NINETY EIGHT REGENCY

GM Must Fashion Another Cadillac Renaissance

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GM Must Fashion Another Cadillac Renaissance

After stumbling in recent years due to a dearth of innovation and marketing dollars, GM's luxury brand is launching new models that will need inspired marketing

By David Welch

BW EXCLUSIVES

A new Cadillac commercial began airing on U.S. TV screens on Aug. 30. It features a silver CTS sedan blasting out of a hangar and speeding across the vast emptiness of the California desert. The ad is meant to evoke a convergence of power and technology, but it could just as easily serve as a metaphor for a brand trying to find its way out of the desert.

The division General Motors executives have long called "the tip of the spear" is about to undergo its second makeover in less than a decade. Fresh from bankruptcy, GM badly needs Caddy to hit. It has a slew of coming new models that take aim at the likes of BMW (BMWG.DE). But some of them—such as the new SRX crossover SUV and a small sedan—will challenge Cadillac's ability to sell vehicles other than big luxury cruisers and SUVs.

With its fourth new manager in five years, Cadillac has yet to figure out a new marketing message to champion its new models and recapture its momentum. "It's time for a new chapter," says newly minted Cadillac General Manager Bryan Nesbitt. "There's still the perception tied to those old Fleetwoods and DeVilles. So there's a fight to build awareness."

THE LOSS OF GMAC CRIPPLED CADILLAC

Cadillac's resurgence is vital to GM. Five years ago, the brand was one of the company's few success stories. After years of indifferent models and mercurial marketing, the division had put its stodgy image behind it. The brash, hulking Escalade had become the hip-hop SUV of choice, and the edgy styling of the CTS sedan attracted people who wouldn't previously have been seen dead in a Caddy. In 2004, Cadillac outsold Mercedes (DAI) in the U.S. and was closing in on Lexus and BMW. Until 2007, the brand could be counted on for upwards of $2.5 billion in annual operating profits, which covered losses from weaker brands. Then GM ran into trouble and the former regime yanked money for new products and marketing in 2005, leaving Cadillac with only the new CTS for the past couple of years.

It doesn't help that since losing control of GMAC, formerly its in-house lender, GM has been out of the leasing game—a knee-capper for a luxury brand. Cadillac is just starting to get back into leasing with newer models such as the CTS and SRX. GM's bankruptcy also has given the brand an uninviting stench. Cadillac is expected to sell 130,000 cars this year, vs. 235,000 in 2005. In a survey by Edmunds.com, only 2.1% of buyers say they would consider buying a Cadillac, down from 4.3% in January 2008.

That's not to say that GM can't turn Cadillac around. "It's still a good brand," says Jim O'Donnell, chairman and CEO of BMW (U.S.). "They're on a knife edge. They could fall off a cliff or be successful."

CAN CADILLAC SELL A SMALL SEDAN?

Back in the day, Cadillac was known not just for luxury and style but for technology, too. It pioneered the automatic transmission, a cabin thermostat, and heated seats. New division chief Nesbitt wants to rekindle that innovative reputation. But a hybrid version of the Escalade hasn't moved the needle. Nesbitt wants to intensify the hybrid's marketing, plugging the brand's high-performance V-Series cars to show that Cadillac can run with the best German cars.

Cadillac will face a big challenge when it launches a small sedan—comparable in size to BMW's 3 Series—in 2012. The ATS, as it is being dubbed, is exactly the entry-level car Cadillac needs to bring in younger luxury buyers, says IHS Global Insight (IHS) analyst John Wolkonowicz. On the other hand, Americans look to Cadillac for such big, brash cars as the Escalade, says Eric Noble, president of The CarLab, an Orange (Calif.) consulting firm. There lies Cadillac's challenge—to establish a brand identity that can sell both.

On that score, company Vice-Chairman Bob Lutz wants to give Cadillac a different take on the kind of high-end car wealthy consumers aspire to. Conventional wisdom says it should be a big sedan such as the Mercedes S600, but Lutz wants to build the Converj, a sleek two-door sports car that runs on the same electric drive system as the ballyhooed Chevrolet Volt. That would change the conversation, putting Cadillac back in the technology game, as it was in its heyday. But production would be years away—if the car gets built at all. Right now, Cadillac just needs to prove that its new models can compete.

THE LINK:

http://www.businessweek.com/bwdaily/dnflas...ampaign_id=yhoo

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Hmmm...small caddy sedan....COOL!

Let's hope they can pull it together. Nice article, thanks 98.

Chris

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Yes they must, and hopefully this renaissance they get right and it is the last one they need. This is a scary statement:

"Cadillac is expected to sell 130,000 cars this year, vs. 235,000 in 2005. In a survey by Edmunds.com, only 2.1% of buyers say they would consider buying a Cadillac, down from 4.3% in January 2008."

Basically half their customer base and half of those that will even consider the brand gone in 4 years.

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They may not be my "thing", but I think Caddy is taking the right steps for the most part.

- The ATS will be vital.

- The multiple bodystyles of the CTS makes great sense

- The Converj will garner some serious attention

- If the XTS has the look of the Sixteen, it will do ok

I still can't see the new SRX as a good thing nor a potential success though.

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I think the SRX will be a success, it just depends on what you're consideringa success....will it take on the likes of the X5 M? No, but will it put people behind the wheel of a Cadillac rather than a Lexus or other entry-lux CUV's. I think it will. And that is what counts right now. People need to see what GM is really capable of and if the SRX does that and sells well, then I think they can take a few more risks in the future.

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If the ATS can build the same kind of momentum the original CTS did and if GM doesn't mess up the CTS redesign, then they have a chance.

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In 2004, Cadillac outsold Mercedes (DAI) in the U.S. and was closing in on Lexus and BMW. Until 2007, the brand could be counted on for upwards of $2.5 billion in annual operating profits, which covered losses from weaker brands. Then GM ran into trouble and the former regime yanked money for new products and marketing in 2005, leaving Cadillac with only the new CTS for the past couple of years.

Was business as usual at GM.

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Business as usual needs to be tossed in the trash, an S-class fighter is necessary both for brand image and for laying the groundwork for Bentley fighters off the same chassis too, then Cadillac can be a true full-line luxury brand again.

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Business as usual needs to be tossed in the trash, an S-class fighter is necessary both for brand image and for laying the groundwork for Bentley fighters off the same chassis too, then Cadillac can be a true full-line luxury brand again.

I agree with the first part, an S-class competitor would be great, but GM doesn't have the money to do it. And I honestly don't think the capability or knowledge either. No Bentley fighters though, that is way out of their comfort zone, and GM doesn't do hand built, low volume.

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I agree with the first part, an S-class competitor would be great, but GM doesn't have the money to do it. And I honestly don't think the capability or knowledge either. No Bentley fighters though, that is way out of their comfort zone, and GM doesn't do hand built, low volume.

It's precisely that it is out of their comfort zone that GM should have Bentley fighters, they have to be hungry enough to fight the competition across the board and kill any sense of complacency on product development that makes it worthwhile, even more so than the value of the product itself.

Edited by aldw
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Sorry, I don't see this as a 'second renassiance', but an interrupted (by the BK) 1st one.

To be a "renassiance", a 2nd one would have to toss out what Cadillac is right now (largely the CTS), and that car is not going away.

Survey #s are meaningless, but the temporary 100% loss of leasing bears the brunt of the blame for the dipping sales totals. What is the percentage of BMW & MB leasing? Considerable, without a doubt.

Perhaps Cadillac can take a page from mercedes and raise fleet sales in their homeland to 50%. :wink:

And as for 'not having the knowledge' to build a uber-low-volume s-class entry, take another look at the Sixteen's specs, and ask yourself when will mercedes come close to that. The knowledge is clearly there to exceed the pedestrian s-class handily.

Money is another, fully valid, inescapable matter.

Very interesting to learn that Cadillac's profit was $2.5 Billion as recently as 4 years ago. Huge.

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Sorry, I don't see this as a 'second renassiance', but an interrupted (by the BK) 1st one.

To be a "renassiance", a 2nd one would have to toss out what Cadillac is right now (largely the CTS), and that car is not going away.

Survey #s are meaningless, but the temporary 100% loss of leasing bears the brunt of the blame for the dipping sales totals. What is the percentage of BMW & MB leasing? Considerable, without a doubt.

Perhaps Cadillac can take a page from mercedes and raise fleet sales in their homeland to 50%. :wink:

And as for 'not having the knowledge' to build a uber-low-volume s-class entry, take another look at the Sixteen's specs, and ask yourself when will mercedes come close to that. The knowledge is clearly there to exceed the pedestrian s-class handily.

Money is another, fully valid, inescapable matter.

Very interesting to learn that Cadillac's profit was $2.5 Billion as recently as 4 years ago. Huge.

But that is Operating profit before you factor in legacy costs or any taxes or interest payments on debt. The net profit was likely a loss since GM lost $10.5 billion in 2005, all brands must have shared in that.

CTS is their best seller, but when you walk into a Cadillac showroom you still see the dated STS and super dated DTS. Then the SRX is front drive, Escalade is rather similar to the Yukon and Tahoe. The second renaissance needs to be Cadillac doing more rear drive performance luxury like the CTS and distancing themselves from Chevy. They had the right idea in 04 but failed in the execution of the XLR and original SRX.

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Hmmmmm, an S-Class competitor ... :scratchchin:

A legit competitor won't happen. GM may build something they think is a competitor, but it won't be. Just because a car is big, with lots of chrome, doesn't mean it competes with the S-class.

First is a rear drive premium chassis (shared with no other model), GM doesn't have one.

Second the engine, there isn't a 400+ hp DOHC V8 at GM or anything for an optional engine, like a V12 or twin turbo version of the V8 they don't have.

Third is the transmission, they need 7 or 8 gears, and don't have that.

Drive by wire they have, maybe brake by wire, but I am not aware of GM having steering by wire, so they need that and a fancy computer to make all that stuff work.

The magnetic ride control shocks would be needed standard, but then could that car vary ride heights or do auto load leveling with it? They would have to incorporate that into the suspension.

Then there are little things like self closing trunk and doors, heavy duty brakes they can pull off the CTS-V, same with the electronic driving aides.

That could be a billion dollars to develop just the mechanics of the thing.

Plus they have to do an interior and exterior design all from scratch. Develop new technology and luxury features beyond what the Escalade or STS-V are equipped with, so that is a few more hundred million. Then all the testing and developmental costs, then marketing costs. This would be a $1.5 billion effort, perhaps more. Which is a big gamble to see whether or not people will buy a Cadillac with a $90,000 base price.

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A legit competitor won't happen. GM may build something they think is a competitor, but it won't be. Just because a car is big, with lots of chrome, doesn't mean it competes with the S-class.

First is a rear drive premium chassis (shared with no other model), GM doesn't have one.

Second the engine, there isn't a 400+ hp DOHC V8 at GM or anything for an optional engine, like a V12 or twin turbo version of the V8 they don't have.

Third is the transmission, they need 7 or 8 gears, and don't have that.

Drive by wire they have, maybe brake by wire, but I am not aware of GM having steering by wire, so they need that and a fancy computer to make all that stuff work.

The magnetic ride control shocks would be needed standard, but then could that car vary ride heights or do auto load leveling with it? They would have to incorporate that into the suspension.

Then there are little things like self closing trunk and doors, heavy duty brakes they can pull off the CTS-V, same with the electronic driving aides.

That could be a billion dollars to develop just the mechanics of the thing.

Plus they have to do an interior and exterior design all from scratch. Develop new technology and luxury features beyond what the Escalade or STS-V are equipped with, so that is a few more hundred million. Then all the testing and developmental costs, then marketing costs. This would be a $1.5 billion effort, perhaps more. Which is a big gamble to see whether or not people will buy a Cadillac with a $90,000 base price.

Oh I think one could be fast tracked through the process, in fact I know it can be ... Besides have you looked at an S-Class interior lately? It's not all that, boring in fact in a real Teutonic sense ...

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SMK, why would a flagship car need braking and steering by wire? Taking the steering and braking feel out of the car and replacing it with computer input doesn't seem practical. I think you are right about the magnetic ride control needing to be in the car. That system is awesome.

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Oh I think one could be fast tracked through the process, in fact I know it can be ... Besides have you looked at an S-Class interior lately? It's not all that, boring in fact in a real Teutonic sense ...

If the people based in Shanghai or somewhere else in Asia can make a case for a certain Zeta platform to be lightened, somehow merged with Sigma, or abandoned in favour of a highly modular Alpha, then why not? I worry more about GM being concerned about the Corvette's CAFE ratings... it sends signals that New GM cannot get out of its pickup truv and SUV addiction...

Interior-wise, what I'd rather have GM looking at the 7-Series if it needs outside inspiration, not the S-Class.

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SMK, why would a flagship car need braking and steering by wire? Taking the steering and braking feel out of the car and replacing it with computer input doesn't seem practical. I think you are right about the magnetic ride control needing to be in the car. That system is awesome.

Steering by wire would be very advanced, but Lexus has brake by wire on a lot of cars, Mercedes used it on a lot but it getting away from it. Perhaps a conventional braking system with an electronic power assist that could basically act as brake by wire is best. The S-class can stop itself without the driver ever touching the brakes so Cadillac would have to have that. All I'm saying is the car needs a ridiculous amount of technology and GM would have to develop a lot of new stuff. They can't piece this car together from the parts bin.

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>>"Second the engine, there isn't a 400+ hp DOHC V8 at GM "<<

So the Cadillac 469 HP DOHC V-8 doesn't count... why? Too much HP ? :wacko:

Hallmark of the chronic basher: ignore the facts and just keep plowing ahead blindly.

>>"The magnetic ride control shocks would be needed standard, but then could that car vary ride heights or do auto load leveling with it?"<<

"Gosh-golly, duh, I dunno! Sounds weely tough!"

Cadillac has had auto load leveling since circa '57 (where was mercedes here?) and CVRSS since at least '00.... no way they could engineer a system with Magnetic-Rheological shocks and CVRSS and ALL... nope; impossible.

Of course, there was someone, somewhere that said Cadillac couldn't develop each of those systems, too, no doubt.

>>"Then there are little things like self closing trunk..."<<

On Cadillacs since '55, IIRC. You can see a youtube vid under '57 Eldorado Brougham' that shows a power opening & closing trunk. Another innovation copied by mercedes and others, yet has been called 'gimicky' WRT to Cadillac, and 'advanced' WRT to the followers. No end to the agendaistic bullsh!t.

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Benz brake by wire systems are garbage, and very disturbing to drive.

If they are dropping it, that would be why.

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>>"Second the engine, there isn't a 400+ hp DOHC V8 at GM "<<

So the Cadillac 469 HP DOHC V-8 doesn't count... why? Too much HP ? :wacko:

That is supercharged and gets 13/19 mpg. They need 23 mpg highway, preferably more since GM is so worried about CAFE because they won't give up on massive SUVs. If they used the supercharged Northstar, where do they go for an optional engine. They need a near 400 hp naturally aspirated V8 so that the boosted version can get over 500 hp, unless they combine the 4.4 S/C with a lithium-ion hybrid system to get mileage up to 16/24, and then offer a V12 as an option.

It's possible for Cadillac to make an S-class level car, I just don't see it happening. It would take a tremendous amount of money and would have to be engineered unlike any other GM car. What we'll get is a Lincoln MKS style full size car that GM will claim is an elite luxury car.

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I drive brake - by - wire cars on iRacing. People spend 800 bucks to get a pedal set that simulates hydraulic pressure braking.

The trunk thing. Total waste. No need for it at all. My family has had Cadillacs with and without it and it is not necessary.

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Steering by wire would be very advanced, but Lexus has brake by wire on a lot of cars, Mercedes used it on a lot but it getting away from it. Perhaps a conventional braking system with an electronic power assist that could basically act as brake by wire is best. The S-class can stop itself without the driver ever touching the brakes so Cadillac would have to have that. All I'm saying is the car needs a ridiculous amount of technology and GM would have to develop a lot of new stuff. They can't piece this car together from the parts bin.

Ya know, the coolest thing about that system is that when Benz did a press demonstration of it, the S-Class plowed into the back of the car it was following.

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Benz brake by wire systems are garbage, and very disturbing to drive.

If they are dropping it, that would be why.

Introduced first in a 2003 E-Classe - they were the major problems which made E-Classe the recall queen of MB and for years 2003-06 MB lost more places in JD power rankings than USC did in BCS ranking after their UW defeat.

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Introduced first in a 2003 E-Classe - they were the major problems which made E-Classe the recall queen of MB and for years 2003-06 MB lost more places in JD power rankings than USC did in BCS ranking after their UW defeat.

All for an utterly pointless "feature" too.

What were they thinking?

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