GM Inside News Forum banner
1 - 20 of 256 Posts

·
Registered
Joined
·
4,600 Posts
Discussion Starter · #1 ·
DETROIT (Reuters) - General Motors Co Chief Executive Mary Barra's strategy of rebuilding the Cadillac brand has run into twin roadblocks: the carmaker can't persuade enough American sedan buyers to switch from foreign competitors such as BMW or Mercedes, and it can't make enough of its Escalade SUVs to satisfy domestic demand.

Even though chrome-bedecked Escalades retailing for more than $100,000 each are rolling every day out of an Arlington, Texas, factory that's been working weekend overtime for months, Cadillac still can't keep more than a few weeks' worth of the big SUVs in stock. By contrast, its dealers are offering discounts of thousands of dollars on the ATS sedan, intended to compete with the BMW 3 series, and on the CTS sedan, meant to rival the Mercedes E-class.

At Brotherton Cadillac Buick GMC in the Seattle suburb of Renton, Washington, owner Brad Brotherton is offering 2014 ATS sedans at up to $12,000 off a sticker price that starts at about $33,215. In St. Peters, Missouri, near St. Louis, Bommarito Cadillac was cutting as much as $17,500 off the price of a 2014 CTS sedan, which starts at about $45,345.

"Cadillac made a commitment to relieve dealer inventories by incentivizing" the leftover 2014 sedans, Brad Brotherton told Reuters. "Dealers had been asking for that for a long time."

The fire sale marks a setback for Cadillac's strategy to challenge BMW and Daimler AG's Mercedes-Benz brand head-on in the luxury sedan market. But while an American Cadillac owner will happily consider a BMW or a Mercedes, drivers of those famous German cars just won't put a Cadillac on their shopping list.

"The problem is, Cadillac is not BMW,” said Larry Dominique, president of ALG in Santa Monica, California, which sets and tracks auto leasing values. "The ATS is the product that Cadillac could have used to build brand equity, but it was overpriced and overproduced."

Cadillac has wrestled for more than a year to shrink inventories of unsold ATS and CTS models. In mid-December it shuttered the Lansing, Michigan, plant that builds the ATS and CTS for six weeks. The factory reopened January 26 on a single shift with a greatly reduced production schedule.

Even with the production cuts, Cadillac and its dealers had about four months' worth of unsold CTS sedans and six months’ worth of unsold ATS sedans on hand at the end of January, a Reuters analysis showed.

In January, GM sales rose 18 percent, largely on the strength of full-size trucks and utility vehicles. Cadillac sales increased just 2 percent, with ATS sales dropping 8 percent from a year ago and CTS sales down 24 percent.

"We understand we have a lot of work ahead of us with Cadillac," Barra said last week.

Residual value

Dominique said Cadillac's residual values -- the projected end-of-lease values, expressed as a percentage of the new car's retail price -- are among the lowest in the luxury segment, ranking near the bottom with Ford Motor Co's Lincoln and Jaguar .

So far, Cadillac has resisted price cuts on either model, although it recently tweaked option prices. Keeping base sticker prices unchanged could undercut the resale values used to set lease prices, Dominique said.

The failure of the ATS and CTS to hit their targets is costing GM. To kindle demand, Cadillac has offered subsidized leases, discounted financing and rebates. Consumers are being given $1,000 on the 2015 ATS and 2015 CTS, $4,000 on the 2014 ATS and $6,000 on the 2014 CTS. But some dealers are getting additional subsidies from Cadillac -- up to $5,000 more on the 2014 ATS and up to $7,000 more on the 2014 CTS -- to help clear out unsold cars.

Cadillac has cleared 90 percent of the leftover 2014 sedans, a spokesman said on Monday.

Meanwhile, the Escalade is hauling in the cash, as year-on-year sales in January rose 149 percent, according to Cadillac spokesman David Caldwell. GM's truck factory outside Dallas, which builds the Escalade and long-wheelbase Escalade ESV and their Chevrolet and GMC siblings, has been running steadily on three shifts and working weekend overtime for months to try to keep up with unrelenting demand.

"If we could run that plant eight or nine days a week, we probably would," said a GM insider familiar with the production schedule.

Cadillac marketing boss Uwe Ellinghaus, a former BMW executive, calls the Escalade "almost a brand in itself," but adds that the big SUV "does not set the direction" for Cadillac's long-range strategy.

As it is, Cadillac is likely to get only "a few more" Escalades this year, according to Caldwell, who said, "A little bit of scarcity isn't a bad thing."
 

·
Registered
Joined
·
21,344 Posts
The ATS is back over 200 days inventory!? CTS is at a razor thin 135 days.............

GM as a whole is doing pretty good, with an in-total average of 100 days, but there are laggards, some being low volume imported, so not un-expected and some are on the list because sales absolutely tanked in January. (ie Regal, Sonic, Volt)


Lacrosse....196
Regal ........214
ATS.......... 206
CTS..........135
ELR..........164
Caprice.....145
Sonic .......216
SS...........176
Volt.........194
 

·
Premium Member
Joined
·
23,621 Posts
The failure of the ATS and CTS to hit their targets is costing GM. To kindle demand, Cadillac has offered subsidized leases, discounted financing and rebates. Consumers are being given $1,000 on the 2015 ATS and 2015 CTS, $4,000 on the 2014 ATS and $6,000 on the 2014 CTS. But some dealers are getting additional subsidies from Cadillac -- up to $5,000 more on the 2014 ATS and up to $7,000 more on the 2014 CTS -- to help clear out unsold cars.
Sweet! Discount luxury, great way to snag some Hyundai, Toyota and Chevrolet customers. You'll be back to full volume soon, Cadillac! Patience, patience, and keep those price cuts coming!

(And to anyone who disagrees, please explain how in a month when all these 2014 bargain discount models are gone, Cadillac is going to magically convince people to pay 5 to 7 grand more for the same cars...)
 

·
Registered
Joined
·
15,633 Posts
The double bang here includes but is not limited to - excessively low off msrp pricing to get a 'now' somewhat disappointing ATS /CTS volume result.

In some ways that really matter....... things are not and have not been as bad as some think; and yet in others ...... especially in the sense of where it is all heading and critically, the timing of needed change - it is worse.

The facts include that this 'now' rather substantial classic case of US / Canada price resistance due to a classical case of perceived lack of value concerning the cars in a physical sense - that GM Mgt. is desperate to avoid acknowledging..... is not easily fixable ie PTs and new backseats and boots are not in the cards for the short run .

Nor are the far more valuable related CUVs.

Beneath all the ridiculous to sublime to 'humorous' over weighted other factor analysis - and CY previous decision makers Ass smoke and mirrors....... is the really simple fact that the ATS and CTS formulations just are so far off for the market of today that they cannot possibly - even with large discounting ever hit any of the intended volume targets .

Nor in the style intended.


So what best to do in this period of time - a 'topic' which has been all spun up in so many ways but is also....... really simple even if painful or politically painful to admit.

There is in the discussion an element of artificial resistance to doing what the market has , is, and will continue to tell you in an ever louder voice what to do..... given what basically physically and economically cannot be done...... along with what GM chooses not to do.

That's 'ok' in a sense because the one thing in this whole mess that is as certain as the day is long is that these vehicle programs will end up exactly where they belong - in the market.

Price reformulation ( and mailing some checks ) and yes, that includes big price cutting - does have the advantage over staying stiff and discounting in that residuals will heal faster.

So....since one way or another they have tied up all their options - might as well find the points within all that for the current programs.

You can get all sassy and stiff on the next go around - when hopefully, you actually have unlike now, the physical product / msrp pricing / lease pricing relation at least corrected and or super strong.
 

·
Registered
Joined
·
3,758 Posts
Sweet! Discount luxury, great way to snag some Hyundai, Toyota and Chevrolet customers. You'll be back to full volume soon, Cadillac! Patience, patience, and keep those price cuts coming!
Their money spends just as well. Maybe they will even become repeat customers for Cadillac.
 

·
Registered
Joined
·
21,344 Posts
Sweet! Discount luxury, great way to snag some Hyundai, Toyota and Chevrolet customers. You'll be back to full volume soon, Cadillac! Patience, patience, and keep those price cuts coming!

(And to anyone who disagrees, please explain how in a month when all these 2014 bargain discount models are gone, Cadillac is going to magically convince people to pay 5 to 7 grand more for the same cars...)
New Logo?


Their money spends just as well. Maybe they will even become repeat customers for Cadillac.

Yes it does, they just tend to not leave as much behind...................
 

·
Registered
Joined
·
21,344 Posts
Everyone knew this was coming. It's a painful process, but they're turning the corner. They haven't even started doing captive leases yet.
With the amount of incentives GM is placing on the ATS/CTS, its effecting residual prices today, which is going to affect future lease residuals, if GM puts more cash on the top-line, but the bottom-line (residual) drops, the lease rates are not going to improve, and to make matters worse, GM will own the car and the loss, at the end.
 
  • Like
Reactions: AMERICA 123

·
Registered
Joined
·
19,319 Posts
With the amount of incentives GM is placing on the ATS/CTS, its effecting residual prices today, which is going to affect future lease residuals, if GM puts more cash on the top-line, but the bottom-line (residual) drops, the lease rates are not going to improve, and to make matters worse, GM will own the car and the loss, at the end.
Yes, it does make me wonder what my 2013 ATS is worth......
 

·
Registered
Joined
·
44,430 Posts
Link to the original article....

http://www.businessinsider.com/r-ex...oadblocks-in-rebuilding-cadillac-brand-2015-2


article said:
"The problem is, Cadillac is not BMW,” said Larry Dominique, president of ALG in Santa Monica, California, which sets and tracks auto leasing values. "The ATS is the product that Cadillac could have used to build brand equity, but it was overpriced and overproduced."
ATS isn't overpriced. It's just seemingly overpriced because the media believes it competes with CLA, which it doesn't. ATS is appropriately priced against the 3-series and C-Class. I mean, C-Class starts at $38,000 -- $5,000 more than ATS!! And C-Class outsells the ATS over 5 to 1.
The problem, like I've always said, it the lack of prestige the Cadillac brand conveys. "It's not BMW." Nor is Cadillac "not a Mercedes." It's simply a matter of Cadillac not being "good enough" in the innumerable intangibles that makes up a luxury product.
 

·
Registered
Joined
·
13,043 Posts
ATS isn't overpriced. It's just seemingly overpriced because the media believes it competes with CLA, which it doesn't. ATS is appropriately priced against the 3-series and C-Class. I mean, C-Class starts at $38,000 -- $5,000 more than ATS!! And C-Class outsells the ATS over 5 to 1.
The problem, like I've always said, it the lack of prestige the Cadillac brand conveys. "It's not BMW." Nor is Cadillac "not a Mercedes." It's simply a matter of Cadillac not being "good enough" in the innumerable intangibles that makes up a luxury product.
Let's go back to Econ 101. Price is where Supply meets Demand. Or, in this case, where Production meets the Customers Who Want an ATS. Are you saying GM should have just bitten the bullet, and accepted a lower volume of ATS's until Cadillac's brand image improves enough to increase Demand?
 
  • Like
Reactions: Ed753

·
Registered
Joined
·
21,344 Posts
ATS isn't overpriced. It's just seemingly overpriced because the media believes it competes with CLA, which it doesn't. ATS is appropriately priced against the 3-series and C-Class. I mean, C-Class starts at $38,000 -- $5,000 more than ATS!! And C-Class outsells the ATS over 5 to 1.
The problem, like I've always said, it the lack of prestige the Cadillac brand conveys. "It's not BMW." Nor is Cadillac "not a Mercedes." It's simply a matter of Cadillac not being "good enough" in the innumerable intangibles that makes up a luxury product.
Your statements are conflicting; if Cadillac doesn’t have said prestige, then the product is overpriced.
 

·
Registered
Joined
·
15,633 Posts
Prestige has very little to do with it.

If these products were BMWs, or Audi's or MBs results would likely be even less.
 

·
Registered
Joined
·
44,430 Posts
Your statements are conflicting; if Cadillac doesn’t have said prestige, then the product is overpriced.
Not conflicting.

The product is appropriately priced for the class. Cadillac has failed (again) to elevate the prestige and marketing of the car. And that fact becomes more and more apparent as you go up the ladder.
Sad to say, the CT6 will fall hard on its face when it launches because it won't have the prestige in place to justify the cost of the $72,000 flagship price.

But at $72,000 it's not over-priced.

It is the decidedly pedestrian image and customer base that Cadillac can't seem to shake. If the expectation is for Cadillac to be a "value priced luxury car brand," then don't ever expect to compete with the Germans. Hell... don't expect to compete with the Japanese and British either.
 

·
Registered
Joined
·
44,430 Posts
Let's go back to Econ 101. Price is where Supply meets Demand. Or, in this case, where Production meets the Customers Who Want an ATS. Are you saying GM should have just bitten the bullet, and accepted a lower volume of ATS's until Cadillac's brand image improves enough to increase Demand?
YES!
I pointed this out before ATS launched!!

Given what we know about 1) GM's inability to properly package cars, 2) Cadillac's inability to attract its traditional customer base to compact cars, 3) incredibly competitive market segment, 4) lack of name brand, 5) decidedly pedestrian looks, 6) product positioning disaster with CTS moving up a tier, that there was absolutely no way ATS could have ever matched the Gen 2 CTS in sales!!!

Common sense dictates that the expectation at Cadillac was at MINIMUM to match Gen 2 CTS in sales. Why replace a relatively successful product with something that would sell in lower volumes? ATS is now roughly 50-60% of Gen 2 CTS volume. That sucks!!!


Go back to my historical posts on ATS!! This is exactly what I predicted, based on what we knew of ATS at that point. And this was before CLA launched. I believe CLA just exacerbated the sales decline for Cadillac.
Do people want ATS to sell at the $29,995 price point? What would an ATS even be like at that price?


It just baffles me to think that the product managers at Cadillac DID NOT see this coming!! They have all the internal data and customer behavior reports and the demographic info in the world!! The only way they could have missed this was they had blinders on.
And if they even had an inkling about what this "entry level" class was about, they would have realized that there are 2 types of buyers in this class: 1) Trend-setters and 2) Buyers who want a foot in the door.

Trend-setters buy the car because it's the "thing to do" and the "thing to have." This is backed up by a strong brand image and strong perception of the product.
Buyers who want a foot in the door are the "up and comers." They are young and want a car to show off, but don't have nearly the cash to get something really cool. But they want to fit in and "be in the club" This only works if you have a strong brand and strong perception of that brand.

So, the ONLY solution, if the product managers didn't have blinders on, would be to strengthen Cadillac's brand position in order to elevate the ATS as much as possible in its first year.


Personallly, I would never have launched ATS first. CTS or CT6 should have launched first. That way, there would be an additional draw to the Cadillac brand, which would have given the ATS an even bigger boost.
 

·
Registered
Joined
·
15,633 Posts
If they nail the details both big and small CT6 will have no problem whatsoever.

Both in terms of realistic volume and transaction pricing.

If they **** it up like they did the ATS and CTS programs then yes, it will possibly fall short.

And you bet, just like always in a situation like this ..... it starts ( and can then end in a bad way ) with the PTs.

If you do not have the ante ( and really a bunch more to back it up ) - you do not belong @ the table.


****

I'm just cynical enough given how cynically GM has played out Cadillac to venture CT6 is really as much about the next chebbie Caprice et al as it is about Cadillac.

Or more "really".
 
1 - 20 of 256 Posts
Top