Cadillac strives to recapture its upscale reputation
NEW YORK -- The good times have returned to the U.S. automobile industry, but they seem to have rolled past the Cadillac division of General Motors.
Cadillac, founded in 1902, is GM's luxury vehicle division. But it no longer fits the highly profitable, super-upscale definition of automotive luxury, according to its new top executive, Johan de Nysschen, and other Cadillac leaders interviewed here last week at the 2015 New York International Auto Show and recently at the 85th International Motor Show in Geneva.
The problem this time isn't vehicle quality. Cadillac is producing some of the best cars in its history, represented by models such as the full-size XTS sedan, the compact ATS and the sporty CTS-V. Sales of the Cadillac Escalade, the division's big sport-utility vehicle, are up nearly 75 percent this year. But Cadillac cars, redesigned to take on the likes of the Mercedes-Benz S-class, BMW 3 and 5 series, and high-end Lexus models, have withered against that competition.
The problem is class, de Nysschen said. Cadillac, once the premier luxury marque in the U.S. automobile market, is now perceived as having no class. Or, to put it more kindly, de Nysschen said Cadillac does not have enough of that "intangible quality" to command the kind of prices asked for the Aston Martin DB9 convertible ($200,800), the oddly named BMW 6 Series Gran Coupe Sedan ($78,300) or the Mercedes-Benz E-Class E63 AMG 4Matic ($92,700).
"Intangible quality" accounts for 50 percent of the pricing on most luxury items -- cars, watches, clothing -- said David Leone, Cadillac's executive chief engineer. "It is what people are willing to pay for beyond the actual value of the product purchased," he said. "It is why people are willing to pay more for a Rolex than they would for a Timex. Both are good watches. Both keep time excellently. But the Rolex is perceived as having more intangible quality."
De Nysschen implied that Cadillac lost its class, its intangible quality, by becoming common. He did not actually use the word "common," but the intent of his comments was clear enough.
The Cadillac division of the 1970s through the 1990s primarily was concerned with market share, using any sales gimmick to increase sales volume, de Nysschen said. The quest for higher market share also inspired the creation of more U.S. Cadillac dealerships, of which there are now 928, an estimated 200 of which are Cadillac-only retail shops.
Nearly 1,000 U.S. Cadillac dealerships is too many, de Nysschen said. He declined to cite an ideal number. But he said that 200 Cadillac-only shops probably is too low.
De Nysschen, who has held his Cadillac job since July after holding similar positions at Infiniti and Audi, believes it will take at least five years to give Cadillac the higher luxury gloss he believes the division has lost. To that end, he has moved the Cadillacs out of the grimy confines of industrial Detroit into a higher-image location in New York,
He also dumped Cadillac's longtime Detroit advertising agency, Lowe Campbell Ewald. Its replacement is Paris-based Publicis Worldwide, which also has offices in New York.
Publicis Worldwide specializes in marketing luxury products.
Cadillac used the auto show here to launch its stunningly beautiful CT6 sedan, which has softer, more luxuriant lines than the knife-edged CTV Cadillac models it replaces. But de Nysschen and Uwe Ellinghaus, Cadillac's chief marketing officer, said the 400-horsepower CT 6 is not designed to take on the Germans by going tit-for-tat against them. It is designed to recapture Cadillac's lost patina by being discernibly different, Ellinghaus said.
The target audience is affluent millennials, people in their late-20s and early-40s, who have scant memory of Cadillac's rise, fall and near-rise again. The same people, the Cadillac executives believe, are getting tired of the German luxury cars their parents fled to after Cadillac's many stumbles.
But the Cadillac people were coy about CT6 pricing. Unofficial estimates are $60,000 to $90,000. That is a lot of "intangible quality" for what now is a mass-production car.