Caddy Won't Carry
Sunday, October 22, 2006
Flint: Cadillac in the Slow Lane
Cadillac had momentum for a moment, but that moment is over.
Back in my army days they used to tell us, "Take the high ground." It's better to be on top of the hill shooting down than on the bottom, climbing up.
I found this was true in the luxury car business, too. To succeed you had to take the high ground. Sell the higher-priced luxury car with the advanced technology, not the lower-priced one. Don't be worried about costing more. Glory in it.
Our Cadillac forgot this lesson long ago, went for volume, lost the high ground to Mercedes and Lexus and BMW, and really is no longer a luxury nameplate. It's what Buick used to be.
I recall long ago, a General Motors executive told me of his talking to a union leader at a now-shuttered Cadillac plant. The union man told the GM executive something like, "I hope you haven't raised the price much. I want to be able to afford another one."
The GM man told me he was thinking: "You SOB. You shouldn't be able to buy one in the first place."
Cadillac went for volume rather than exclusiveness. Now they pay the price.
Look at the new Lexus LS460 or the Mercedes CLS. They push past $70,000. Cadillac isn't there except with some of the "V" models, limited-volume cars to compete with the AMG and the S and the R and all the other special initial hot cars.
It's said but true. We all wrote about a Cadillac renaissance, but it's over. Look what's happened in the luxury field below. These figures count cars and SUVs.Lincoln is included as a laugh because Ford treats it like a joke.
2006-E 2005 2004 %
Cadillac 230,000 235,002 234,217 -2%
Lexus 325,000 302,895 287,927 +13%
BMW 275,000 266,200 260,079 +6%
Mercedes 245,000 224,269 221,366 +11%
Lincoln 118,000 123,207 139,016 -15%
BMW excludes MINI.
The estimates for this year may be off since the fourth quarter is an unknown and there are lots of new luxury models coming out. But the direction is clear. The foreign luxury brands are growing and Cadillac, at best, is standing still.
You could say that half of those Lexus models are "trucks," compared to only 35 percent of the Cadillacs. Or that more than 40 percent of BWW sales are the 3-Series while only a quarter of Cadillac sales are the CTS. But I'll stick to my guns. Its badge is getting a smaller share of the luxury badge group, and today's big money doesn't consider Cadillac in the luxury class - with one big exception - Escalade SUVs.
What's wrong with Cadillac?
For the most part Cadillac designs are boring compared to competitors. The Escalade is a huge exception, an "over the top" look that should have pointed the way, shown that Cadillac designs must be head-turning to win back customers. The CTS with its sharp edges was successful, too. But new models are designed to please - what? Even bankers want Lexuses nowadays. General Motors bureaucrats even eliminated Cadillac's own styling studio for a while, if you can image that. Pinching pennies and throwing away dollars. There was one exciting Cadillac design: the Sixteen show car. Of course, they aren't building it.
The Escalade and CTS were successful. But that's all. The SRX SUV sells around 20,000 a year; the STS rear-drive sedan is dropping toward 25,000. That's failure to me. The DTS, the renamed DeVille, sells around 65,000 a year, near the DeVille level. The Escalades are new this year and are holding their own. A new CTS is coming but it will be doing fine to match the success of today's model.
Cadillac failed to build a serious rear-drive large car. They did well by making the CTS rear-drive, but that's not a large car. Cadillac has two larger car models, the front-drive DTS and the rear-drive STS, which actually isn't so large. What they need is to do a great rear-drive car with take-your-breath-away looks. One model, not two. But GM isn't willing to invest. The fact is Cadillac never recovered from the GM decision to go front-drive, a mistake they have yet to correct.
I don't blame Cadillac's managers. They've done the best they can. GM's top management just hasn't been willing to create a real division, giving its leaders enough money and power to compete with Lexus and Mercedes and BMW. They went part of the way, but not nearly far enough. We still have Cadillacs using four-speed automatic transmissions.
What's sad is that Cadillac did have some momentum with the Escalade and CTS. But the moment is over and the division seems to be slipping farther behind the leaders as that chart shows. The luxury market continues to grow, but alas, our Cadillac isn't getting any of that growth.
Like John Greenleaf Whittier wrote:
For of all sad words of tongue or pen, the saddest are these: "It might have been."