Save Cadillac!

"highmodulus" (highmodulus)
03/04/2015 at 08:08 • Filed to: None

Is it time for Barra to clean house at the Cadillac brand before it is too late?

The only reason Cadillac's sales decline in February made a bigger thud than Lincoln's is because they had further to fall, even if by only a few thousand units. The patterns the two luxury brands had were similar. Cadillac's Herculean SUV, the Escalade, has model sales of 1,489, up 91.9%. Sales of the Escalade ESV rose 78.9% to 888. The best-selling Cadillac, the SRX, posted a unit decrease of 24.7% to 3,809.

As an aside, for those keeping score, Mercedes sold 25,291 vehicles last month, up 5.2%. BMW sold 25,201, up 14.5%, and Audi sold 11,455, up 5.3%.

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Hint, don't hire failed Infiniti execs. Or marketers not interested in cars. Because this is what you get. And note Caddy was down in an up luxury market. The thing is, the ATS and CTS are good. The idiotic pricing and marketing decisions have been one train wreck after another lately.

ps. Look to the price of the ATS-V. Sigh. . .

DISCUSSION (37)

jkm7680 > highmodulus
03/04/2015 at 08:13

They're making good cars, but the prices need a little work and IMO they really skimped out in some areas.

http://oppositelock.jalopnik.com/2015-cadillac-…

For instance, have a look at the gauge cluster on that. Plain unacceptable.

Street Surgeon > highmodulus
03/04/2015 at 08:42

As a car enthusiast this is probably kind of an odd stance, but Cadillac has never done anything for me. The CTS-V was kind of neat, but I'd much rather have the German equivalent of whatever Caddy was/is pushing.

Sweet Trav > highmodulus
03/04/2015 at 08:46

So, Here's my thought.

Cadillac IS moving in the right direction. They do need become more "cool" which is the job of marketers. The engineers have done their jobs, and done them well.

And pricing is way out of whack. 43K for a 273 HP rear wheel drive compact sedan with a stick? Blow me. It's not even my money I'd be spending and I wouldn't consider it.

Personally I think Johan has never had an orignal thought, which is why he is a failed executive. He is far from "visionary".

yamahog > highmodulus
03/04/2015 at 08:46

There have been studies on luxury pricing and as you can see from Cadillac's low sales despite deep discounts, people won't suddenly buy a luxury car just because it's cheaper than the competition, even if it's better than the competition. We are talking about a similar subgroup of customers who still buy Porsches and other more expensive stuff over C7s, the people who keep buying Lexuses for whatever reason. Almost every Cadillac sale has to be a conquest, and that doesn't happen overnight. Who would you put in charge, and what would you have them do differently, keeping in mind the goal is to win customers and make sales, and saying WELL JUST MAKE BETTER CARS CHEAPER doesn't magically do that? Travis and I argue about this and I'm getting kind of tired of it.

highmodulus > yamahog
03/04/2015 at 09:04

The actual reality is the new management intentionally and sharply raised prices (especially on CTS) with the argument that that was more consistent with the luxury segment they wanted to be in. But BMW, Mercedes and Audi earned their way there. While the ATS and CTS are good cars, realistically they are not going to compete well at the same price as zee Germans. The 2014's were glued to the lot after the massive price hike, until the panic incentives (which magically did increase sales). The coming ATS-V and CTS-V are good cars, but if they are priced at (or insanely , above) the price of a BMW M, Mercedes AMG or Audi S or RS they are not going to sell well. If they are $5-10k cheaper they will.

So Travis is right. Sorry.

yamahog > Sweet Trav
03/04/2015 at 09:07

Speak of the devil.

What do you think a brand executive does that requires "original thought" to accomplish their goals of selling luxury cars? Do you not realize that in the luxury market, you cannot just toggle the magic price switch down and make a profit, or even make sales? Do you think half of BMW/Audi/Benz buyers give a damn about "value" of their <300hp sedans? Effing BUICKS have higher quality rankings than the 328i, but this is not a segment of rational people, and generalizations made by internet commenters generally don't grasp the complexities at hand.

highmodulus > Sweet Trav
03/04/2015 at 09:09

He was one of many at Audi during their rise, but unlike the executive who went to Hyundai and crushed it there too, his time at Infiniti (Let's make everything a Q!) was a trainwreck and so far his time at Caddy is just as bad or worse. To say nothing of the wasted time, money and effort of the headquarter move- I would have fired him for that alone.

I really have a soft spot for the ATS-V sedan, but to price it at M3 levels— madness .

I agree, the engineers have been killing it. But the suits are Acura-ing up the place.

highmodulus > Street Surgeon
03/04/2015 at 09:11

Not an odd stance at all. How about the incoming ATS-V?

yamahog > highmodulus
03/04/2015 at 09:12

If they are $5-10k cheaper they will.

Right, because that's worked so well for Cadillac/Lincoln/K900 in the past. Pricing shit at a loss just to move it, or cutting content, is not a sustainable business model. To be cheaper and still make profit, corners must be cut to get cost out, and you will have knockoffs instead of competitors.

highmodulus > yamahog
03/04/2015 at 09:19

The Caddy in the past were garbage. These are pretty good. They do get very good prices for the new Escalades. Why? Because those models have earned it. Caddy's management jacked up the prices before the models or buyers would ever support it.

The K900 is just a poor car. Not sure what Kia was thinking on that one.

yamahog > highmodulus
03/04/2015 at 09:22

Gee, it's almost like it costs more to make a better car. Wild.

Logansteno: Bought a VW? > highmodulus
03/04/2015 at 09:26

I'm going to have to agree with Yamahog here, pricing a car lower for the sake of moving them off lots is idiotic. Why price very competitive cars cheaper just because they don't have the "prestige" that the Germans have? That's stupid. Especially if GM would be making a loss on them. The luxury sector is one full of buyer who usually have more money than sense, the fact that Cadillacs great cars are struggling is just a byproduct of that.

As for marketing, I think Cadillacs "Dare Greatly" ad campaign is better than the latest BMW commerical I saw where there's an old woman in the third row of an X5 talking about how she wore leather. How the fuck does that sell or even market BMWs?

highmodulus > Logansteno: Bought a VW?
03/04/2015 at 09:29

And yet BMW was up, and Caddy way down.

highmodulus > yamahog
03/04/2015 at 09:31

Price increase was for marketing purposes. The CTS was mostly the same ddespite the new much higher price, especially under the sheet metal. Wild indeed.

yamahog > highmodulus
03/04/2015 at 09:34

False.

http://www.autonews.com/article/201309…

Logansteno: Bought a VW? > highmodulus
03/04/2015 at 09:35

If you haven't noticed, BMW has been THE luxury company to buy from for years. They could not market at all and still gain sales. They've built a reputation of being "the ultimate driving machine" and Cadillac has a lingering reputation of old person mobile which they are working insanely hard to shake off. A point emphasized by them driving better than new BMWs. Luxury buyers rely a lot on a brands set reputation. The more Cadillac shakes off the old person stigma, the more their sales go up.

NotUnlessRoundIsFunny > highmodulus
03/04/2015 at 09:37

My experience working with GM was that most of the folks in charge didn't really care much about the cars, they were just the things they happened to make for money. Could have been lawnmowers, or couches, or trash bags. The number one question in a project was always, "how does this increase profit margins?"

That said, there are obviously some very good, passionate car people there because many of the recent products are terrific.

As for Johan...I don't get it. He left Infiniti much less interesting than he found it, but the decline may have already been underway when he got there. Hopefully he doesn't repeat the pattern at Cadillac.

highmodulus > yamahog
03/04/2015 at 09:40

Crap- wrong on how much was new. I thought the prior CTS had those engines. Sorry about that. The Que system did not prove to be an improvement.

But on pricing:

http://www.autonews.com/article/201501…

"Cadillac told dealers in a memo today that it will reduce sticker prices on most 2015 CTS models by $1,000 to $3,000. It also is adding more content to some trim levels.

The new pricing takes effect today.

Cadillac told dealers that it reduced CTS prices "after receiving feedback from both dealers and customers" to "enhance its competitiveness in the marketplace and to help you sell more cars."

The price reduction comes amid a U.S. sales slump. Cadillac sales fell 7 percent last year, compared with a 6 percent increase for the luxury market overall.

Dealers have complained that Cadillac is trying to price its newer entries head-to-head with BMW and Mercedes — a strategy that has proved hard to swallow for some returning customers. Sticker prices on the '14 CTS, launched in fall 2013, ranged from about $6,000 to $15,000 higher than the previous generation."

highmodulus > highmodulus
03/04/2015 at 09:43

And the statements on why they increased the price (from the same linked article):

Strategy shift

The price reduction marks a shift in strategy for Cadillac President Johan de Nysschen, who has been mapping out a broad strategy to elevate Cadillac since taking over the brand on Aug. 1 from Infiniti.

Asked in a September interview whether Cadillac would cut prices to avoid alienating loyal buyers, de Nysschen said flatly: "That's not going to happen."

De Nysschen has said that Cadillac must command luxury prices and reduce its reliance on incentives to raise resale values and ultimately rehabilitate the brand's image. He believes Cadillac's vehicles compare favorably to BMW, Mercedes and Audi — a view that many auto critics share — and should be priced accordingly.

Even before his arrival, Cadillac's rationale for the price increase was that the smaller ATS, which entered the lineup in 2012, serves as Cadillac's entry-level model, giving the CTS higher positioning. The latest CTS was made larger, with better performance and more features, to compete directly with the 5 series, E class, Audi A6 and other midsize luxury models.

"Either you have to bring your volume aspirations into alignment with reality and accept that you will sell fewer cars," de Nysschen said in the interview. "Or you have to drop the price and continue to transact at the prices where you were historically.

"I think the logical conclusion is that it's better to build off a very solid base in terms of [product] credibility, charge a fair price for the car and realize you have to wait until the volume comes," he said.

— Hubris!

highmodulus > yamahog
03/04/2015 at 09:44

Strategy shift

Asked in a September interview whether Cadillac would cut prices to avoid alienating loyal buyers, de Nysschen said flatly: "That's not going to happen."

highmodulus > Logansteno: Bought a VW?
03/04/2015 at 09:49

Doesn't explain the great sales (and margins) of the Escalades. Those are not bought by old people. Its a segment leader and its price is viewed as fair. While not my cup of tea, I have seen a new one and its really nice.

BMW dealerships are also much, much nicer than the average Chevy/GMC/Caddy combo dealership. Also, BMW is very good at the leasing game. Even with that, they have been run very hard by Audi and Mercedes. And even Porsche in certain segments.

Caddy stepped into a buzz saw with there pricing, and finally admitted it here:

http://www.autonews.com/article/201501…

highmodulus > NotUnlessRoundIsFunny
03/04/2015 at 09:52

On the bright side we got those unintentionally funny F1 "Director of performance" Vettel ads and the Q everything program. Good times. . . .

yamahog > highmodulus
03/04/2015 at 10:07

$1000-$3000 still leaves you in the same price range. The dealers will probably end up eating it and BMW buyers probably won't care either. Is that what you think it takes to make a difference, or do you think that Cadillac prices should be cut all the way down to being as cheap as a higher-trim-level Impala and give themselves the Lincoln problem?

Bottom line: it costs money to improve your car, and it has been proven that lowering the price of a luxury vehicle also lowers its perceived quality among luxury buyers. They are generating enthusiast buzz with the V series while they release new vehicles and wait for the rest of the market to get hooked by their good press, marketing, and improved perception.

Once again, I ask: who would you hire, and what would you have them do differently? You certainly couldn't have artificially low prices and not make profit on the current, improved vehicles and then bump them up for no reason once they've sold enough (among people who can't afford the luxury competition, not even your target market) and as you claim, "earned it."

briannutter1 > highmodulus
03/04/2015 at 10:07

I think Corvette gets something like 75% of the magazine covers for Chevy and maybe even GM in general. Caddy was promoting the 2nd gen CTS-V hard...'Ring numbers and everything. That got covers and that got people talking about the brand. because it WAS faster than Mercedes, BMW, AUDI. They've since toned down the booty so they can be grownups. I don't think it's the way to go and judging by sales...I may be right.

highmodulus > yamahog
03/04/2015 at 10:25

Its $1-3k in list price reduction, before incentives . Which if you read the article Caddy has been doling out in huge chuck despite de Nysschen earlier statements:

"But those CTS sales required steeper discounts. The average incentive on the car last year was $9,213, research firm Autodata says. The 5-series average incentive was $6,831; the E class was $7,219."

And additionally, they are having to do other stealth discounts:

"Cadillac also has made some more popular optional features standard. For example, an UltraView sunroof with navigation and a higher-quality Bose sound system — options before, cost $2,155 — will now come standard on Luxury models, one step up from the base trim level."

Alas, logic did not prevail across the line:

The car's base price of $46,340, including destination fee, did not change. Neither did that of the priciest CTS: the vSport with a twin-turbo 3.6-liter engine, which remains $71,880.

Still nice to see de Nysschen was wrong on just about everything.

yamahog > highmodulus
03/04/2015 at 10:36

Those do not contradict anything I said. The incentives aren't doing anything for conquest sales (people will still buy a more expensive BMW or Benz because reasons), and they're shuffling around prices on content ie instead of paying for that option package, now you get it standard at a higher trim level. These discounts aren't coming out of thin air.

Putting aside your deNysschen schadenfreude, who would you hire and what would they do differently to "save Cadillac?"

highmodulus > yamahog
03/04/2015 at 10:47

Well, I would hire someone who hadn't horrifically bombed their last job. Given that Dr. Z and his magnificent mustache are going no where, and Mercedes has been killing it the last 5 years in multiple segments (and has leveraged AMG nicely) I would raid them.

BTW- when I buy an ATS-V in 8 months I need you to come and make fun of me.

yamahog > highmodulus
03/04/2015 at 10:49

The Escalade is actually a phenomenal example of luxury buyers blindly going after the aspirational model reputation established when that SUV became wildly popular with rappers, wealthy celebrity families, etc in a time before the European luxury SUV market exploded. In fact, the Escalade brand name is so strong that people in the luxury segment will (hilariously) have better associations with Escalade than Cadillac. The rest of the lineup still needs to get there, and as you can tell with the Escalade, cheaping out isn't the way to do it.

highmodulus > briannutter1
03/04/2015 at 10:50

I think you may be as well.

Sweet Trav > yamahog
03/04/2015 at 10:59

Do you think half of BMW/Audi/Benz buyers give a damn about "value" of their <300hp sedans?

Evidence would suggest that they do care about value

But lets look at the sales numbers.

Kinja'd!!!

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When the CTS was a vehicle between the size of the 3 and five series it sold well in its first two generations. It was a 5 series comparable vehicle, for 3 series money. It was a good looking luxury car at a significant discount from the competition.

Looking at the current CTS we see it priced negligibly less than the 5 series. BUT it doesn't have the brand image BMW has. It's probably a better car too, and probably a better value once you start ticking the option boxes.

And looking at the ATS, it is actually more expensive in base form than the 3 series it competes against, again without the Brand recognition.

I included the STS in the data, because on the penultimate sales year of the first Gen CTS (a 5 series for 3 series money) the STS had it's best year. They Moved 77,000 CTS's and STS's in 2007, Compared to the refresh of the full on midsize CTS and ATS in 2014 which managed only 61,000 units in 2014. Even the 2g CTS and ATS managed 70k units in 2013.

To compete against the Germans, you cant square your products up to them plainly. You have to take time build your Brand. (blah blah blah cadillac has heritage, that heritage died in 2002 with the launch of the CTS) Because BMW sells cars because they have the brand recognition and "cool" not necessarily because they are "better", Ask yourself, if all things are equal... are going to pay a little extra for the "cool" one? The one with the prestige and reputation?

Yes. Every. Single. Time.

So original thought is to condense your product line and stop trying to measure up and offer more for your money. Offer the cars in between in size, offer a little more power, remove the optional extras, include them in the base price. streamline your suppliers. Luxury brands hate to appeal to value, but rich people are notoriously cheap. How do you think Hyundai and Kia have went from being literally the butt of every automobile joke to building some decent looking cars at an alarming rate? They undercut their competitors, offered more, tweaked their styling and used common platforms.

Ok maybe my thoughts aren't exactly Original, but if you're hoping that a brand can actually stand on the merits of its products, you've never met a marketer.

The question is, do we want to build good cars, great cars, or profitable cars.

If we wanted to focus on profitable cars, I'd also consider moving away from the Alpha and Omega platforms for my midsize car. People love all wheel drive. We even really know know why. The Epsilon II platform is AWD capable, and FWD to AWD is lighter, easier to implement and is more fuel efficient. The cost savings by limiting Cadillac's platforms and powertrain would help drive profitability up, not just across the brand, but GM as a whole. Are these cars that enthusiasts want to see? No. But we're a dying breed, most BMW buyers aren't "enthusiasts" either.

I guess time will tell who is right. That and the success of new the Genesis sedan... considering it is already beating the CTS for 2015 so far.

yamahog > Sweet Trav
03/04/2015 at 11:07

We will talk about this at home, even though you're just reiterating all the same shit I debunked last time.

But for real, you of all people should know how Hyundai/KIA can undercut everyone else, and for someone who's placing value on original thought, that's probably not the best example

Sweet Trav > yamahog
03/04/2015 at 11:13

Perhaps "original" thought isn't the term. More so what worked for BMW/Audi/Infiniti wont work with Cadillac.

Id like to know how more or less profitable the first and second generation of the CTS are than the current one. The concept of a 5-er for 3-er money worked pretty damned well for Cadillac. Without the original CTS and the buyers that it brought in, the brand would be in the same situation Lincoln is in.

nermal > highmodulus
03/04/2015 at 12:02

I think the ONLY way for Cadillac to be successful is to build a significantly better car than ze Germans.

Not close enough but cheaper. Not the same but a smidgen cheaper. Not even the same but the same cost. They need to completely revamp their lineup so that it blows the doors off of everything offered by ze Germans, top to bottom.

They need to win every category of every comparison test, convincingly.

The problem with that? It won't be cheap. It won't be easy. It won't happen overnight. And it will require a much longer leash from the Mommy Barra and friends. Changing every car name to Q CT-whatever isn't going to do it. They need to ensure that everything from the underlying design of the car, to the driver / passenger experience, to the buying and service experience is better.

They're close on a few grounds - I checked out an ATS recently, and it really was great. But they're not there yet.

Sweet Trav > highmodulus
03/04/2015 at 13:27

So is it pricing, the cars themselves, or marketing/market forces?

As Yamahog illustrated earlier, If prices are ratcheted down, why haven't sales picked up? Incentives are a good way to kill your profitability. The one aspect to consider with price is young buyers, who may want an aspirational car, but cant quite afford a BMW/Merc/Audi. You may be able to capture their sale with a price decrease, or perhaps more value for their money. But, at what cost to your bottom line? I think that the ATS needs the price decrease, not the CTS. I am also confused how the CT6 fits into the current lineup. What sets it far apart from the CTS?

I think currently Cadillac in terms of all, measurable "performance" beats the Germans. That being said there is something slightly more intangible about the German cars, the material quality, the build "quality", the knowledge that nothing comes from a "parts bin" shared with lesser Chevys or Buicks. To combat this Johan wants to distance the brand from GM. Which I think in some areas it may help and hurt. Interiors, yes Cadillac does need to distance itself from the GM parts bin, and improve the feel of their interiors (not that I can identify a single component used in the interior of the 2014 CTS-V that appears in another GM vehicle) I think that distancing themselves from GM powertrain on the other hand would be a mistake. I have said this before and I will say it again. GM builds the best powertrain of any OEM. "Special" Cadillac powertrain is a waste of resources in my opinion.

When it comes to marketing, some may say that the people who are are looking at 550i probably aren't even considering a Cadillac CTS, and why is that? Because Cadillac lacks the image. I don't necessarily agree with the direction that he has taken, but good old Johan has said that brand image is a very key component to his plan and it should be. Unfortunately, I don't think that Cadillac is going to out luxury, out class (they abandoned this market position years ago), or out the yuppiness of BMW or MB. Focus on something else. Anything Else. If you want to call the German's styling stuffy and make wild wacky new Art and Design models, do it. If you want to be a performance brand, show your cars kicking the teeth in of the competition (heads up BMW the CTS-V and ATS-V already do). If you want to be the cheap luxury brand, focus on value. The Germans already have the ultra-luxe part of the market cornered. It is a well, and easily defensible market position, its like unseating an incumbent in an election, either they have to screw the pooch, or you have to fit the bill of what the people want more.

The Escalade, unlike the rest of the line-up has the cool factor that the entire line needs. Is it the most capable vehicle in its class? hell no. It's a bloated SUV with a pushrod truck motor. They are utterly useless off-road (Yes I have seen this, It's hilarious) A Land Rover is better in damn near every respect, but it isn't as cool, edgy or different as the Escalade.

Cadillac has mostly a marketing problem, but I think prices could use a little tweak too.

highmodulus > Sweet Trav
03/04/2015 at 13:49

http://www.carscoops.com/2015/02/cadill…

"Cadillac's ATS and CTS aren't too good at convincing people to choose them over German premium sedans. Dealers throughout the United States are offering significant discounts on the two sedans. In some cases, the 2014 Cadillac ATS is offered with up to $12,000 off a sticker price that starts at about $33,215.

The situation is similar with the 2014 CTS , which is offered with a discount of up to $17,500 from the starting price of $45,345. According to a report from Reuters , dealers have been asking for Cadillac incentives for a long time.

What this says is Cadillac's strategy to rival BMW and Mercedes-Benz in the luxury sedan market doesn't appear to be working. Drivers of German luxury sedans aren't willing to switch to Cadillac.

A part of the problem is that the ATS and CTS are overpriced and overproduced, according to analysts. Cadillac has been trying for more than a year to reduce inventories of unsold ATS and CTS sedans, even stopping production at the Lansing, Michigan, plant in mid-December for six weeks.

When it reopened on January 26, the facility that builds the ATS and CTS was reduced to a single shift and a significantly diminished production schedule. Despite all these measures, Cadillac and its dealers still had about four months' worth of unsold CTS sedans and six months' worth of unsold ATS sedan at the end of January."

highmodulus > Sweet Trav
03/04/2015 at 13:50

And on the well received new version of the Escalade:

In January, ATS sales dropped 8 percent from a year ago, while CTS sales plummeted by 24 percent. Cadillac doesn't have the same problem with its SUVs, especially with the Escalade . January sales of the big luxury SUV were up 149 percent, with GM's truck factory outside Dallas, which builds the Escalade and long-wheelbase Escalade ESV, running on three shifts and working weekend overtime for months to try to keep up with demand.

MontegoMan562 is a Capri RS Owner > highmodulus
03/04/2015 at 15:52

I guess it's time for the automotive advertising guy to jump in.

Listen, I'm a huge American car fan. Big 3 all the way for me.

I know that every American car sale is a fight against the imports. To me it feels like Caddy has squared off against Germany and Lincoln against Japan/Korea. By this I mean, Caddy wants RWD performance oriented cars that they can tame down to entry level models. Lincoln wants comfort and style, I know there are "performance" Infiniti, Lexus, and Acura, but no one looks to them for it. People specifically look to BMW and Audi for performance models.

The marketing portion needs to step it's game up, but there's a double standard 100% of the time. Caddy does the funniest ad move I've ever seen them pull with their ATS-V across Europe in front of all the competitors shops on the way to the Geneva Auto Show and BAM internet haters say "Only stupid Americans would do this" Without realizing that all their favorite brands have done the exact same thing.

The name change is beyond stupid for Cadillac (firmly on the new management's shoulders). Let me explain why. Is CTS, ATS, SRX, XTS any worse of a naming structure than MKS, MKT, MKZ, MKC, MKX? No. Not at all. In fact it's worse, at least Lincoln has a connection to Mark historically to identify vehicles which they converted to MK. So why does everyone hate the Lincoln names and love the Cadillac ones?

The cars. People actually care about the CTS and the ATS (and some people actually like the SRX, shockingly). The reason is there was a product worth learning. People cared about the actual product. They don't care about the Lincolns, so they never bothered to learn the names. CT6 is just copying the Germans and it's stupid. Everyone already knew the Cadillac naming scheme.

Pricing is what pricing is, the longer the cars are in production the higher their profit margin will be, don't think for a minute they aren't making a healthy profit on every Cadillac sold, maybe not on every Chevy Cruze sold though. Lincoln is making even MORE profit because of how shared their platforms are, the problem is they aren't selling as many.

The perception is slowly changing and there needs to be a balance between consistency and cost. If you keep shifting the name, or the overall image, you lose it. Like driving up a hill in the snow - for the love of god don't stop half way up.