Why GM’s Premium Brands Will Always be Also Rans

[mgescuro]

Why GM’s Premium Brands Will Always be Also Rans
... a commentary by mgescuro ...

This is surely to cause a stir and some debate. But hear me out for a few minutes.
What exactly is the key to being a “Premium Brand?” Is it just the brand that makes a vehicle “premium?” Is it the gadget and leather seating areas? Is it social stature? Is it the ability to turn heads in the “better parts” of town? Is it the ability to stand out from a crowd? Or is it all of that and unquantifiable intangibles that make the brand premium?

The Germans and British have had a virtual lock on the “premium” market for some time now. Mercedes-Benz automobiles are recognized the world as being the epitome of luxury. Once you have a Mercedes or ride in a Mercedes or notice someone in a Mercedes, you know you have arrived. Mercedes-Benz have the reputation for being built like a vault (recent ML and E class models not withstanding). They are over-built and are extremely solid to drive. The built-in extra turn in the steering wheel enables any Mercedes to literally turn on a dime and maneuver in some of the tightest spots around. The interiors are sophisticated and refined; they’re built to impress and to high levels of sophistication. But it’s more than that. It’s the image the Mercedes has come to convey. It’s that image and the quality of cars they have been building for decades that has earned them the reputation of being the best luxury cars in the world.

BMW, is considered Mercedes “nemesis.” They have competent cars that are also luxurious and sophisticated. But they have tuned their cars to be “driving machines.” They have cornered the market in performance luxury cars. The 3, 5, and 7 series cars are uncompromising in performance, even though they are mid-pack when it comes to horsepower, the BMW lineup is synonymous with performance and luxury. BMW’s are also overbuilt and solid; however, BMW platforms aren’t as solid and long lasting as Mercedes. Yet BMW’s reputation prevails.

Jaguar, is perhaps the most sought after premium brand. Recognized world over for its unending attention to detail and sophisticated luxury and performance. But they have easily not been the highest quality cars ever made. And an experiment in rebadging has proven to dent the Jaguar name rather than expanding it. However, the mere mention of the word “Jaguar,” conveys the image of super-premium luxury.

The mere mention of “Mercedes,” “BMW,” and “Jaguar” conveys to the listener luxury. It’s implied. It’s inferred. It’s a distinct connotation. You know it immediately. There is no question about it.
Now there are other brands that are striving to reach the upper echelons of the premium brands – Porsche, Audi, Land Rover, Lexus, Infiniti. All are recognized in some way.

And what of GM's brands?

But where are GM’s premium brands in all of this? Cadillac? Saab? HUMMER? In my view, absolutely nowhere. And they will never get anywhere, with GM’s uncanny ability to cheapen its premium products, despite its best efforts to do otherwise. These brands will never become unquestion premium brands without GM putting the extra effort to prop them up -- in product, in engineering, in marketing, in perception.

What exactly does Cadillac convey these days? It’s got far more solid cars than they ever had before. Their performance is nearing the heights of AMG and M cars. So Cadillac is premium car, right? No. There is no essence to Cadillac. It’s flat. It’s lacking all the intangibles of the Germans, British, and Lexus. In time, Cadillac will reach those heights. Well, I don’t believe it. I believe Cadillac will forever just be a second tier luxury brand, striving to reach Tier 1.

In the world of GM, you build cars to make money. In order to make money, you need to build cars in sufficient volume in order to achieve profit. BUT, you also need to build cars that are worth of the price it is being sold at. GM has proven the only way it can do that is to eliminate features or skimp on quality or reuse parts extensively. This of course, allows GM to make more money off its cars, yet it eliminates a tenet for being a premium car – exclusivity. No one ever wants to see a radio or a dash piece that is identical to a lower brand. You don’t see a Ford 500 radio in an XJ8. You shouldn’t see a Chevy steering wheel in an Escalade. It cheapens the look. It cheapens the brand. It reduces exclusivity. And it hinders the chance of building a reputation of luxury and sophistication. There is absolutely nothing wrong with dipping into the parts bin... so long as it's not obvious you're dipping into the parts bin. (Case in point -- the Solstice -- which is almost entirely parts bin.)

So if Cadillac can build all these cars and build in exclusivity and sophistication, then is it premium? Well. No. Cadillac needs to build on its history of making luxury cars. The marketing needs to convey it. But right now, Cadillac marketing is extremely unfocused. You have “Breakthrough” and Led Zeppelin. And you have a smattering of a few others. But does that show luxury? It show performance. But that’s not luxury. It doesn’t convey a premium presence. It doesn’t connote sophistication. It just shows a car burning rubber… which is fine, if you’re selling a Corvette. And then there’s the DTS commercial with college marching band. WTF was that?? So Cadillac marketing is nearly a complete failure in getting where I believe Cadillac needs to be. It was a good foundation, but Cadillac has outgrown it. But does Cadillac know where it wants to go?? BLS has components shared with 9-3. DTS has a resemblance to the Lucerne. Escalade has a resemblance to Yukon Denali. NONE of this should exist at all! And the moment Cadillac realizes that this is totally unacceptable, then they will be on their way to achieving Tier 1 status. People who want luxury, want the best or what they perceive as the best. Sharing or looking like they share parts with non-premium brands will get Cadillac absolutely nowhere.

Saab is the other victim of GM’s corporate mentality nonsense. The “updates” of the 9-5 and now the 9-3 have added the corporate radio unit into a previously independent and proud brand. Well, it’s still a Saab. It still runs and performs like a Saab. Well, yes it does. But does adding a non-premium radio unit add to Saab’s premium value? Does seeing a part that can easily be found in 4 dozen other GM vehicles around the world help or hinder Saab? Is it a Saab? Or is it a short wheelbase G6? People who want luxury, want the best or what they perceive as the best. Sharing… or looking like they share parts with non-premium brands will get Saab absolutely nowhere. If GM needs to add the corporate material in Saab, they best do their darndest to hide it.

Hummer is teetering on the brink. GM says Hummer is a “premium brand.” And that’s fine. So, what exactly does it compete with? Jeep? Land Rover? Hummer’s interiors still share components with non-premium brands. But I still don’t quite know why GM is calling it a Premium brand. It shouldn’t be one. Hummers’ perception of ruggedness is unquestioned. And it is perhaps the best defined brand at GM today. But if it is to remain a premium brand, they should act it, and interior pieces need to be upgraded significantly. If GM chooses to aim for Land Rover, then Hummer has its work cut out for it. But if it is aiming for something between Jeep and Land Rover – luxury with off-roading capabilities, I believe Hummer would be even more successful than it is today. The challenge to Land Rover would be very real. Hummer’s perception is already there in premium circles. It’s a head turner. People will know you have arrived. This is GM’s best shot at a true, unquestioned premium brand… if they don’t botch it up by cheapening the looks and sharing parts with non-premium brands. So, it would behoove GM not to add a column shifter in the next-gen H2 for the sake of “saving space.”

The way GM is running and maintaining their premium brands, I have no confidence. It all points to a dilution of the premium brands… a degradation of style… a loss of identity. It points to a complete failure of the premium brands.

So what can GM do establish a presence in the premium markets??

First of all, GM’s premium brands – Cadillac, Saab, Hummer – need to be able to stand on their own and share no internal pieces. They must have their own steering wheels. They must have their own radio/Nav units. They must have their own unique identities. If a knob, switchgear, or button manages to sneak in, without any perceivable effort to hide its origins, it should be regarded as a failure.

Second, GM needs to show customers that they are demanding more from their premium brands. They need to show that Cadillac is not going to settle for 3rd place in the latest comparison test. They need to show that they too are in the “Relentless Pursuit of Perfection.” They need to show that they are over-building their cars. They need to show that they have put time and money into the details of their cars. The perception in the market is that Cadillac is just a luxury name. But nothing special. You don’t expect Mercedes to have a Chrysler radio unit or a Chrysler signal stalk. When you sit in a Cadillac (or a Saab or a Hummer) you don’t expect to see a Chevy part anywhere.

Third, These premium brands need to show distinctiveness. They already do to an extent. But a line needs to be drawn in the sand. GM can’t afford to dilute the essence of these brands.

Fourth... Details, details, details, details, details, details, details.

Changes like these obviously don’t happen overnight. It will take 5-10 years, for Cadillac to even achieve a solid Tier 2 status in terms of luxury, performance, sophistication. That’s assuming Cadillac does everything right. No more cutting corners. No more cheap plastic Chevy parts. Cadillac needs to stand with its global competition and prove to the global consumer that there are no compromises. No excuses. Saab can’t afford to use corporate material. They are a global brand, more so than any other US brand. Why should they get cheap US parts that look like they came from the US instead of Sweden??? Get a clue GM.



We as GM fans need to finally say Enough is Enough. These are GM’s crown jewels. These 3 make up GM's halo. GM can't afford to have them tarnished in any way.

[56 Starchief]

i agree with your points.

however, I am glad you didn't use Audi as an example, because their interiors are shared with VW on the whole...

...yet Audi interiors are considered the Standard?

(or, even more laughably, how about the Bentley Continental and the VW parts that are visible in THAT baby...)

I have a feeling the new CTS will begin to really buff Cadillac's previously tarnished wreath and crest--and I am equally as interested in seeing the ULS car.

As far as advertising, I believe the current Zepp contract was renewed through 07 or 08 from an old news item on this site a couple of years ago.

[mgescuro]

Originally Posted by 56 Starchief

i agree with your points.

however, I am glad you didn't use Audi as an example, because their interiors are shared with VW on the whole...

...yet Audi interiors are considered the Standard?

(or, even more laughably, how about the Bentley Continental and the VW parts that are visible in THAT baby...)

I don't believe Audi has quite reached that true "Tier 1" status because their overly close relationship with VW. However, Audi does an exceptional job at hiding its relationship with VW and the various parts bin parts.

I've also often said that the Flying Spur and ConGT are reconstituted Audis. No doubt wonderful and exceptional vehicles, but really, just expensive parts bin cars. Give me an Azure instead!!!

I have a feeling the new CTS will begin to really buff Cadillac's previously tarnished wreath and crest--and I am equally as interested in seeing the ULS car.

I still maintain high hopes for the CTS. HOpefully, the parts are high quality and significantly differentiated from the rest of GM.

I too want to see what GM can do with the ULS.

[Aerodynamix]

Good write-up mg! I agree with a lot of your points and feel that no one at GM can really see 'the big picture' since all but one or two people are focused on individual markets and individual brands.

[delmarjohn]

I totally disagree....mercedes is nowhere near what thye were nad what they were percieved ....let's take the xlr vs the comparable mercedes 75,000 vs 120,000......or the current 300 series comprable to cts sorry ....but thet mention of jag is what really got me ...no one wants jaqs anymore ....Gm is making a very significant come back piece by piece it is coming together ....they are not HURT by the europeans but by the japaneese,they target each car and have the patience to keep coming at you....what would the next intrigue have been or the next camaro{maybe we will soon find out**...but GM second tier sorry I don't agree

[mgescuro]

Originally Posted by delmarjohn

I totally disagree....mercedes is nowhere near what thye were nad what they were percieved ....let's take the xlr vs the comparable mercedes 75,000 vs 120,000......or the current 300 series comprable to cts sorry ....but thet mention of jag is what really got me ...no one wants jaqs anymore ....Gm is making a very significant come back piece by piece it is coming together ....they are not HURT by the europeans but by the japaneese,they target each car and have the patience to keep coming at you....what would the next intrigue have been or the next camaro{maybe we will soon find out**...but GM second tier sorry I don't agree

See. That's the point. I've mentioned the caveats about Mercedes, BMW, and Jaguar. Merc and jaguar have quality issues, and BMW platforms have a limited lifespan. But despite all that, they comprise the Top Tier of Premium luxury cars. At this level of the market, it is ALL about perception.

Jaguar might not have the global sales of Mercedes or BMW or even Lexus, but mention the name "Jaguar" to anyone in the world, and you are sure to get a reaction. THe Jaguar name means something in premium circles.

Also, I'm only focusing on the premium brands here. 300C isn't a luxury car. It's entry level luxury.

So if you want to focus on teh Japanese, focus on Lexus and Infiniti, both of which I consider Tier 2 luxury, though Lexus is definitely making inroads to Tier 1 in name and reputation alone.

But for premium cars... Europe is the competition.

[hotrod747]

The response to your thoughts is spelled, "2008 Cadillac CTS!" I've doubted GM for a long time, and from what I'm seeing lately, I have a very weird feeling that starting with the new CTS, GM will began to display a level of ability we haven't seen from them in decades. Don't be so quick to count out their other premium brands like Buick, Saab, and yes, Pontiac! Actually, Pontiac is probably the brand to keep a close eye on in the coming years.

[asim]

As cold sounding the write-up is, it was very thought out, and very true. GM just has to loose this corporate crap if they ever want to build great luxury cars. Thats just it.

[ZvetteGuy]

I would rather have a reliable "luxury" brand over a bloated "premium" car with all the bells and whistles only to have it in the shop every other time I drive it.... my friend at work owns a Merc 230 and that thing was nothing but trouble when she first bought it... So far, it has been acting good... aside from that... the interior and ride isn't something that I would brag about... I honestly don't like it... but, it's a Mercedes... who cares, right?!

[AutoGrifos]

So, let me get this straight, you are essentially saying you don't like GM's corporate radio, especially in Saab's vehicles.

Why do you hate America? (Had to add that one!)

Wow, one would think that the corporate radio was the ugliest radio ever for all of the shots it keeps talking... on the forums of GMInsideNews. I'd rather see an optional, up-level interior be made available on the Corvette than see different face plates on the radios, myself. Especially since it is only available on "GM's premium cars" as the base radio--as soon as you opt up to navigation, it is gone. Wowee.

[mgescuro]

Originally Posted by AutoGrifos

So, let me get this straight, you are essentially saying you don't like GM's corporate radio, especially in Saab's vehicles.

Why do you hate America? (Had to add that one!)

Wow, one would think that the corporate radio was the ugliest radio ever for all of the shots it keeps talking... on the forums of GMInsideNews. I'd rather see an optional, up-level interior be made available on the Corvette than see different face plates on the radios, myself. Especially since it is only available on "GM's premium cars" as the base radio--as soon as you opt up to navigation, it is gone. Wowee.

No. What' I'm saying, although the corporate radio has a great look, GM's premium cars deserve BETTER. I'm sick of GM and other people saying, "The radio is 'good enough'." Because in premium cars... it simply is NOT good enough... especially when that same system can be had in 4 doen other cars.

It's not premium. It's not exclusive.

I removed the entire section of me writing about the Corvette in teh first post... because frankly, it really isn't a premium car... at least the way GM is positioning it. But I still firmly believe the Corvette needs a better interior anyways.. and also deserves better than the corporate radio.

Originally Posted by ZVetteGuy

I would rather have a reliable "luxury" brand over a bloated "premium" car with all the bells and whistles only to have it in the shop every other time I drive it.... my friend at work owns a Merc 230 and that thing was nothing but trouble when she first bought it... So far, it has been acting good... aside from that... the interior and ride isn't something that I would brag about... I honestly don't like it... but, it's a Mercedes... who cares, right?!

A few years of questionable quality on the M and E class. But take a look at the Mercs of the 70's 80's and early/mid 90's. THey're solid. THat is where teh reputation stems from.
Yet the reputation clings.

[espo19047]

Also rans? Thats a little harsh. Such a well thought out piece with a headline that is a little over the top.

[mikesright]

While I would certainly agree there is a need for more differentiation and refinement in GM's luxury and near-luxury brand status, I would disagree that Cadillac or Saab or Hummer are inferior brands against the Europeans or the Japanese. What draws me (and many people I've talked to when buying a car) is simply "presence." GM used to have hardly any vehicles truely in the pop culture circle that defined American culture, and they paid the price.

That's changed. Kids now dream of owning an Escalade, or a V-Series car. Most young people would kill to have a CTS, and among the 35-50 crowd, many like the new STS, and GM did a great job with the new DTS and Lucerne, because even among people MY age (19-21, college crowd) like them! They are the two most buzzworthy cars right now for their targeted senior crowd as well! That's not mentioning cars like the Corvette, Solstice, H3, H2, GMT-900's, etc. Most people don't even know the name of the models of BMW's, Mercedes, Audi, or Jag!

Don't underestimate Hummer as well. I see them everyday, on TV, on the street, tricked out with a lift kit, or 26" wheels, body kits, etc! Buick and Cadillac will be getting new product to match their growing personalities, and in a few years I believe Buick will have a better reputation than Lexus. I'm not kidding either. The Lucerne has been the start of a growing reputation as an extremely reliable and extremely quiet and luxurious car maker now, what it was supposed to be instead of rebadged Chevrolets in Ronald Zallarella's and the Smith's reign as captains.

Saab has been a different story, and hasn't had the same love given to other brands, unfortunately. I see hope, though, with the Aero X concept, and with future product commitments. The Aero X is a concept car that looks to define the brand, and they have commited to four new products so far, the 9-1, 9-3, 9-5, and 9-6X. I believe they can revitalize the brand entirely, but you have to understand that right now, Saab is such a small part of their overall strategy, and will have to have an in between time now so GM can focus on getting its volume divisions healthy again, or we could go into a tailspin with another $10b loss. I'm not saying Saab's not important, its just that GM has bigger fish to fry right now. They are really the hole in the strategy right now, but even Saab's day is coming in 2-3 years.

[mbukukanyau]

Looking at the new Enclave, the sky, and the new escalade, save for the chevy steering wheel, (I wonder why they did not yank a 9-3 steering wheel from saab) I think GM is going the right way.
But, they need to lower production volume, kill incentives completely on cadillacs, load them with excessive HP, and features and Push Buick and saab as the lower Luxo brands..

Price paid is everything in Luxo.. If I paid more.. I am better than you

[mgescuro]

Originally Posted by mikesright

While I would certainly agree there is a need for more differentiation and refinement in GM's luxury and near-luxury brand status, I would disagree that Cadillac or Saab or Hummer are inferior brands against the Europeans or the Japanese. What draws me (and many people I've talked to when buying a car) is simply "presence." GM used to have hardly any vehicles truely in the pop culture circle that defined American culture, and they paid the price.

And you can't have presence with sophistication and a unique car? There's nothing special with Cadillac. Mercedes has its legendary build quality. Lexus has its "pursuit of perfection." BMW is the ultimate driving machine. I don't believe there is any direction at Cadillac. It's not really luxury. It's not really performance. It's a mish mash of everything.

I think you need to refocus your thinking of Cadillac into a global perspective. Step out of the box for a moment and understand the global market. H2 and Escalade in Europe?? Yeah.. good luck. Wrong cars for the market. If Cadillac is expecting a big hit with Ecalade in Europe, well, it's got another thing coming. And with no diesel? Good grief.

Cadillac's lineup just doesn't hold up against the global competition, where even VW and even Opel have better build quality and perceived quality and attention to detail than Cadillac and Hummer and Saab. Escalade is much better, but still has a way to go. But other than that, what makes it special? Horsepower? Better leather? Better performance? No, no, and no. It needs to stand out more. Not only looking different... but being different. But being able tostand out to the Europeans and the upstart Japanese.

Saab is European. It has no place looking like an American car.

Hummer is fine... for now... until GM decides to go corporate on it.