Can GM produce a competitive luxury car or are the American consumers wedded to German made vehicles? The record at GM has been mixed so far. Cadillac has produced two worthy competitors in the CTS and ATS models but has not done an admirable job on the 6000 pound Escalade. The market will get a chance to pass a verdict in the next 6-9 months.
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General Motors’ struggling Cadillac division is hoping that bigger is better.
While luxury competitors have been scaling down their offerings, Cadillac announced on Friday that it would add a new, larger sedan to its lineup next year, which it hopes will lure wealthy trendsetters.
G.M. did not release specifics of the yet-unnamed flagship sedan, but the automaker described it as a “top end, high technology” car intended to compete with the best from German rivals.
“The objective for this upcoming model is to lift the Cadillac range by entering the elite class of top-level luxury cars,” Cadillac’s president, Johan de Nysschen, said in a statement.
The new car will take aim at the BMW 7 Series, Audi’s A8 and the Mercedes S-Class — the top of each competitor’s lineup. Those sedans carry price tags starting in the $75,000 range and can exceed $100,000 for the most feature-laden configurations.
But while the luxury auto market has been surging this year, Cadillac has been left behind.
Through August, Cadillac’s overall sales were down 5 percent this year compared with a year ago, and the company’s sedans have fared even worse, down a combined 15 percent through August. The entry-level ATS sedan, though widely praised, has not taken off with buyers. Its sales were down 20 percent; the larger CTS sedan was down 6 percent.
The entire market for luxury vehicles in the United States has risen 14 percent over the same period, according to the auto research firm AutoData. Audi sales are up 15 percent, BMW up 12 percent and Mercedes-Benz up 9 percent this year through August.
“Cadillac still suffers from more of an older demographic,” said Jessica Caldwell, senior analyst with Edmunds.com.
Cadillac has also suffered from a seemingly endless cast of executives rotating through its top positions. In July, the company looked to the outside, hiring Mr. de Nysschen from Nissan’s Infinity division in an attempt to bring fresh ideas and long-term stability to Cadillac’s leadership.
Mr. de Nysschen is best known for his work at Volkswagen. He played an important role in transforming Audi into a true luxury competitor. Cadillac wants to be seen similarly as among the best luxury brands in the world.
One bright spot for Cadillac is China, where it sold more than 50,000 vehicles last year. The new sedan aims to capitalize on that market, said Xavier Mosquet, head of the Boston Consulting Group’s automotive practice.
Mr. Mosquet said that the European market had no appetite for large cars, and while Americans did, the number willing to buy an ultraluxury Cadillac was not large enough to justify the investment in the new model. Chinese buyers, on the other hand, are not only snapping up larger, more luxurious vehicles, but are also open to switching from one auto brand to another.
“Many in China are now first-car owners,” he said. “People are now about to make new choices, and many of them want to upgrade.”
Mr. Mosquet said that even though only the elite in China were likely to be able to afford the new flagship Cadillac, the aspirational effect for lower-tier buyers would be important. With so much of the Chinese market up for grabs, and no long-ingrained loyalties to weigh down buyers’ decisions, Cadillac has a chance to establish a reputation in China that matches that of the Germans.Production of the new Cadillac will begin next year in the fourth quarter. It will be assembled at G.M.’s Detroit-Hamtramck plant, which currently builds the Chevy Volt, Impala, Malibu and Cadillac ELR. The company plans to unveil the new model in the first half of 2015.
(NYT)
15 comments:
While all other car competitors are lowering their offers, Cadillac announced a whole new car lineup. It is adding a sedan. This is supposed to bring in wealthy people who can help set trends. Cadillac is trying to compete with the German car brands. The reason Cadillac is doing this is because this past year, Cadillac was not doing so good. Their sales were down 20%.
I think with the help of Mr. de Nysschen, Cadillac can improve their sales and stability. Since Nysschen has helped transform the Audi maybe he can help transform Cadillac.
I think this is a great way for the cadillac to finally have a chance to compete with the other brands. i didn't know that the cadillac sales were going down this year but teaming up with somebody who managed to turn Audi into a top luxury brand, i have high expectations that Cadillac will make the car that can be both luxury and affordable. i think that if they want to increase the sales of this new car they should start with a lowered price than the other competing brands, that way many people will turn to the new car than the other competing cars a common trick to underhand the competing brands.
I can't wait to see what this flagship vehicle is suppose to look like. Although I never really been a fan of Cadillac I found the Escalade to be a nice SUV. Hopefully with the unveil of this new vehicle, along with the help of Mr. De Nysschen they can boost sales in the United States. I also never new Cadillac was popular in China, apparently they 50,000 vehicles. With the transformation of Cadillac underway I'm sure they sell another 50,000 in China. Sadly i'm not so sure about the US because it's going to be tough to revile German engineering and design.
Definitely is a large amount of stress on Cadillac's shoulders in the competition against the German cars today. Especially because Cadillac doesn't have the same positive connotation as it did many years ago. As some one who's very into cars I will say Cadillac most definitely has come a long way but when it comes to the plain models I would take a regular BMW over a regular Cadillac, however when it comes to the high end model this is very different. What Cadillac lacks in luxury it well makes up for with power, Cadillac's V series is one of the best bang for your buck cars on the market, that being said I would take a high end Cadillac over a high end BMW. It will be very hard for GM to have a luxury connotation to their name, and I am waiting to see the reveal of the new Cadillac to see how it goes.
I believe it's going to take GM a lot of hard work and research to compete with these luxury cars such as Audi, BMW, and Mercedes. First things first, they need to hire better designers that can form a design that has the performance of the high end cars, but a new luxury to it, wether it be technological or how the car feels. Once they have that, they can compete, but I'm not sure if they can compete in the U.S. As a buyer, you get a certain reputation when buying an Audi, BMW, or Mercedes. People are buying these cars because of the logo on it, similarly to apple with the iphone. Even if GM's car can perform better, people might stick with the brands that have been high end for decades.
-Jack Madden
Hopefully with the help of Mr. De Nysschen, Cadillac will be able to create a better image for itself and increase sales. Hiring someone who is known for his work at Volkswagen and turning Audi into a luxury vehicle was a smart move on GM's part. However, Americans tend to be creatures of habit and will be more likely to continue purchasing German made luxury vehicles. This new sedan may be able to sway opinion and influence buyers in the American market but from the sounds of it. it should do quite well in China. Either way, this should increase the overall sales of Cadillacs.
I'm not surprised at all by the fact that Cadillac sales have been going down. Personally I think the Cadillac is overrated. I would much rather have a BMW if I was going to have any luxury car. BMW's offer a better performance level than Cadillac's. I think engine performance is the number one thing to consider when purchasing a car. Also when compared to other foreign made luxury vehicles the Cadillac is more expensive in terms of fuel cost- another huge deciding factor. It's not that I don't think Cadillac can compete with German luxury cars-it's just that they need to fix they key issues such as engine performance and fuel economy
-Annemarie Casale
I do not see Cadillac's sales going up that significantly next year. It is focusing on the escalade, which most people are not interested in. While China is a big market and may help their sales, Europe and America can be a bigger marker if Cadillac is willing to switch its direction into the sedan market rather than larger vehicles. Escalades cost more than sudan's because of their size, which also means the customer would spend more on gas. Most people are looking for sedan's which would make the escalade low on the demand scale, which puts it on the lower end of prices for luxury cars. Cadillac could make a lot more money if they were to focus on the CTS and ATS. They are nice cars to begin with, but if they put more focus on them, they would be a lot more profitable. If they keep going the way they are going, they are not going to be considered a top luxury car anytime soon.
I agree, i do not see cadillac's sales going up significantly either. today there are so many customers shopping around for german made cars such as bmw and mercedes. they are becoming very popular and many users are now leasing them as well. they are nice cars, luxurious and becoming very popular to lease. focusing on the CTS and ATS could absolutely make Cadillac a lot more money than they are currently earning
I think that Cadillac adding a new sedan to it's lineup may benefit them but it may take some time to make serious changes. Cadillac needs to start making progress on their sedans rather than their larger vehicles because many markets outside the United States have a higher demand for sedans. Cadillac needs to make a serious increase in sales from their new addition especially after a 20% decrease in sales this past year. Audi was transformed into a large company greatly due to the work of Mr. de Nysschen and now that he has been added to the Cadillac team he may be able to help transform their company.
I agree with Christopher, but many of the people who own Mercedes, BMWs, and Audies buy the car because of the name and the reputation of being a foreign luxury car, not necessarily because of the quality of the car. Cadillacs new approach to designing a similar car to that of the German power houses is a great strategic move and hopefully does increase sales.
Cadillac has announced that they plan to add a sedan to their new car lineup during this year. They hope that this form of car, along with any notes/ideas taken from Mr. de Nysschen will help re-brand the company as a luxury auto brand that trendsetters alike will flock to.
Although the company's sales are down, I don't feel that their issue will lie in producing an attractive car, but more so with getting rid of their current stigma as an auto brand. Other companies such as Mercedes and Audi have made, excelled, and increased their sales of cars that can be easily spotted with a number of "trendsetters" at the wheel of them. I think that targeting these cars toward the younger generation in not only advertising but design as well should help GM create a new successful automobile.
I don't think the cadillac sales will increase after introducing this new sedan. In the past, cadillacs were much more popular and these days they are just too expensive and people would rather buy something else. They should design a car that either appeals to the Chinese market which seems to be interested in their cars or towards young people.
I believe that Cadillac is making the right step towards becoming a top brand car, HOWEVER, i do believe that this is the first step of MANY that it will take before being able to be compared to brands such as Audi and BMW and the total revenue and sales. With China's population, if this does lure in a large population as said in the article, it will most definitely help, that being said I still believe in America the dominant cars have prevailed and are not just peaking now but are still on the rise. In essence, Cadillac has a lot of catching up to do, but is definitely making the right moves towards what must be a long term goal.
I believe that Cadillac is doing the only thing it can do at this point. The problem is that Cadillac, as the article stated, is an automobile that's consumer population consists of an older demographic. Most of the people i know who own Cadillac automobiles are 45 +. And getting older. Now a great number of the consumer population consists of people in our generation entering the economic world. People in our generation are buying Jeeps, BMW's, Mercedes. The only chance for Cadillac right now is for new ideas to appeal to a new consumer market.
- Austen V
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