jpd80 Posted January 19, 2015 Share Posted January 19, 2015 LINK DETROIT -- Cadillac President Johan de Nysschen has had about five months since taking over the brand to assess the gaps in his vehicle lineup. He has found a lot of them. Two in particular, he says, are hurting Cadillac's sales (down 6 percent last year) relative to competitors: the lack of a small crossover, and an entry-level car priced below the ATS to fend off the Audi A3, Mercedes-Benz CLA and others. He intends to fill those holes. "It's a big priority. It's a red-hot market segment right now that's really going through explosive growth," de Nysschen said of the entry-level sedan during an interview last week on the sidelines of the auto show here. "The same applies for the compact crossovers. We will need entrants there as well." He said the small crossover would come first, in early 2017, after ceding a substantial head start to the Mercedes GLA, Audi Q3 and BMW X3 and X1. A sub-ATS car is to come later, probably in 2018. Both vehicles are included in a $12 billion, multiyear capital-expansion plan for Cadillac that de Nysschen disclosed last week, spanning new vehicle platforms, powertrains and other technology. The former Audi and Infiniti boss gave the impression that he's coming to terms with the depth of Cadillac's lineup shortcomings relative to Mercedes, BMW and Audi, the brands that he wants to challenge head to head. Explaining why Cadillac is pushing an electric vehicle down its priority list, he said: "There are so many priorities, and there are obvious gaps in our product range in conventional cars that we should fill first, because those cars can immediately be profitable and help to finance our longer-term aspirations." De Nysschen said ATS sales have suffered because its price has been undercut by the CLA and A3. The ATS started strongly when it was launched in 2012, but sales sank 22 percent last year, to 29,890 cars, amid the more intense competition. The CLA came close to that in its first full year on sale: 27,365. Audi sold 22,250 A3s in about 11 months. The ATS starts at $34,210. The CLA's base price is $32,425. The A3's base is $30,795. Prices include shipping. "Suddenly, you have access to a Mercedes-Benz at $30,000, whereas the ATS is starting several thousand dollars higher," de Nysschen said. Unlike the front-wheel-drive layout of the CLA -- which is less expensive to develop and typically allows for more interior space -- Cadillac plans to build its future entry-level sedan on the same rwd platform that underpins the ATS, code-named Alpha. "The cost and packaging advantages of front-wheel drive are appealing. But Cadillac is the challenger brand," de Nysschen said. "We want to build our reputation as a purveyor of high-performance drivers' cars ... so it's better that we do it off a rear-wheel-drive architecture." Quote Link to comment Share on other sites More sharing options...
jpd80 Posted January 19, 2015 Author Share Posted January 19, 2015 (edited) Cadillac is still trying to go head to head with BMW and MB on price, I think that's a mistake of epic proportions. Cadillac needs to follow the original Lexus model of brand building and offer its 3 and 5 series competitors at a compelling price advantage. Start the ATS at CLA prices and bring the CTS starting price back below $40K. Those two simple changes would address rsistance from buyers, fix the perception gap and neatly avoid doing the CLA direct competitor, GM could just introduce a Cadillac Subcompact Utility based on Encore and start focusing on compact and mid sized Utilities to build revenue base. - Give dealers products they can sell. Sure it's a more Lincoln-esque plan but one that would get Cadillac out from under tout suite without piling up billions in investment and added resources. GM needs to take its Cadillac buyers on a journey of discovery and educate them that products are getting better and worth the added premium, you can't do that cold turkey. Controlling inventory is a critical part of those plans going forward, Cadillac needs to be brutally honest about sales projections. Edited January 19, 2015 by jpd80 Quote Link to comment Share on other sites More sharing options...
akirby Posted January 19, 2015 Share Posted January 19, 2015 1 Quote Link to comment Share on other sites More sharing options...
akirby Posted January 19, 2015 Share Posted January 19, 2015 Until he comes to grips with why the ATS and CTS aren't selling (hint - it ain't just price) he'll never fix Cadillac. He thinks he can sell them just like the German brands, except he doesn't have the same types of dealerships or brand prestige. He has a built-in customer base of loyal GM owners who want to upgrade to a nicer vehicle but they're being ignored while he chases buyers that probably wouldn't be caught dead in a Cadillac dealership in the first place. Bob Lutz would be proud. 2 Quote Link to comment Share on other sites More sharing options...
twintornados Posted January 19, 2015 Share Posted January 19, 2015 Lets see....both the A3 and CLA are selling robustly and turning a profit AND are front wheel drive...but Cadillac is going to show 'em both up with a rear wheel driven small car with less space and less capability....De Nysschen really does fit in at "the new GM" Quote Link to comment Share on other sites More sharing options...
jpd80 Posted January 19, 2015 Author Share Posted January 19, 2015 Until he comes to grips with why the ATS and CTS aren't selling (hint - it ain't just price) he'll never fix Cadillac. He thinks he can sell them just like the German brands, except he doesn't have the same types of dealerships or brand prestige. He has a built-in customer base of loyal GM owners who want to upgrade to a nicer vehicle but they're being ignored while he chases buyers that probably wouldn't be caught dead in a Cadillac dealership in the first place. Bob Lutz would be proud. 100%. I asked the question of where the "affordable V8 CTS and was told it's a V6 Mid sized car. If you're spending 60K and still not getting access to a V8 then something is terribly wrong. GM is using "Buick engines" in ATS and CTS and just expecting the cars to sell on RWD dynamics, Cadillac buyers see right through that, they want what they want and until those buyers are satisfied, ATS and CTS will sit there as mediocre sales achievers Massive Incentives and killer leasing deals are in Cadillac's future. their chief just doesn't get it.. Quote Link to comment Share on other sites More sharing options...
blwnsmoke Posted January 19, 2015 Share Posted January 19, 2015 I was just at the Boston Auto show yesterday with my wife, father (65yrs old) and sister/brother in law (early 40s).. every one of us just walked through the Cadillac section without really giving any consideration to them. None of them in any of our opinion was of any interest to us. The way our path was setup, it went Nissan, BMW, Mercedes, Audi and then Cadillac. Maybe that was part of why their section had no one waiting in line to sit in the vehicles. There was NO WAY that any of these cadillacs competed with BMW or Mercedes.. Interior Design was AMAZING in the Mercedes vehicles.. Now granted they were $110-$150,000 on the show floor but still, to see Cadillac even mentioning them as a competitor is downright laughable. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted January 19, 2015 Share Posted January 19, 2015 I just can't believe how clueless this guy is. Quote Link to comment Share on other sites More sharing options...
rmc523 Posted January 19, 2015 Share Posted January 19, 2015 So, I know I've already thought about this more than they have, but here's some thoughts anyway... --- So let me get this straight......ATS sales have gone down, we all know that. We also know prices are too high for it. So this guy's theory is not that the price is too high and should be lowered some until the brand is viewed more favorably.....instead he believes that the way to fix this problem is to introduce a new lower cost vehicle below the ATS that will further undercut it price wise??? Tell me how that is supposed to jump start ATS sales? The fact that it's going on Alpha tells me that they're desperately trying to make that platform work. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted January 19, 2015 Share Posted January 19, 2015 The answer to all your questions and assumptions is, "you need to look at the big picture" Quote Link to comment Share on other sites More sharing options...
akirby Posted January 19, 2015 Share Posted January 19, 2015 What does this say about the folks that hired him? Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted January 19, 2015 Share Posted January 19, 2015 Something we've known for quite some time. Their BS detectors are broke. Quote Link to comment Share on other sites More sharing options...
akirby Posted January 19, 2015 Share Posted January 19, 2015 Something we've known for quite some time. Their BS detectors are broke. I still say that was Mulally's biggest achievement at Ford - seeing through the BS and changing how Ford made business decisions. The first meeting he had with his direct reports they each had an assistant with a book full of data, charts and reports and they weren't sharing all of their financial details with each other. One week later the assistants and cheat sheets/books were gone and nothing was hidden. Read this story and see if you can imagine GM management doing this. I can't. http://www.mckinsey.com/insights/strategy/leading_in_the_21st_century_an_interview_with_fords_alan_mulally Quote Link to comment Share on other sites More sharing options...
Fgts Posted January 19, 2015 Share Posted January 19, 2015 100%. I asked the question of where the "affordable V8 CTS and was told it's a V6 Mid sized car. If you're spending 60K and still not getting access to a V8 then something is terribly wrong. GM is using "Buick engines" in ATS and CTS and just expecting the cars to sell on RWD dynamics, Cadillac buyers see right through that, they want what they want and until those buyers are satisfied, ATS and CTS will sit there as mediocre sales achievers Massive Incentives and killer leasing deals are in Cadillac's future. their chief just doesn't get it.. Please check XTS sales. That car bomb the most out of the Cadillac lineup nor the MKS didn't set sales records, the marketshare keep going smaller by offering "traditional" crap that sold for 30 years off the sweat off of big, powerful luxury cars made in the 50-70s. You say people isn't buying because of a lack of a v8, isn't the trend of offering smaller engines with larger power, Navigator,F150, Fusion would be in trouble because of smaller engines . People here think it's cheap now at this point to dump Alpha and go exclusively with Ep2 and have no rwd platform at all is ludicrous. Quote Link to comment Share on other sites More sharing options...
fuzzymoomoo Posted January 19, 2015 Share Posted January 19, 2015 (edited) I still say that was Mulally's biggest achievement at Ford - seeing through the BS and changing how Ford made business decisions. The first meeting he had with his direct reports they each had an assistant with a book full of data, charts and reports and they weren't sharing all of their financial details with each other. One week later the assistants and cheat sheets/books were gone and nothing was hidden. Read this story and see if you can imagine GM management doing this. I can't. http://www.mckinsey.com/insights/strategy/leading_in_the_21st_century_an_interview_with_fords_alan_mulally No chance in hell GM does that until they stop trying to believe that every brand under their control is a separate entity even then its still a long shot. too many cooks in the kitchen Edited January 19, 2015 by fuzzymoomoo Quote Link to comment Share on other sites More sharing options...
fuzzymoomoo Posted January 19, 2015 Share Posted January 19, 2015 Please check XTS sales. That car bomb the most out of the Cadillac lineup nor the MKS didn't set sales records, the marketshare keep going smaller by offering "traditional" crap that sold for 30 years off the sweat off of big, powerful luxury cars made in the 50-70s. You say people isn't buying because of a lack of a v8, isn't the trend of offering smaller engines with larger power, Navigator,F150, Fusion would be in trouble because of smaller engines . People here think it's cheap now at this point to dump Alpha and go exclusively with Ep2 and have no rwd platform at all is ludicrous. The luxury car market is entirely different than those buying an F-150 or Fusion As for Navigator, the jury is still out on how well the smaller EB engine is selling Quote Link to comment Share on other sites More sharing options...
akirby Posted January 19, 2015 Share Posted January 19, 2015 People here think it's cheap now at this point to dump Alpha and go exclusively with Ep2 and have no rwd platform at all is ludicrous. Just because you keep saying something, doesn't mean it's true. Quote Link to comment Share on other sites More sharing options...
akirby Posted January 19, 2015 Share Posted January 19, 2015 Large car sales have tanked everywhere, for everyone. It has nothing to do with which wheels are driven. It's a market shift. Quote Link to comment Share on other sites More sharing options...
rmc523 Posted January 19, 2015 Share Posted January 19, 2015 The luxury car market is entirely different than those buying an F-150 or Fusion As for Navigator, the jury is still out on how well the smaller EB engine is selling How is the jury out? Sales have been up. Quote Link to comment Share on other sites More sharing options...
Fgts Posted January 19, 2015 Share Posted January 19, 2015 (edited) Just because you keep saying something, doesn't mean it's true. So after spending billions and simply just cut the platform and add billions more to the fwd platform to accommodate the additional and compromised vehicles (not to mention what the hell the Camaro will sit on?) and GM is to be alright?. I guess you say that enough it would come true... If larger cars sales are getting smaller still at this point what the benefit of certain cars going fwd if GM already have a rwd platform ready to use or just wait many model years to make a mediocre fwd competitor?. Edited January 19, 2015 by Fgts Quote Link to comment Share on other sites More sharing options...
ehaase Posted January 19, 2015 Share Posted January 19, 2015 I think the XTS failed because it is about $10,000 too expensive. I think it would succeed if it were priced to compete with the Lexus ES350. Quote Link to comment Share on other sites More sharing options...
fuzzymoomoo Posted January 19, 2015 Share Posted January 19, 2015 How is the jury out? Sales have been up. my bad, i thought they were still offering it with the V8 as well as the EB3.5 Quote Link to comment Share on other sites More sharing options...
Fgts Posted January 19, 2015 Share Posted January 19, 2015 (edited) I think the XTS failed because it is about $10,000 too expensive. I think it would succeed if it were priced to compete with the Lexus ES350. Actually the XTS was the best seller until the current ATS/CTS showed up. Though the XTS don't compete with the ES, I'll go with the Cadillac if I had a choice of a cruiser. Edited January 19, 2015 by Fgts Quote Link to comment Share on other sites More sharing options...
Fgts Posted January 19, 2015 Share Posted January 19, 2015 (edited) Dp Edited January 19, 2015 by Fgts Quote Link to comment Share on other sites More sharing options...
jpd80 Posted January 19, 2015 Author Share Posted January 19, 2015 In recent months, something has changed at Cadillac, sales of SRX, XTS, ATS and CTS have slowed up and their inventories all ballooned. Everything but Escalade has slowed up, I don't know what's behind it but dealers are worried. I know it's winter but can anyone explain why everything seems to have come off the boil so to speak, is Cadillac suffering from competitors using aggressive leasing, not enough incentives, what is it? Quote Link to comment Share on other sites More sharing options...
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