NINETY EIGHT REGENCY

Fundamental Blocking, Tackling Puts Cadillac on Cusp of Luxury Elite

17 posts in this topic

Fundamental Blocking, Tackling Puts Cadillac on Cusp of Luxury Elite

By James M. Amend

WardsAuto.com, Apr 12, 2010 9:00 AM

NEW YORK – Cadillac has struck gold with its V-Series, a growing lineup of high-performance luxury cars tasked with repositioning the brand alongside rivals such as Lexus, Mercedes-Benz and BMW.

Ironically, the strategy is nearly as old as the 108-year-old brand itself: Build a wickedly powerful, no-compromise vehicle for the media to gush over, price it within the reach of a handful of buyers who quickly become ombudsmen, and watch mainstream consumers flock to dealers for a substantially tamed-down version of the same car.

General Motors Co. needs buyers to return to Cadillac to help speed the auto maker’s rebound from last year’s bankruptcy. Luxury vehicles make more money than mainstream varieties, and the segment remains one of the industry’s fastest growing.

GM’s focus on building light trucks throughout the last decade came at the expense of Cadillac, allowing competitors to create broader portfolios that have eaten away at the brand’s market share. Without the landscape-changing Escalade SUV, Cadillac arguably would be sunk.

“If we look at the buyers of our V-Series models, and obviously it’s just the sedan at this point, they are younger, more educated and with higher incomes – it’s a more sophisticated buyer,” says Don Butler, Cadillac’s newly appointed marketing manager.

“Buyers of the V-Series are exactly the sort of buyers that we are targeting, and they are passionate advocates for Cadillac and what we are about,” he tells Ward’s during a recent interview at the New York auto show.

They also are few and far between. GM does not break out sales of the Cadillac CTS-V sedan, but Ward’s data reveals just 3.1% of the sedan’s 56,121 models built for the ’09 model year were equipped with the 6.2L V-8.

In fact, the base 3.6L V-6 with port injection, since jettisoned from the CTS lineup, accounted for the most installations at 53.8%. The 3.6L V-6 with direct injection appeared in 43.1% of all builds.

At the same time, the V-Series sedan’s buyer is 15 years younger than Cadillac’s average demographic and as many years younger than the average buyer in its segment, meaning the brand is gaining relevancy with modest engineering investment.

“It more than pays for itself,” Butler says of the variants.

More irony: the CTS-V Sport Wagon coming late this year, arguably the model with least sales potential, easily rates as the brand’s darling on the Internet.

However, Butler speculates the Cadillac CTS-V coupe launching later this spring may have the most legs of all the variants.

“Particularly early in the launch, we expect the V-Series to be a significant portion of the coupe sales, because that car just screams, ‘Drive me,’” he says.

There also is a more a practical benefit to a lineup of Nurburgring-validated cars, Butler argues, because the development team overseeing the V-Series works on the standard models as well.

“The same kinds of things they are finding out about the (V-Series) cars – relative to tuning, handling and performance – those make their way into the normal CTS, as well,” he says.

David Martin, president of Interbrand Corp. in New York, which helps companies create and manage brand value, says the V-Series gives Cadillac clout because it puts its products alongside similar high-performance offerings from competitors.

“It’s not what the brand says, it’s what the car does for me,” he says of V-Series variants. “I look forward to driving that car. I’m going to want to have a relationship with that car for a long time and I’m going to tell my friends about it.”

But burning rubber will take Cadillac only so far.

According to Ward’s data, Cadillac sales this year are up 23.6%, as lending loosens and GM continues to break away from the bad press of bankruptcy.

Cadillac also has added a redesigned-for-’10 SRX cross/utility vehicle. This 5-seat model has proven more attractive than its 7-seat predecessor and now ranks as the No.2 seller in the segment, behind the Lexus RX 350/400/450, for incremental sales gains this year.

But Ward’s data also shows while Cadillac only sells half as many vehicles as Lexus, it has five times as many dealers. And it runs a distant fourth among luxury brands to BMW and Mercedes-Benz, also with many fewer dealers.

A plan to cull Cadillac’s retail footprint, roughly about 1,200 dealers, to increase throughput at remaining stores and allow owners to reinvest in modernization to better compete against younger brands with newer facilities, backfired under pressure from Washington lawmakers.

GM now has moved to reinstate 661 of a total 1,160 dealers objecting to their closing. Many are thought to be Cadillac stores. However, the auto maker refuses to provide a breakdown of its reinstated dealers.

Kurt McNeil, who recently rejoined Cadillac as sales manager from Chevrolet, says the brand’s dealer body still will shrink “by hundreds” this year. But as with GM’s highest ranking executives, he declines to talk specific numbers.

“It’s not the size of the network, it’s the quality of the network,” McNeil says. “It’s not about numbers.”

Mark Rikess, CEO and founder of Los Angeles-based InnovAuto Group LLC, a consultancy to dealers, says he’s unsure GM even knows how many dealers might be the right amount, as automation has slashed the cost of maintaining dealer services such as field representatives.

That means small-market Cadillac dealers, which push through only a handful of sales every year with little left over to reinvest, make sense to keep. Perhaps, he offers, GM could not justify the additional expense of winding them down.

“There are towns where you are not going to get traditional import competition,” Rikess says. “Even in the midsize markets, there is potential for incremental business – you don’t have Mercedes, Lexus, BMW, Infiniti.”

Instead of closing the poorer performers, GM plans to boost sales by sending Cadillac dealers back to school to hone their selling skills.

In one of at least two dealer initiatives this summer, GM has retained the leadership training experts of The Ritz-Carlton Hotel Co. LLC to pass on to Cadillac store owners the philosophy and values behind the hotelier’s legendary customer service.

“Think about their slogan, ‘Ladies and gentlemen serving ladies and gentlemen,’” Butler says. “So we are working with them, having them help us talk to our dealer partners and emphasize the importance of how you treat your customer.”

Unlike costly facility upgrades that GM also will require of Cadillac dealers, Ritz-Carlton training focuses on the little things buyers of luxury items have come to expect.

“Just treating the customer the right way does not cost money,” Butler says.

According to the Ritz-Carlton website, the classes cost a company $1,700 per person. GM does not say how the cost of the training will be covered.

Cadillac hopes a renewed international push also will help sales. China is the brand’s third-largest market behind Canada and the U.S. Plans are to grow further in China, starting with a major presence at this month’s Beijing auto show.

Cadillac also is restarting in Europe, where the collapse of its distributor during last year’s global economic crisis stalled already tepid sales.

Sales goals are more modest this time but decidedly optimistic, given the brand now has a solid entry for the wagon-friendly region and a smaller car under the CTS has been green-lighted.

“We definitely need to maintain our global presence,” Butler says. “But Cadillac is, and will continue to be, a quintessentially American brand – with a sort of daring, a kind of boldness to it.

“Globally, we will have a presence, but it all begins and ends here (in the U.S.). We’ve got to maintain and increase our success in this market, primarily. That is obviously going to be our focus going forward.”

In addition to a rise in first-quarter sales, Cadillac claims to be making more money on the vehicles it sells than ever before. On a month-to-month basis, its average transaction prices frequently exceed those of Mercedes-Benz, BMW, Audi, Lexus and Infiniti brands, the auto maker says.

The higher ATPs mean buyers are willing to pay more for a Cadillac.

Part of that is a function of fewer leases, a key focus of the new GM. But with more consumers purchasing Cadillac cars and trucks, residual values on the vehicles are growing, too. On the flipside, Cadillac sacrifices some volume to competitors.

Says Bob Lutz, GM’s outgoing vice chairman and the man who rebuilt Cadillac to this point: “We could (increase) CTS sales in a heartbeat by going for low lease rates the way many of our mid-lux competitors are doing.

“It’s self-defeating because you destroy your own residual values,” he tells Ward’s. “And then…in the next generation, you’ve got to subsidize the lease even more because the residuals are lower.”

Instead, GM will let the product do the work of attracting customers to Cadillac, where Lutz says reality quickly is catching up with outdated perceptions.

“Whether you look at fuel economy, ride, handling, steering, braking, overall dynamic quality, exterior fit and finish, interior fit and finish, I’ll put a Cadillac CTS up against any of the German products and, objectively, will win.”

McNeil says Cadillac’s percentage of leases is less than 30% against a luxury segment where it typically comprises 60% of all sales. Some brands are positioned even higher on the lease ladder.

Asked for Cadillac’s U.S. sales goal for 2010, McNeil says, “Significant growth is how I would frame it. We’re going to grow substantially in 2010.”

But Butler says to be mentioned in the same breath as its rivals, Cadillac does not have to reach their annual volumes.

“In the segments where we compete, to say that we have the best product, that’s what we aspire to,” he says.

“That’s how we define success. And we believe if we do that, and we do it well, and we do the job we need to do in terms of communicating to consumers in a consistently compelling way, we think the sales will result.”

Martin at Interbrand agrees. Having successfully reengaged the media, doubled down on customer relations and delivered provocative advertising, “Cadillac has done all the things a brand would have to do bring itself back from oblivion,” he says.

“They are now in the decision-making process – not No.1 or No.2, but people are thinking about them.”

Cadillac now must deliver more product wins, Martin says, drawing a parallel with Apple Inc. The computer and gadget maker burst back into the market with the iPod in 2001 and since has put together a string of headline-grabbing products.

“Apple keeps us paying attention with a series of progressive innovations.”

link:

http://wardsauto.com/ar/cadillac_luxury_elite_100412/

0

Share this post


Link to post
Share on other sites

b.b.b.b... but it has teh PUSHRODs!!!!!!

Related, an STS-V accelerated uphill away from me yesterday, damn that S/C Northstar sounded mean.

0

Share this post


Link to post
Share on other sites

an STS-V is a sleeper in the used car market. I see one from time to time and they are priced a lot cheaper than you would think.

I'd drive one.

0

Share this post


Link to post
Share on other sites

I'm gonna miss the STS.

Another good car that GM failed to improve.

0

Share this post


Link to post
Share on other sites

I'm gonna miss the STS.

Another good car that GM failed to improve.

Hopefully one of the last ones.

0

Share this post


Link to post
Share on other sites

an STS-V is a sleeper in the used car market. I see one from time to time and they are priced a lot cheaper than you would think.

I'd drive one.

I've seen used 2007 STS-V's for $29,000 before. It is a pretty good buy.

Problem is Cadillac has 1 V-series model and Mercedes has 13 AMG models. Thus the problem with vehicles like the SRX and XTS, they can't make V-series versions of them.

0

Share this post


Link to post
Share on other sites

Hopefully one of the last ones.

Agreed, sir. Agreed.

0

Share this post


Link to post
Share on other sites

I've seen used 2007 STS-V's for $29,000 before. It is a pretty good buy.

Problem is Cadillac has 1 V-series model and Mercedes has 13 AMG models. Thus the problem with vehicles like the SRX and XTS, they can't make V-series versions of them.

I just can't wait for that A-Class AMG....

0

Share this post


Link to post
Share on other sites

I just can't wait for that A-Class AMG....

Race you in my Sprinter AMG... :spin:

0

Share this post


Link to post
Share on other sites

Race you in my Sprinter AMG... :spin:

I raise that to Actros Black Edition AMG

actros_1861_black_edition_1.jpg

0

Share this post


Link to post
Share on other sites

I noticed the article made no mention of the XLR V... Jeremy Clarkson thoroughly trashed that car, but conceded it was one of the best looking 2-seaters he had ever seen.

0

Share this post


Link to post
Share on other sites

Z-06, I know when I'm beat... :bowdown:

I actually like that truck. 16L Turbo Diesel with only 612 hp and 1991 lb-ft torque coming at 1080 rpm churned through a 16 speed semi-automatic transmission. That sounds gospel.

1

Share this post


Link to post
Share on other sites

The Actros has a 15.9 liter V8 with 1,991 lb-ft of torque and a 16 speed transmission. That sounds pretty sweet. AMG can crank performance out of anything.

0

Share this post


Link to post
Share on other sites

In an ideal world, every Cadillac model would be capable of supporting a V-series variant.

0

Share this post


Link to post
Share on other sites

In an ideal world, every Cadillac model would be capable of supporting a V-series variant.

Yes but not who$e it out like MB is doing the AMG badge by putting one engine (2 if you count the 15 Twin Turbo V12's they sell annually around the world) and just stiffening the legs up. The cars should be unique and revered.

AMG is nothing but __63AMG where the blanks can be filled by any model.

0

Share this post


Link to post
Share on other sites

I've seen used 2007 STS-V's for $29,000 before. It is a pretty good buy.

Problem is Cadillac has 1 V-series model and Mercedes has 13 AMG models. Thus the problem with vehicles like the SRX and XTS, they can't make V-series versions of them.

I think the number of V-series models Cadillac has should be the least of the brand's problems right now. They need to make sure the ATS and all it's variants are launched without problems, then come out with the XTS, next Escalade, and then turn the CTS into a 5-series fighter. Notice that Infiniti is doing just fine without a high performance brand.

0

Share this post


Link to post
Share on other sites

Your content will need to be approved by a moderator

Guest
You are commenting as a guest. If you have an account, please sign in.
Reply to this topic...

×   You have pasted content with formatting.   Remove formatting

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor