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Cadillac Distances Itself From GM to Escape Bankruptcy Stigma

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Cadillac Distances Itself From GM to Escape Bankruptcy Stigma

By Keith Naughton

March 9 (Bloomberg) -- Cadillac, the luxury brand General Motors Co. acquired in 1909, is distancing itself from the Detroit-based automaker to avoid the stigma of the parent company’s $50 billion U.S.-backed bankruptcy last year.

Cadillac is erasing the GM name from its marketing and dealerships, changing e-mail addresses to @cadillac.com from @gm.com and exiting companywide promotions such as the Red Tag Event, said Nick Twork, a spokesman. The separation strategy was “absolutely” driven by GM’s restructuring, he said.

“Cadillac, which has really turned itself around with new levels of quality and exemplary products, doesn’t want to be associated with something that will drag it down,” said John Grace, president of marketing consultant BrandTaxi LLC in Stamford, Connecticut. “With GM’s bankruptcy comes lower credibility in the ability to build quality products.”

Bolstering Cadillac is central to Chief Executive Officer Ed Whitacre’s effort to revive GM, which is shedding half its U.S. brands as part of a post-Chapter 11 plan. Cadillacs such as the SRX sport wagon start at $33,330, a 47 percent premium over the Chevrolet Equinox, according to researcher Edmunds.com.

The recession and GM’s slide into bankruptcy helped cut Cadillac’s 2009 U.S. sales by 32 percent, compared with the drop of 30 percent for the biggest U.S. automaker. Cadillac’s 14 percent gain this year is the worst among GM’s 4 remaining brands and less than half of the 31 percent companywide jump.

Reversing Approach

Disavowing the parent company reverses the approach the automaker took five years ago when it began affixing a silver GM badge on all its models. “Our own studies show that consumers place a tangible value on the General Motors name,” GM said at the time.

Now, company officials are telling dealers the separation strategy is aimed at avoiding the “negative connotations with GM because of the bankruptcy,” said David Butler, general manager of Suburban Cadillac in Ann Arbor and Troy, Michigan.

GM plans to boost Cadillac’s U.S. sales by 28 percent to 140,000 units this year, Butler said. Annual Cadillac deliveries last rose in 2005, climbing 0.3 percent to 235,002, according to researcher Autodata Corp of Woodcliff Lake, New Jersey.

“There is a lot of pressure on Cadillac this year because it took such a beating last year,” Butler said. “As Cadillac dealers, we didn’t like being lumped in with the other GM brands, especially when they threw us into the Red Tag sale. We felt it cheapened the brand.”

Luxury Buyers

Instead of joining the annual year-end sale featuring discounted prices and cash rebates, Cadillac will run its own marketing campaigns that probably will include lease promotions more popular with luxury buyers, said Twork, the spokesman.

A new Cadillac ad campaign will debut later this month before a model introduction at the New York International Auto Show on March 31, Twork said. The ads will be the first from Bartle Bogle Hegarty, the New York agency hired in January to replace Modernista! of Boston, he said.

“We’re in the process of revamping all the things that face the customer,” Twork said. “The Cadillac brand is best communicated as Cadillac without GM.”

Founded in 1902 and bought by GM seven years later, Cadillac is the first unit trying to create distance from the parent company. Chevrolet, Buick and GMC are also starting to play down those ties, said Susan Docherty, GM’s marketing chief.

GM’s logo is being removed from the base of signs at dealerships selling other brands, Docherty said, and the automaker is poised to begin research on how customers perceive the company.

Customer Mindset

“Consumers, in their minds, can separate out the corporation versus the brands,” Docherty said in an interview. “They can separate ‘Hey, I can still fall in love with a CTS coupe, but I may not necessarily be happy with the fact that General Motors had to go through bankruptcy.’”

Cadillac held the U.S. luxury-sales title for six decades before being eclipsed by Ford Motor Co.’s Lincoln in 1998. Since then, GM has been retooling styling and quality to compete with imports such as Toyota Motor Corp.’s Lexus, now the leader in U.S. luxury sales. Cadillac finished 2009 as No. 4, with 109,092 vehicles compared with Lexus’s 215,975.

“Cadillac is critical to GM’s turnaround,” said Jeff Schuster, a J.D. Power analyst in Troy, Michigan. “Certainly from a profitability standpoint, it’s important. But if you can raise the image of Cadillac, that will also buttress the GM brand.”

Bailout Taint

Whitacre has been working to eliminate the taint of the “Government Motors” tag coined by critics of the federal bailout that gave taxpayers a 61 percent stake in the company.

In December, he began repaying GM’s $6.7 billion in federal loans. On March 2, he reorganized the U.S. sales and marketing team for the second time in three months. Cadillac General Manager Bryan Nesbitt was sent back to GM’s design staff, where he worked until July. Three of the brand’s marketing executives also left the company, Twork said.

Butler, the Michigan Cadillac dealer, said Toyota set the standard for brand identity when it formed the Lexus luxury line in 1989, omitting any mention of the parent company in marketing or showrooms. GM, he said, should do the same thing.

“I don’t think people will forget that Cadillac is a GM product,” Butler said. “But it’s the right thing to do. Customers come to our stores to buy a Cadillac, not a GM.”

link:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aS3bRI9dHFGw&pos=7

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yes yes Yes YES YES YES !!!!!!

I have advocated playing down the focus on the Corp here years ago- all it does is compete with the Divisional message. There ARE no 'General Motors' cars, there are only Cadillacs, Buicks, etc. STOP SELLING THE CORPORATION !!!!

The 'GM' fender badges were a silly mistake, and even tho it had no clear effect either way for a long long time, I never liked when the 'GM' logo became mandatory in print advertising ('68). The present day result of all this Corporation pedaling has been magazine reviews where "Cadillac engineers developed..." has overwhelmingly morphed into "GM engineers developed..." - AND THAT HASN'T DONE CADILLAC ANY FAVORS !! That dovetails right into misconceptions that "the DTS is a rebadged BUICK"... to the point that I've had to correct assumptions that GM marques have ALWAYS been these so-called 'badge-engineered' products and it washes the whole 75 years of relative autonomy down the drain. Without a degree of autonomy, that erroneous perception rules all.

EXCELLENT first step.

Next up : a few years ago it was announced that Cadillac Engineering was reinstated. In that it's been years & a bankruptcy since I heard mention of that entity, I will assume it has been since re-dis-banded. That needs to be reestablished and brought back into press releases and conversation with Cadillac personnel who the press deal with. Cadillac MUST have a proprietory engineering department. I also would welcome a independant styling studio, and occasional mention of that. Autonomy will go a HUGE & cost-effective way toward mending Cadillac's image with those who readily dismiss it.

Best GM news I've heard in maybe the last 5 years.

Edited by balthazar
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I have no problem with this idea.

But what about the paired dealerships? I don't think that removing the GM emblem from a Chevrolet-Cadillac dealership will fool customers into thinking that Cadillac isn't part of GM.

Edited by Lamar
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Separate signage may work- one at either corner of the property.

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Agreed 100% balthy.

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Every Cadillac dealership left that I have seen is attached to another GM brand's dealership. The service entrances are all intertwined. This is going to be expensive. Besides, if GM didn't have the reputation it does right now, this whole idea would not matter.

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It's about time. You won't find a single mention of BMW at MINI's or Rolls-Royce's websites. As for paired dealerships, they can create distinct branding for each, including Cadillac-only salespeople and service advisers.

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I thought the little silver GM badges was a horrible idea a few years ago, especially on Cadillacs. Good to see those gotten rid of. Cadillac is definitely better off if they are just Cadillac, and not so tied to GM. That is what made Lexus successful all those years, they had their own dealer and Lexus dealerships didn't have reminders of Toyota everywhere. I agree with Balthazar that there are no GM cars, don't sell the corporation. The name GM is a negative to many car buyers, best not to mention it.

I like distancing Cadillac, I've been wanting to see that for a long time. But, the Escalade is a Tahoe, SRX is awfully close to an Equinox, and XTS is similar to the LaCrosse/future Impala. They need to make the products unique to Cadillac, not just change signage at the dealership.

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Cadillac distances brand from General Motors

03/09/2010, 9:38 PMBY MARK KLEIS

Cadillac has begun enacting major policy changes in an effort to distance the luxury brand from its parent company, General Motors. Cadillac has been owned by GM since 1909, but now wants to establish itself as a unique luxury brand away from the negative publicity associated with GM’s bailout funding.

Cadillac embraces change, shuns General Motors

According to a new report by Bloomberg, GM’s most luxurious brand, Cadillac, is looking to reverse the parent company’s decision five years ago to begin badging all GM products with a common GM emblem.

Cadillac’s first moves to separate itself from GM include changing corporate e-mails from the current @GM.com domain to @Cadillac.com, dis-including the Cadillac brand from GM-wide sales events such as the Red Tag Event and removing the GM branding from Cadillac vehicles and dealerships. A Cadillac representative, Nick Twork, told Bloomberg about the changes and said that they were “absolutely” driven by the ongoing restructuring taking place at GM.

Why the change? Why now?

John Grace, president of marketing for consultant firm GrandTaxi LLC, said, “Cadillac, which has really turned itself around with new levels of quality and exemplary products, doesn’t want to be associated with something that will drag it down,” referring to GM.

The main reason behind the damage from the GM brand stems from the highly public bailout funding to the automaker. GM’s roughly $50 billion government bailout in 2009 has created a stigma that is driving many buyers away, and Cadillac hopes that by distancing itself from the brand name typically associated with the bailout – GM – it will be able to avoid the negative stigma.

Evidence suggests Cadillac needs significant changes

Cadillac has struggled the most out of GM’s remaining core brands, dropping 32 percent in 2009, 2 percent worse than the industry average. In 2010, Cadillac has increased sales by only 14 percent, the lowest of GM’s brands which reported a combined 31 percent increase.

Cadillac’s last annual sales increase took place in 2005 when the luxury brand sold a healthy 235,002 units – an increase of 0.3 percent. By contrast, Cadillac’s volume has slid low enough that the automaker is hoping for a 28 percent increase in annual sales for a total of 140,000 units.

Light at the end of the tunnel for Cadillac

The news isn’t all bad for the luxury marquee, as Cadillac has enjoyed comfortable sales gains from some new models such as the SRX crossover – which enjoyed a 400 percent increase in year-over-year sales last month. Cadillac also has new and competitive sedans that are challenging German luxury automakers with outlandish performance numbers and improved interiors. The brand has also undergone massive changes in its design language inside and out, hoping to appeal to more youthful buyers.

The move away from GM only continues the brand’s efforts at a major face-lift.

link:

http://www.leftlanenews.com/cadillac-distances-brand-from-general-motors.html

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I agree with Balthazar...

{shuts off computer, wanders out into the backyard and stares into the still-bare treetops for an hour...}

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{shuts off computer, wanders out into the backyard and stares into the still-bare treetops for an hour...}

Still on those Percs Balthy?

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You did see who agreed with me, right? :wacko:

Nah- I took 1 before bed Sat nite, none since. I've got Wolverine's constitution.

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Why just Cadillac? Autonomy is needed at all GM divisions.

It is funny you say that. That is when they were semi independent and most successful. When they switched over to what it is now in the 1984-1985 time frame, that is when things went south really fast.

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Looking at a 2-pg print ad from 2003. Big GM badge, 9 division names below, prattling on about a few things, small duotones of the Imy, the Ion & the Rendevous down one side, tech sidebar of Night Vision.... yet this is only available on the DeVille. As such, Nightvision should ONLY have been featured in a Cadillac ad... and the whole point of advertising GM as this ad does seems utterly pointless. I can only assume a degree of cost savings was behind it.

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I wonder if giving Cadillac a "CEO" (a la Chrysler, Dodge, Jeep) would be a step in the right direction..

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Well, that's what worked so well thru history; a general manager with a discretionary budget and some actual authority. Now they are only figureheads. All Divisions should have that, provided qualified, dedicated people can be found.

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Why just Cadillac? Autonomy is needed at all GM divisions.

*nods*

Agreed.

But, definitely a good move for Cadillac.

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