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Discussion Starter #1
Paul Lienert and Ben Klayman
February 10, 2015 - 8:35 am ET

DETROIT (Reuters) -- General Motors' strategy of rebuilding the Cadillac brand has run into twin roadblocks: the carmaker can't persuade enough American sedan buyers to switch from foreign competitors such as BMW or Mercedes, and it can't make enough of its Escalade SUVs to satisfy domestic demand.

Even though chrome-bedecked Escalades retailing for more than $100,000 each are rolling every day out of an Arlington, Texas, factory that's been working weekend overtime for months, Cadillac still can't keep more than a few weeks' worth of the big SUVs in stock. By contrast, its dealers are offering discounts of thousands of dollars on the ATS sedan, intended to compete with the BMW 3 series, and on the CTS sedan, meant to rival the Mercedes E-class.

At Brotherton Cadillac Buick GMC in the Seattle suburb of Renton, Wash., owner Brad Brotherton is offering 2014 ATS sedans at up to $12,000 off a sticker price that starts at about $33,215. In St. Peters, Mo., near St. Louis, Bommarito Cadillac was cutting as much as $17,500 off the price of a 2014 CTS sedan, which starts at about $45,345.

"Cadillac made a commitment to relieve dealer inventories by incentivizing" the leftover 2014 sedans, Brad Brotherton told Reuters. "Dealers had been asking for that for a long time."

The fire sale marks a setback for Cadillac's strategy to challenge BMW and Daimler AG's Mercedes-Benz brand head-on in the luxury sedan market. But while an American Cadillac owner will happily consider a BMW or a Mercedes, drivers of those famous German cars just won't put a Cadillac on their shopping list.

"The problem is, Cadillac is not BMW,” said Larry Dominique, president of ALG in Santa Monica, Calif., which sets and tracks auto leasing values. "The ATS is the product that Cadillac could have used to build brand equity, but it was overpriced and overproduced."

Cadillac has wrestled for more than a year to shrink inventories of unsold ATS and CTS models. In mid-December it shuttered the Lansing, Mich., plant that builds the ATS and CTS for six weeks. The factory reopened January 26 on a single shift with a greatly reduced production schedule.

Even with the production cuts, Cadillac and its dealers had about four months' worth of unsold CTS sedans and six months’ worth of unsold ATS sedans on hand at the end of January, a Reuters analysis showed.

In January, GM sales rose 18 percent, largely on the strength of full-size trucks and SUVs. Cadillac sales increased just 2 percent, with ATS sales dropping 8 percent from a year ago and CTS sales down 24 percent.

"We understand we have a lot of work ahead of us with Cadillac," GM CEO Mary Barra said last week

Residual value

Dominique said Cadillac's residual values -- the projected end-of-lease values, expressed as a percentage of the new car's retail price -- are among the lowest in the luxury segment, ranking near the bottom with Lincoln and Jaguar.

So far, Cadillac has resisted price cuts on either model, although it recently tweaked option prices. Keeping base sticker prices unchanged could undercut the resale values used to set lease prices, Dominique said.

The failure of the ATS and CTS to hit their targets is costing GM. To kindle demand, Cadillac has offered subsidized leases, discounted financing and rebates. Consumers are being given $1,000 on the 2015 ATS and 2015 CTS, $4,000 on the 2014 ATS and $6,000 on the 2014 CTS. But some dealers are getting additional subsidies from Cadillac -- up to $5,000 more on the 2014 ATS and up to $7,000 more on the 2014 CTS -- to help clear out unsold cars.

Cadillac has cleared 90 percent of the leftover 2014 sedans, a spokesman said on Monday.

Escalade unrelenting demand

Meanwhile, the Escalade is hauling in the cash, as year-on-year sales in January rose 149 percent, according to Cadillac spokesman David Caldwell.

GM's truck factory outside Dallas, which builds the Escalade and long-wheelbase Escalade ESV and their Chevrolet and GMC siblings, has been running steadily on three shifts and working weekend overtime for months to try to keep up with unrelenting demand.

"If we could run that plant eight or nine days a week, we probably would," said a GM insider familiar with the production schedule.

Cadillac marketing boss Uwe Ellinghaus, a former BMW executive, calls the Escalade "almost a brand in itself," but adds that the big SUV "does not set the direction" for Cadillac's long-range strategy.

As it is, Cadillac is likely to get only "a few more" Escalades this year, according to Caldwell, who said, "A little bit of scarcity isn't a bad thing."


http://www.autonews.com/article/20150210/RETAIL01/150219993/gm-faces-roadblocks-in-rebuilding-cadillac-brand
 

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Maybe not all the americans want to buy copies of european luxury cars. Maybe they want "american luxury". What is american luxury? Seeing the succes of the Escalade, the american luxury is a big, ostentatious, confortable, soft car (or truck). Nothing to do with good drive or sport character.

Lincoln must learn from the mistakes made by Cadillac.
 

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While Cadillac certainly has a lot of work cut out for them, "they can't build enough" of the Escalade is hardly a "roadblock."

It's probably annoying as **** to their business folks, but strong demand isn't really a problem.

Anyway, the ATS definitely needs the most help (out of their near future, since the CT6 should help with the XTS market, even if their segments aren't identical [not to mention one of their reps at NAIAS tole me the XTS will probably end production once the CT6 arrives]). The ATS feels more cramped inside than its competition, its exterior is [debatably] "love it or hate it" (I love it). The base engine is subpar (esp. compared to the 3er -- don't give me HP numbers, show me performance), and it's fuel economy is worse (don't give me EPA, look at observed values in road tests, EPA isn't all that reliable -- look at some of the EcoBoost numbers, as much as I love those motors...). If I can get a similarly equipped 328i for a similar price, while getting great looks, better real world fuel economy, a lower curb weight, and a faster vehicle, the ATS makes less sense.

Sure on paper the ATS sounds like the performance winner. 32 more hp and 5 more ft-lb tq than the 328i, but it just isn't. If the ATS didn't have a glorious chassis (basically perfect, imho, driving the ATS was special for me) and good looks to those who prefer edgy styling, it would be a disaster. Standalone, it's a wonderful product. Among its peers, it is not the best. And sales reflect that because people who are spending well over 30K on a small sedan want the best.
 

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"The ATS is the product that Cadillac could have used to build brand equity, but it was overpriced and overproduced."
Pretty much what I've been saying all along, you have to build up the brand before you can play on an equal pricing field with the Germans. In order to do so you need to build capable vehicles that live up to the bar set by the Germans while offering better pricing to get your vehicles in buyers garages. If the product is equivalent then you will build owner loyalty and ultimately brand equity, if not you can always be Buick.

Building Cadillac or Lincoln into true premium competitors is a very long term quest, but without truly competitive premium vehicles it's a fools quest. I have no doubt that Cadillac can get there, I only question their will to what it takes long term, will they continue to invest?
 

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Maybe not all the americans want to buy copies of european luxury cars. Maybe they want "american luxury". What is american luxury? Seeing the succes of the Escalade, the american luxury is a big, ostentatious, confortable, soft car (or truck). Nothing to do with good drive or sport character.

Lincoln must learn from the mistakes made by Cadillac.
Judging by this infographic, you could be right, I'm not sure. But what am I missing here? (Since when does the MKZ outsell the CTS? Have I been sleeping under a rock?)

Is this graphic true, guys? Not to mention the XTS being the best selling Cadillac car (more classic luxury, not European at all)

 

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Judging by this infographic, you could be right, I'm not sure. But what am I missing here? (Since when does the MKZ outsell the CTS? Have I been sleeping under a rock?)

Is this graphic true, guys? Not to mention the XTS being the best selling Cadillac car (more classic luxury, not European at all)

I'm very surprised to see the highest rated Audi fall so far behind the Infiniti Q50, WTF is up with that?
 

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Discussion Starter #8
Cadillac and Lincoln have to offer more for less but still remain profitable for 2 generation of vehicles, by the 3rd generation they should be on parity. With each generation they can raise the price but still undercut the German 3 and Lexus.

The original IS was the laughing stock in Lexus lineup, they have consistently invested in it and it's paying off even though it's half the sales of the 3/4 series. The Q50(G) is doing well, it's where the ATS should be. The 2nd gen G was the car that the auto media considered the biggest threat to the 3 series reign but Infiniti took to long to redesign it with no major updates in between. Let's see what the Q50 and the coming redesigned Q60 do.

When you look at the chart, the MKZ is not doing that bad, it's in the middle of the pack. It has long way to go to reach the top 6 but top 10 is attainable with some more frequent updates and better leasing packaging.
 

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Lincoln News:
Not worthy of its own thread, and since this is a Ford biased site, I might as well dump it into a bad news Cadillac thread to help cheer us up even more, LOL. (hate me or sue me, see if I care)

1. So of the 3 entirely new Lincoln dealers launched in China recently (with a total of 9 scheduled in coming months), all 3 have already broke global sales records of any other Lincoln dealership, anywhere, ever. Not a bad start over there. They are being very well received.
2. Future Lincoln Business plan got approval in December, after the Lincoln team presented their overall strategy and future products. The approval allows them “billions” of additional money to fund it. Some brief product discussion, but can’t share that.

Back to our regularly scheduled news briefing, Cadillac product miscues.
 

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Lincoln News:
Not worthy of its own thread, and since this is a Ford biased site, I might as well dump it into a bad news Cadillac thread to help cheer us up even more, LOL. (hate me or sue me, see if I care)

1. So of the 3 entirely new Lincoln dealers launched in China recently (with a total of 9 scheduled in coming months), all 3 have already broke global sales records of any other Lincoln dealership, anywhere, ever. Not a bad start over there. They are being very well received.
2. Future Lincoln Business plan got approval in December, after the Lincoln team presented their overall strategy and future products. The approval allows them “billions” of additional money to fund it. Some brief product discussion, but can’t share that.

Back to our regularly scheduled news briefing, Cadillac product miscues.
1: This is great to hear. Hopefully they can maintain this momentum, instead of let the "wow, something new!" factor wear off. This makes me very happy. Lincoln bringing in some cash is great.

2: Billions sounds like a lot of differentiation. Makes me look forward to the MKS even more. I want New York to come to see something.

Thanks, Wings!
 

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Discussion Starter #11
^ Glad to hear the positive Lincoln news Wings, China may be Lincoln's holy grail. I would be even happier if you hinted about the "product discussion".

Cadillac has to be willing to sacrifice short-term profits for long-term sales and cut the prices. Maybe something is going on with GM financials that we don't know about on why they can't lower the prices.
 

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OK fine, new sedan in 2016.
Oh, come on Wings... we already knew that the next MK S will be here in 2016 with the next Taurus.

News.... really good news is what we want to hear... New 3 row crossover??? New bigger sedan above the MK S???? New coupe??? An small C sedan???? A business plan with billions in new founds will mean a lot of new vehicles...

:tongue:
 

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Maybe not all the americans want to buy copies of european luxury cars. Maybe they want "american luxury". What is american luxury? Seeing the succes of the Escalade, the american luxury is a big, ostentatious, confortable, soft car (or truck). Nothing to do with good drive or sport character.

Lincoln must learn from the mistakes made by Cadillac.
I think that a big problem is that Caddy's styling has been horrid past the point of tragic for years, now, and their entire lineup has essentially looked clunky and much less refined than their desired competition.
 

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I think that a big problem is that Caddy's styling has been horrid past the point of tragic for years, now, and their entire lineup has essentially looked clunky and much less refined than their desired competition.
Tell us how you really feel!
 

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Tell us how you really feel!
If I used language that expressed my true feelings of the "art and science" styling, I'd likely be banned.

Eye violators must be prosecuted.
 

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Part of the problem is the restructuring of their lineup which is confusing existing customers, although it's abundantly clear that GM completely miscalculated since they overproduced/undersold. I don't know what to think about Caddy, technically they make exceptional cars but their business is run poorly. Both Lincoln and Caddy suffer from chronic turnarounditis, it's hard to know if they've actually made any progress and if they really have the potential to be more than a bit player in this market. Neither brand has strong cultural relevance to the luxury consumer (in many ways it remains very toxic) and they don't offer a unique alternative in any meaningful way beyond value. I'm convinced if it wasn't for China, Lincoln would have closed up shop by the end of the decade.
 
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