Cadillac Chases Luxury's Top Players and Profits With New XT6

(Bloomberg) -- General Motors Co. has a lot riding on the new Cadillac XT6 sport utility vehicle, being shown for the first time on the eve of the Detroit auto show.

Cadillac sales fell 1.1 percent in the U.S. last year and were down almost 3 percent in the fourth quarter. Steve Carlisle took over as president of the division in April with a vow to turn around the brand.

The main reason for Cadillac’s malaise at home is that GM has been about a generation behind rivals in rolling out new luxury crossover vehicles. While GM was getting out new sedans like the CT6 -- which went on sale in 2016 and already may be phased out soon -- competitors were going big with their SUVs.

Cadillac Chases Luxury's Top Players and Profits With New XT6

The new XT6 going on sale in the spring will be a second model in the lineup with a third row of seats for Cadillac to try to lure away luxury buyers shopping for Audis, BMWs and Mercedes-Benzes. It’ll slot between the midsize XT5 and the brand’s brawny flagship SUV, the Escalade.

“The problem with Cadillac is that they’ve had gaps in their lineup for some time,” said Alan Baum, an independent auto analyst in West Bloomfield, Michigan. “This is expanding their reach into an area that customers have been demanding.”

Carlisle has a parade of six new models coming out in the next three years. The first was the small XT4, which debuted in the fourth quarter and won over buyers with starting price of under $35,000. It outsold the likes of the BMW X2 in November and December to lead its segment, according to GM.

But the real profits are made off the bigger, seven-passenger luxury vehicles like the XT6, Baum said. While GM hasn’t announced a price yet, the BMW X7 and Mercedes GLS start at more than $70,000.

‘Different Beast’

The giant Escalade shares DNA with GM’s pickup trucks and sticker prices that reach $100,000. It’s “a large box and a big step up in price from the other vehicles in the lineup,” Baum said. The XT6 will instead have “more rounded and car-like styling.”

The XT6 eventually will have GM’s SuperCruise technology, which allows hands-free driving on the highway. All Cadillacs will be getting SuperCruise in 2020, before other GM brands, and the division will get the first electric vehicle using GM’s new battery technology within the next couple of years.

Those changes will put the brand back in its historical position of being GM’s technology leader. Or, as GM President Mark Reuss has said, “Cadillac will be Cadillac again.”

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