Cadillac’s Umpteenth Reinvention Features a Small SUV at $35,000
(Bloomberg) -- Here we go again. For at least the eighth time in two decades, General Motors Co. has a new brand chief vowing to reboot Cadillac, the once-storied luxury name that has been losing market share and prestige for years.
GM promises a $12 billion parade of new models, with the perhaps most significant being a smaller, cheaper sport utility vehicle that turns on its head everything Cadillac has historically stood for. There also will be revamped advertising, including a fresh tagline -- not yet revealed -- to replace the sleepy “Dare Greatly” campaign. The strategy kicks off with the millennial-aimed XT4 SUV, followed by five more models.
To some GM watchers, the latest initiative is a now-or-never moment, perhaps the last window for the 116-year-old Cadillac to recover its marquee name before the very idea of auto brands fades away. That’s a bit overly dramatic to Steve Carlisle, the new division president. But he’s well aware that shareholders have seen this song-and-dance before.
“We lost our mojo for a long period of time,” he said. “This time, it is different and we will show you.”
For GM, Cadillac’s comeback effort represents more than just the resurrection of a famous brand. While its share of the U.S. premium-car market has fallen, Cadillac is a vital money maker for its parent. Sales are booming in China, where last year it sold more vehicles -- almost 180,000 -- than in the U.S. for the first time. Chevy and Buick sales, meanwhile, are falling in China. Globally, luxury cars make up just 10 percent of the 100 million cars bought every year but haul in close to 50 percent of the profits.
Cadillac’s problems are many, and familiar. Premium buyers have flocked to SUVs, but the brand has just three, including the behemoth Escalade that starts at $75,000. Most of its models are sedans, a style now out of favor with many consumers. Older people continue to be Cadillac’s mainstay.
The brand’s advertising theme has hardly helped, according to Bob Lutz, the retired GM vice chairman. In some video ads, viewers wouldn’t even see a Cadillac until halfway through the video, he said.
“‘Dare Greatly’ has been a disaster from beginning to end,” Lutz said. “When you have product that is in many ways better than the competition, you tell people about it. You don’t dare them to take a leap of faith on your cars.”
Carlisle agrees the division needs to freshen its advertising. He and Deborah Wahl, the new marketing boss, are working on ads that will emphasize features and new technologies. That’s one reason Cadillac will move its headquarters back to Michigan after several years in New York: The marketers will be close to engineering.
Carlisle is a GM lifer who most recently steered the growth of its Canadian business. He was named Cadillac division president in April, replacing Audi veteran Johan de Nysschen.
The new XT4, geared to appeal to younger buyers, starts at around $35,000 and goes close to $50,000 with options. (The least expensive Caddy now is the ATS sedan starting at $39,000.)
Small Cadillacs have rarely clicked in the marketplace. In the 1980s, there was the famously awful Cimarron, a rebadged Chevrolet Cavalier that is now synonymous with the brand’s decline. Another low point: the mid-sized Catera from the late 1990s, which was little more than an Opel Omega family car. Even the ATS, which boasts good quality and a sporty ride, sells fewer than 1,000 a month in the U.S.
Yet other automakers, from Audi to BMW and Mercedes-Benz, have managed to sell profitable quantities of small SUVs. Mercedes-Benz has bejeweled cabins and Volvo has become a winner with artistic, Scandinavian interior design.
With the XT4, Cadillac is paring down some of the touches premium buyers expect, said Eric Noble, president of consulting firm The CarLab.
“The first question that comes to mind is, where’s the luxury?” Noble said.
Phillip Kucera, the car’s interior-design manager, pointed to hand stitching on the dashboard leather and wood grain made from different timbers to give it a modern look. But he acknowledged that with a starting price of $35,000, Cadillac can spend only so much decorating the XT4.
Alexander Edwards, president of marketing consultant Strategic Vision Inc., said the XT4’s technology and lower price have a chance to attract a different type of Cadillac buyer.
But all that may not matter, Lutz said. Cadillac’s reputational comeback could take years, during which carmakers may be competing with ride-sharing companies offering autonomous transportation. If they succeed, he said, consumers would be more attracted to brands like Uber and Lyft than to a particular car manufacturer.
“I don’t think there are enough decades left in the branded automobile business as we know it to achieve a comeback,” Lutz said.
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