Cadillac faces uphill struggle to succeed in Europe

[nadepalma]

Source: http://www.detnews.com/2005/insiders...uto-375425.htm


The front-wheel-drive Cadillac BLS, based on the Saab-3, is the first Cadillac designed specifically for Europe.

Cadillac faces uphill struggle to succeed in Europe
BLS model - designed, made in Europe with diesel -- debuts in 2006, but the Germans are hardly quaking in their boots


Americans are probably getting used to the idea that Cadillac is a strong, cutting-edge luxury brand with products that can compete head-on with the best that Germany can offer.

Sadly, that's not the case in Europe.

The word association is still gigantic, pink Eldorado with outrageous, over-the-top fins.

"Europeans still think of Cadillacs as huge, old, badly built cars that wallow around like barges and that's going to take some changing," said Al Bedwell, analyst at J.D. Power's European headquarters.

That's a problem, because General Motors' Cadillac is cranking up a big sales campaign to kick-start sales in Europe which will get under way early in 2006. Sales targets are modest - 20,000 vehicles a year by 2010 - but even that number is going to be hard to achieve, according to J.D. Power's Bedwell, who thinks only about 16,000 sales are likely.

There has been a trickle of Cadillac sales in Europe, mainly of the CTS and including the STS, the XLR roadster and the SRX all-wheel -drive estate car. This year sales have struggled and are unlikely to reach the target of 3,750.

But next year will see the first Cadillac designed specifically for Europe, based on the Saab 9-3 and built in Sweden. Sales of the front-wheel drive Cadillac BLS start next April and will be the brand's first car to offer a diesel engine. Given that at least half of all new car sales in Europe are diesel, that is a prerequisite.

Uphill Battle

Mark Fulthorpe, director of European Vehicle Forecasts for CSM Worldwide, sees difficult times for Cadillac Europe, despite the addition of a model specifically designed for the market.

"It's going to be an uphill battle. It's been tough for Jaguar in the compact (BLS) sector and that's a brand which carries tremendous affection. Jaguar's found it very difficult in a sector dominated by the German triumvirate (BMW, Audi, Mercedes). And Lexus has introduced its second generation GS and the IS is being rolled out as we speak," said Fulthorpe.

The Lexus GS competes with the BMW 5-series, the Lexus IS against the BMW 3-series, and the new Cadillac BLS.

Reclothed Saab 9-3

Fulthorpe doesn't think the BLS, which he describes as a reclothed Saab 9-3, will cause much of a stir, particularly as the compact executive segment dominated by the BMW-3 series is shrinking, with many buyers moving to sport utility vehicles.

In the long run, Fulthorpe said Cadillac needs more European-friendly products, and Cadillac's plans look a big threadbare.

"They are going to have to go back and decide whether they are in Europe for the long run, and design cars which have more transatlantic appeal than most of the products you see at the moment," said Fulthorpe.

The Cadillac target of 20,000 a year in Europe is puny compared with its U.S. sales of about 240,000 expected in 2005. BMW should sell about 250,000 cars in the U.S. this year.

Cadillac management in Detroit concedes that the current plans for Europe are unlikely to worry BMW or Mercedes, but the Germans had better watch out in the long term.

"We want to lay the foundation for growth and invest in a dealer network that we haven't had in Europe," said Jim Vurpillat, global marketing director for Cadillac.

Move to mainstream

"We need to establish the network and focus on the long term when we will be really ready with the whole model portfolio and be able to seize the opportunity. We want to move from being an exotic, niche, boutique type of brand and move into the mainstream and be an alternative luxury car. We're taking small steps - we're not going to get there overnight. We want to improve incrementally year over year," said Vurpillat by telephone from Detroit.

Vurpillat agreed that the Cadillac image in Europe could use a makeover.

"The challenge is the brand name, which has high awareness. They (European consumers) know the name; but they think of 1950s and 1960s image. Our challenge is to show them it's more contemporary and modern. That will take time and investment in a dealer network," said Vurpillat.

Cadillac plans to set up 17 Cadillac and Corvette Experience Centres across Europe, with 7 in Germany, Europe's biggest market.

Struggle ahead

J.D.Power's Bedwell believes that Cadillac will struggle, not least because the new BLS didn't cut the mustard when it was first shown at the Frankfurt Car Show in September.

"Looking at the BLS in Frankfurt we were pretty under-whelmed by it. How are they going to sell it? Will it be pricing? The quality wasn't nearly close enough to European premium brands either. Cadillac needs to build up its dealers, but I'd be very wary of putting a lot of money into it. It is debatable whether the product will succeed," said Bedwell.

Analysts point to the rotting carcasses of other pretenders who have sought to topple BMW and Mercedes.

"The Germans are extremely good at defending their own turf and the desert is full of the dry bones of the people who tried. The most recent bones are those of Jaguar," said Stephen Cheetham, chief auto analyst at Sanford C. Bernstein Ltd.

"Cadillac will have a hard time, but they might find themselves a bit of a niche, their cars will be priced competitively and are very well equipped. The few who want lots of comfort and toys will be fine, but they (Cadillac) won't be threatening BMW and Mercedes," Cheetham said.

It's not just American interlopers who have tried to storm the BMW/Mercedes/Audi castle, and been easily repelled.

Big European manufacturers like Volkswagen with its Phaeton, Renault's Vel Satis, the Peugeot 607, and Vauxhall/Opel's Signum, have recently tried and failed. Next year Citroen will try to sell its huge new C6 sedan.

Cadillac has changed

Only Lexus is shaping up as a serious threat to the triumvirate.
But Cadillac's Vurpillat isn't about to quit.

"Europeans will see, slowly maybe, that Cadillac has changed. It worked in America where we are viewed as a luxury manufacturer. Quality is big part of that. Cadillac has improved so much we outperform Mercedes and BMW. The foundation elements are there," he said.

[kmacleod]

will be the brand's first car to offer a diesel engine

This writer did not know that Cadillac offered Diesels from the Late 70's through the early 80's. My Father owned an '81 Cadillac Coupe Deville Diesel. That car got 33MPG @ 70MPH. It was a boat, and it handled like one. But it was very cool.......

Ken

[pkd87]

I believe it will be hard for Cadillac but I do believe that after a while (and a good steady pace of great prodcuts) Cadillac could pose a threat but it took awhile for the Germans to catch on over here so i expect the same for GM over in Europe.

[tgagneguam]

GM isn't well known for being tenacious when products don't instantly succeed, so I hope this quote isn't just GM pandering to the press:

Cadillac management in Detroit concedes that the current plans for Europe are unlikely to worry BMW or Mercedes, but the Germans had better watch out in the long term...

The longterm view is something Toyota seems to have mastered, sadly. They're probably thinking in decades, in which case it would behoove the German triumvirate to pay attention.

...The quality wasn't nearly close enough to European premium brands either.

They have to be speaking to the issue of "perceived quality," because based on their performance in actual quality rankings of various sorts, the Europeans seem to have nothing to teach anyone about quality. And I say that as someone who rather likes several BMW and Mercedes autos.

I think Cadillac can acheive success in Europe, particularly if they take the longterm view. Of couse, I'm skeptical, as Detroit generally tends to take a myopic view of product planning.

[mbukukanyau]

Will Cadillac and Chevy attack the Japanese Market too? I wonder.. If I was them, I would try

[AMcA]

Originally Posted by kmacleod

This writer did not know that Cadillac offered Diesels from the Late 70's through the early 80's. My Father owned an '81 Cadillac Coupe Deville Diesel. That car got 33MPG @ 70MPH. It was a boat, and it handled like one. But it was very cool.......

Ken

I think Cadillac would rather forget those cars.

I drove a diesel Fleetwood c. 1980ish across the country once. It couldn't maintain speed in the rolling hills of Iowa. On the other hand, it didn't break down. At least not on that trip.

[AMcA]

Originally Posted by nadepalma

Source: http://www.detnews.com/2005/insiders...uto-375425.htm


The front-wheel-drive Cadillac BLS, based on the Saab-3, is the first Cadillac designed specifically for Europe.

Cadillac faces uphill struggle to succeed in Europe
BLS model - designed, made in Europe with diesel -- debuts in 2006, but the Germans are hardly quaking in their boots


Reclothed Saab 9-3

Fulthorpe doesn't think the BLS, which he describes as a reclothed Saab 9-3, will cause much of a stir, particularly as the compact executive segment dominated by the BMW-3 series is shrinking, with many buyers moving to sport utility vehicles.

I think the best perspective I've seen on the BLS was Jerry Flint from Forbes. He noted that the BLS had to have cost hundreds of millions to bring to market. So how about, instead, putting those hundreds of millions toward discounting the infinitely superior CTS, STS ad SRX products in the European market? That's how Lexus established a foothold in the US. And look where that got 'em.

[LI CADILLAC]

I dont think that the Germans like to think that American car manufacturers have beaten them badly with quality in the U.S. But Cadillac has pounced BMW, Mercedes and VW. They probably write it off.

[mgescuro]

Originally Posted by mbukukanyau

Will Cadillac and Chevy attack the Japanese Market too? I wonder.. If I was them, I would try

With what RHD car??
THey need to... but right now, it's a waste of time, if they don't have the RHD cars to do it.

[mgescuro]

Originally Posted by AMcA

I think the best perspective I've seen on the BLS was Jerry Flint from Forbes. He noted that the BLS had to have cost hundreds of millions to bring to market. So how about, instead, putting those hundreds of millions toward discounting the infinitely superior CTS, STS ad SRX products in the European market? That's how Lexus established a foothold in the US. And look where that got 'em.

STS and SRX are too big for the European market. THey are close to 7-series in size, and they command a price near the 7-series in Europe... for half the luxury and gadgets. Not exactly the best value.

Cadillac's best bet in Europe is BLS and CTS and perhaps a car smaller than BLS. STS will be fine in the next generation, but the shoddy perceived quality of the STS is really no match for the Europeans in that market segment.

And... Cadillac needs the diesels and RHD cars.

[aldw]

Originally Posted by mgescuro

And... Cadillac needs the diesels and RHD cars.

Very true, it will be a hard struggle, but one well worth it.

[johnnyangelb]

I remember when the spanish students we hosted saw a cadillac they commented on Elvis's Cadillac.

[mgescuro]

Originally Posted by aldw

Very true, it will be a hard struggle, but one well worth it.

Oh absolutely well worth it!!!
Because it would mean European level quality and detail in Cadillacs across the board.

Of course, it's not gonna be overnite...it'll take a while.

[Mikkoo]

The most recent issue of a Finnish car magazine ranked the
STS last, from a group of german and japanese competitors.
The highest score being 100, the STS trailed it's nearest
competitor by a full 10 pts. It was also the most expensive
out of the group at a cost of 76,000 euros, ( $89,000 USD )
for the 3.6 V6 model.

I'm in agreement that to penetrate the market, Cadillac not
only must have diesel options, but also must undercut
their competitors. With the STS they don't achieve either
of those objectives, proving continued slow growth for
Cadillac in Europe.

[mgescuro]

Originally Posted by Mikkoo

The most recent issue of a Finnish car magazine ranked the
STS last, from a group of german and japanese competitors.
The highest score being 100, the STS trailed it's nearest
competitor by a full 10 pts. It was also the most expensive
out of the group at a cost of 76,000 euros, ( $89,000 USD )
for the 3.6 V6 model.

I'm in agreement that to penetrate the market, Cadillac not
only must have diesel options, but also must undercut
their competitors. With the STS they don't achieve either
of those objectives, proving continued slow growth for
Cadillac in Europe.

Sounds about right. I think in eventuality, GM will probably build a Sigma plant in China and build the cars in Eastern Europe for the European market.