Businessweek: GM Must Fashion Another Cadillac Renaissance

[Simon says]

Businessweek.com


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


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.

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[ARCANGEL]

This is key. They need to go all out and not waver as a BmW fighter although I don't believe it because already the ATS looks like a FWD fail

[1G6]

Originally Posted by Simon says

"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."

Those old Fleetwoods and deVilles (and Eldorados and Sevilles) and the legend/goodwill they built are the only reason Cadillac survived the HT4100 and Northstar debacles. Mr. Nesbitt is fighting the friendly ghosts.

[Simon says]

Originally Posted by 1G6

Those old Fleetwoods and deVilles (and Eldorados and Sevilles) and the legend/goodwill they built are the only reason Cadillac survived the HT4100 and Northstar debacles. Mr. Nesbitt is fighting the friendly ghosts.

I agree 100% with your assessment. Also Art & Science has been in place long enough for people to know that the Fleetwoods and [Cruella] de Villes are ancient history. Time to take some responsibility and leave the past alone Mr. Nesbitt.

[goblue]

Mediocre vehicles wont cut it. Even the new SRX is far from class leading across the board. Cadillac should not release a vehicle unless its best in class. Also, they need to use VOLTEC. I don't mind that the VOLT is a Chevy, but something better should be a Cadillac.

[PA Dweller]

Originally Posted by goblue

Mediocre vehicles wont cut it. Even the new SRX is far from class leading across the board. Cadillac should not release a vehicle unless its best in class. Also, they need to use VOLTEC. I don't mind that the VOLT is a Chevy, but something better should be a Cadillac.

The 2010 SRX isn't a bad vehicle, they just need to get the 3.6L engine into it. That 3.0L is pathetic.

[megeebee]

Originally Posted by goblue

Mediocre vehicles wont cut it. Even the new SRX is far from class leading across the board. Cadillac should not release a vehicle unless its best in class.

And what vehicle, in your opinion, leads the SRX's Class?

Does any luxury maker, or any automaker of any kind anywhere on Earth, produce aline of vehicles that are acknowledged to be the head of each class the compete in?

How do you mean "class leading"?

Is every Lexus or Mercedes the best in its respective class? What about those areas where these two compete? In the LS class leading or the S? The IS or the C Class? What about the BMW 3 Series? Is that better or worse than the Lexus or the Mercedes? If not, then why doesn't BMW take heat for it?

[megeebee]

"Can Cadillac Sell A Small Sedan"?

That's what everyone asked when the Catera came out. It did sell fairly well, 20-25K a year. But the CTS did, and does, gang-busters. It has become the central model line at Cadillac. I know Cadillac probably didn't want it that way, but I think this would answer the question. If a small sedan is A CADILLAC, then it will sell. If it looks lilke nothing else and performs at least as well as the competition, then I won't worry too much.

BUT, this doesn't mean there shouldn't be a fantastic large Cadillac, and this is where things get cloudy. There's one on the way as we all know. Alot of people here think it's wrong. I wish it were a RWD platform too. But who knows, it may suprise us all.

[megeebee]

Originally Posted by 1G6

Those old Fleetwoods and deVilles (and Eldorados and Sevilles) and the legend/goodwill they built are the only reason Cadillac survived the HT4100 and Northstar debacles. Mr. Nesbitt is fighting the friendly ghosts.

Northstar debacle??? I don't remember that. I had 2 or three Northstar engines and they all performed trouble free.

[tgagneguam]

There is no legit reaon why Cadillac cannot sell a small car, or rake in huge profits again, or sell an ultra-luxury car line, or anything else. Their not being able to do so thus far simply reflects how poorly GM's management has done to manage the company in general.

...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...

GM management's shortsightedness just makes me cringe. So, a division is producing a rather impressive $2.5 billion from relatively few vehicle sales so the solution is... to starve it of new product. I'm hoping that someone, somewhere in the Company has been taking notes.

[jbernie]

Everything GM has done in the last few years has been hampered by debt and the other issues hanging around. If GM had an extra $1k to add/improve the content in every vehicle it sold they would be rated much higher already. Unfortunately they were only able to do so much with so little.

With Lutz around they started to make the interiors & exteriors so much more desirable, now they $$$ are being freed up they can work on upgrading the content to make it all even better.

[Hoboken Tim]

Originally Posted by goblue

Mediocre vehicles wont cut it. Even the new SRX is far from class leading across the board. Cadillac should not release a vehicle unless its best in class. Also, they need to use VOLTEC. I don't mind that the VOLT is a Chevy, but something better should be a Cadillac.

GM never seems to learn from their mistakes. You can not make a world class
luxury car on the bones of a mass market car. The new SRX is a dolled up Vue and the coming DTS will be a dolled up LaCrosse. Big Mistake! Both of these cars should have been based on the CTS.

[mkwelbornjr]

The recipe for the SRX is no different than what Lexus did to create their's...same with Audi and the Q5. And the SRX Turbo is as good or better than these...they said the interior was class leading and it handled like a sport sedan unlike the others.

Originally Posted by Hoboken Tim

GM never seems to learn from their mistakes. You can not make a world class
luxury car on the bones of a mass market car. The new SRX is a dolled up Vue and the coming DTS will be a dolled up LaCrosse. Big Mistake! Both of these cars should have been based on the CTS.

[1G6]

Originally Posted by megeebee

Northstar debacle??? I don't remember that. I had 2 or three Northstar engines and they all performed trouble free.

Somewhere, just now, another relatively young N* head gasket blew and the owner is stuck with a $3,000+ repair bill. Every time that happens, the owner and his Facebook buddies are convinced that Cadillacs are unreliable and fragile. That in turn kills the resale of the remaining N* cars. For every one customer the excellent, current cars win back, the mistakes of the past come back and steal two.

It's like 1983 all over again.

[ryannel2003]

I'm still waiting for Cadillac to build a competitive, midsize luxury sedan. The current STS isn't helping the situation, and moving that car to FWD would be painful. The current STS is less competitive now than the Seville was 11 years ago, and that car was plagued by FWD and not so great build quality.

GM needs to re-invigorate Cadillac with class leading vehicles, not vehicles that are "just average". New SRX is nice, but I don't know how it will sell in the marketplace. CTS is a start, but it cannot hold up the brand forever. Escalade needs a good MCE, and DTS/STS need to die and be replaced by something competitive (aka not FWD). XLR is dead, though a 2nd generation could fix all the shortcomings of the 1st (not likely, unfortunately).