”, no personality. If you simply put the badge out, it could be any make. I consider this is an involution.
CTS was really a car with more personality than CT5. I am very afraid how the Escalade will look like…