They messed with the wrong model's pricing structure.
All of these changes should have been on the ATS instead.
All of these changes should have been on the ATS instead.
This is Why General Motors Cut Cadillac's Prices
Watch the video in the link for the interview. de Nysschen impressses more with every interview he gives.
Earlier this month, General Motors' (NYSE: GM ) Cadillac luxury brand surprised industry observers by announcing that it would cut the prices on its acclaimed (but slow-selling) CTS sedan.
Cadillac reduced the sticker price of the CTS from $1,000 to $3,000, depending on model. The company also said it would include more standard equipment in some trim levels.
Why was this a surprise? Companies regularly adjust pricing on slow-selling models. But Cadillac managers had been adamant: We're building cars that are as good as the German luxury brands', they said, so they'll be priced accordingly. After all, they cost just as much to build.
That position turned out to be a little optimistic: While average transaction prices for the CTS did rise, U.S. sales fell almost 4% last year despite a strong market. The reality is that while Cadillac's latest products, including the CTS sedan. are up to the standard set by brands such as BMW (NASDAQOTH: BAMXF ) and Mercedes-Benz -- maybe even a bit better in some ways -- the Cadillac brand still needs a lot of work. Buyers aren't (yet) willing to pay BMW prices for Cadillacs -- at least, not enough to keep GM executives happy.
That's the simple version, at least. We were hoping for more insight, so we asked Cadillac President Johan de Nysschen to give us the full scoop on the brand's turnabout on pricing. He graciously agreed to do so -- and you can see what he told us in this video, shot on the Cadillac stand at the North American International Auto Show in Detroit. Check it out, and then scroll down to leave a comment with your thoughts. Is this the right move for Cadillac, or should it have held its ground?
http://www.fool.com/investing/general/2015/01/29/gm-de-nysschen-3-cadillac-pricing-adjustments.aspx
Earlier this month, General Motors' (NYSE: GM ) Cadillac luxury brand surprised industry observers by announcing that it would cut the prices on its acclaimed (but slow-selling) CTS sedan.
Cadillac reduced the sticker price of the CTS from $1,000 to $3,000, depending on model. The company also said it would include more standard equipment in some trim levels.
Why was this a surprise? Companies regularly adjust pricing on slow-selling models. But Cadillac managers had been adamant: We're building cars that are as good as the German luxury brands', they said, so they'll be priced accordingly. After all, they cost just as much to build.
That position turned out to be a little optimistic: While average transaction prices for the CTS did rise, U.S. sales fell almost 4% last year despite a strong market. The reality is that while Cadillac's latest products, including the CTS sedan. are up to the standard set by brands such as BMW (NASDAQOTH: BAMXF ) and Mercedes-Benz -- maybe even a bit better in some ways -- the Cadillac brand still needs a lot of work. Buyers aren't (yet) willing to pay BMW prices for Cadillacs -- at least, not enough to keep GM executives happy.
That's the simple version, at least. We were hoping for more insight, so we asked Cadillac President Johan de Nysschen to give us the full scoop on the brand's turnabout on pricing. He graciously agreed to do so -- and you can see what he told us in this video, shot on the Cadillac stand at the North American International Auto Show in Detroit. Check it out, and then scroll down to leave a comment with your thoughts. Is this the right move for Cadillac, or should it have held its ground?
http://www.fool.com/investing/general/2015/01/29/gm-de-nysschen-3-cadillac-pricing-adjustments.aspx
1 - 20 of 24 Posts
Interesting.
AS I understand it, the base prices are unchanged, but there is greater standard equipment and the costs of options have moderated.
Is it me, or does "The Fool" seem more than usually interested in Cadillac?
AS I understand it, the base prices are unchanged, but there is greater standard equipment and the costs of options have moderated.
Is it me, or does "The Fool" seem more than usually interested in Cadillac?
Equipment being standard doesn't mean it's free. If they add $1000 worth of standard features, the car is worth $1000 more, and you should certainly expect the price you pay to correspond.Interesting.
AS I understand it, the base prices are unchanged, but there is greater standard equipment and the costs of options have moderated....
If they add $1000 of features, but the price remains the same, that is equal to the price dropping $1000.
BUT.....
The general public will just see the same base price listed, not really know anything about additional features, say, "Eh", and move on.
This is why someone like johan who has been instrumental in building an underdog brand is crucial to Cadillac's come back...
The Vsport is such a great car.. its sounds wicked!!
The Vsport is such a great car.. its sounds wicked!!
HBO
Perhaps not. If the dealers have good Sales people who knows their products and are able to point out to the Customet that they are getting more for the same price. But if they still have the same know nothing Sales People then you are right.Equipment being standard doesn't mean it's free. If they add $1000 worth of standard features, the car is worth $1000 more, and you should certainly expect the price you pay to correspond.
If they
add $1000 of features, but the price remains the same, that is equal to the price dropping $1000.
BUT.....
The general public will just see the same base price listed, not really know anything about additional features, say, "Eh", and move on.
Didn't he just last week state that Cadillac was NOT lowering prices?
The 'cult of De Nysschen' is growing strong...
I'm tuning out for a year and will check back after. He's clearly a bright guy, but the million dollar question is whether GM will really allow him to do what he's planning, or will they get cold feet and shorten Cadillac's leash again.
I'm tuning out for a year and will check back after. He's clearly a bright guy, but the million dollar question is whether GM will really allow him to do what he's planning, or will they get cold feet and shorten Cadillac's leash again.
I'm trying to determine whether Johan is a genius or a failure in the making. He seems to encourage very counter-intuitive moves, but sometimes the most innovative people do. It will definitely be interesting to see how Cadillac evolves over the next few years.The 'cult of De Nysschen' is growing strong...
I'm tuning out for a year and will check back after. He's clearly a bright guy, but the million dollar question is whether GM will really allow him to do what he's planning, or will they get cold feet and shorten Cadillac's leash again.
Yeah you have said that a few times, but here you are!The 'cult of De Nysschen' is growing strong...
I'm tuning out for a year and will check back after. He's clearly a bright guy, but the million dollar question is whether GM will really allow him to do what he's planning, or will they get cold feet and shorten Cadillac's leash again.
Actually..... both.They messed with the wrong model's pricing structure.
All of these changes should have been on the ATS instead.
And yeah, if forced, doing the CTS first makes sense also.
It now appears that very paradoxically to conventional think , the ATS had a better initial period.
Personally..... think there is a bunch of non necessary agonizing and agonizingly slow change ups coming along because some previous people with skin in the game ie the cluster**** leadership pre JdN are having there asses covered.
Which is why we hear the endless shibob that the cars are all there - when in fact - they are not.
CTS is the most fixable fastest because some of what ATS needs starting with the backseat and boot are not of a drop in nature etc etc.
For CTS, just take what they have done and are doing and add a few change ups in the pt area and you would have it or have it well enough.
***
It is real interesting to consider how the ATS and CTS programs are the same and yet .... also ( very ) different.
He talks too much. I think JDN likes the attention.Didn't he just last week state that Cadillac was NOT lowering prices?
I think Cadillac is just a very high profile story for American news outlets. Its success means everything to General Motors (a major company) and is symbolically important for the country. Even just 5 years ago, its success did not seem very likely... not that it seems likely now, but at least there's a Man with a Plan in charge instead of some half-baked lobbyist-turned-executive.He talks too much. I think JDN likes the attention.
I think the media interest is due to Cadillac being associated with Detroit's disaster porn.I think Cadillac is just a very high profile story for American news outlets. Its success means everything to General Motors (a major company) and is symbolically important for the country. Even just 5 years ago, its success did not seem very likely... not that it seems likely now, but at least there's a Man with a Plan in charge instead of some half-baked lobbyist-turned-executive.
Does anyone actually have examples of the changed pricing strategy? Has it happened yet?
For whatever reason, it is undeniably a high profile "case" if you want to call it that.I think the media interest is due to Cadillac being associated with Detroit's disaster porn.
Someone (TheNewStandard?) posted some information the dealers got. It's not a big deal. It's a few grand off on some stuff but pricing really stays the same.Does anyone actually have examples of the changed pricing strategy? Has it happened yet?
It's the headlines that are sensationalizing it as some massive price slash.
anything for hitsIt's the headlines that are sensationalizing it as some massive price slash.
The cheap cast wheels of the base cts make it look so cheap it's unbelievable.
1 - 20 of 24 Posts
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