General Motors chief executive officer Mary Barra has envisioned a strategy to revive the ailing Cadillac brand, but the plan has now run into twin hurdles: how to lift dwindling sedan deliveries and how to cope with demand for the Escalade SUV.
The luxury automaker last year lost the position of fourth largest premium brand in the US to Germany’s Audi, with Cadillac still unable to convince Americans to come back to US-built sedans after they tasted the German and Japanese luxury. On the other hand, the bling-bling Escalades that retail above $100,000 each have been on the roll since the new generation was introduced, so much that even though the Arlington, Texas, factory that produces them has been working during the weekends the brand still has excess demand for the model. In the same dealerships, by contrast, the ATS sedan – a competitor for the BMW 3 Series and the CTS sedan – a competitor for the Mercedes-Benz E Class – are offered with thousands of dollars worth of discounts.
The new incentive-driven sales for leftover 2014 model stocks are a setback for the Cadillac strategy that envisioned its sedans as worthy alternatives for BMW and Mercedes-Benz. “The problem is, Cadillac is not BMW,” comments Larry Dominique, president of ALG in Santa Monica, California. “The ATS is the product that Cadillac could have used to build brand equity, but it was overpriced and overproduced.” Last month, while General Motors overall jumped 18 percent – driven by sales of SUVs and trucks – Cadillac modestly grew by 2 percent. The ATS saw deliveries down 8 percent from the same month in 2014, while the larger CTS was diving even deeper, with a 24 percent fall.