fuzzymoomoo Posted January 20, 2015 Share Posted January 20, 2015 It's all part of the plan. I'm sure the gap will widen when the next gen Fusion/MKZ are launched. GM really should be learning from this. It's a slow burn, not a 5 year pipe dream. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted January 20, 2015 Share Posted January 20, 2015 The verdict is out with Lincoln (at least with cars) at this point especially if their next totally new design doesn't roll out until the 2019 model year. CD4 MKS is coming out long before then. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted January 20, 2015 Share Posted January 20, 2015 No but they did raise prices pretty high which limited sales, so that part is similar. There is a pretty significant price jump from an Escape Titanium to a MKC - I think it was around $6K. Not *before* they started weeding out dealers. They were weeding out dealers in the late 00s, starting in '08/09 or thereabouts, when the MKZ and MKX were barely differentiated from and not much more expensive than the Fusion/Edge. Quote Link to comment Share on other sites More sharing options...
akirby Posted January 20, 2015 Share Posted January 20, 2015 Not *before* they started weeding out dealers. They were weeding out dealers in the late 00s, starting in '08/09 or thereabouts, when the MKZ and MKX were barely differentiated from and not much more expensive than the Fusion/Edge. True, but the point is IF you want to weed out marginal dealers one way to do that is to raise product prices which usually lowers volume which can be the turning point for dealers on the edge. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted January 20, 2015 Share Posted January 20, 2015 You also have to be willing to pay money to buy back franchises, something that GM seems unwilling to do. A dualed dealer (and most of the worst Cadillac dealers are probably dualed) can handle decreased volume with the sort of minor grumbling that is seemingly the default response of car dealers to just about everything short of a dump truck full of money. At one point in time, Ford had Lincoln down to, basically, two retail models (the MKZ & MKX--Navigator numbers were horrendous). And then the Ford reps were calling on poor performing dealers and offering them cash money to walk away from the franchise. Quote Link to comment Share on other sites More sharing options...
akirby Posted January 20, 2015 Share Posted January 20, 2015 Agreed. And I wasn't saying that's what Cadillac is trying to do. They're simply not that smart and they probably think they need more dealers, just like they seem to want more vehicles and revenue regardless of profit. Quote Link to comment Share on other sites More sharing options...
grbeck Posted January 20, 2015 Share Posted January 20, 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? The SRX needs a revamp. It's in a hot segment, but this segment is also one that is filled with newer, fresher entries. The XTS has no "legs", as it appeals to the dwindling number of "old school" Cadillac buyers. Once they had bought their XTS, that was it. It isn't the type of vehicle that is going to attract buyers of other brands. The problems afflicting the ATS and CTS have been effectively covered on this site. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted January 20, 2015 Share Posted January 20, 2015 (edited) Agreed. And I wasn't saying that's what Cadillac is trying to do. They're simply not that smart and they probably think they need more dealers, just like they seem to want more vehicles and revenue regardless of profit. Cadillac has lately had leaders that either do not understand dealers, and therefore ignore them, or leaders who think they understand dealers and actively antagonize them. In neither case has there been a pragmatic assessment of what can be done with a realistic outlay of cash for buybacks and incentivized renovations. Edited January 20, 2015 by RichardJensen Quote Link to comment Share on other sites More sharing options...
Dave-S Posted January 20, 2015 Share Posted January 20, 2015 (edited) CD4 MKS is coming out long before then. I don't expect that to be anything other than an upscale Taurus in the same vein as the "Fusion" MKZ. Edited January 20, 2015 by Dave-S 1 Quote Link to comment Share on other sites More sharing options...
grbeck Posted January 20, 2015 Share Posted January 20, 2015 Cadillac has lately had leaders that either do not understand dealers, and therefore ignore them, or leaders who think they understand dealers and actively antagonize them. In neither case has there been a pragmatic assessment of what can be done with a realistic outlay of cash for buybacks and incentivized renovations. If GM is burning bucket loads of cash to rebuild Cadillac, I'm guessing that there isn't much left over to buy out dealers. You've pointed out before that GM isn't THAT profitable, at least compared to Ford. I'm also guessing that the billions spent to buy out Oldsmobile dealers in the wake of the division's closure remain embedded in the corporate memory. Quote Link to comment Share on other sites More sharing options...
akirby Posted January 20, 2015 Share Posted January 20, 2015 What do you mean "IF"? Quote Link to comment Share on other sites More sharing options...
grbeck Posted January 20, 2015 Share Posted January 20, 2015 Okay, GIVEN that GM is burning bucket loads of cash.... 1 Quote Link to comment Share on other sites More sharing options...
bzcat Posted January 20, 2015 Share Posted January 20, 2015 (edited) So let's be constructive here, what should De Nysschen's plans be going forward? Three good utilities to go with Escalade? in pricing for ATS and CTS? Skip the Sub-compact car challenger? Thoughts... SUVs sales are growing worldwide but especially so in China so yes... Cadillac needs to grow the SUV portfolio aggressively. The plan is to align with GM's global platforms on SUVs. Subcompact XT1 or XT2 - Based on Gamma II platform (related to Buick Encore/Opel Mokka) Compact XT3 - Based on Delta III platform (related to Buick Envision/Opel Antara) Midsize XT5 5 seats - replace SRX, based on the Epsilon III platform Midsize XT5 7 seats - longer with 7 seats Fullsize - Escalade ATS and CTS pricing - I don't really see a big problem with MSRP in the US per se. The big problem is that GM does not have a captive bank to write subsidized leases so no amount of tinkering with MSRP is going to change the fact that BMW and Mercedes can always undercut Cadillac with a better deal, since they each own BMWFS and MBFS. Ditto Lexus with Toyota FS and Audi with VWFS. The end game here is to improve the products, and forget about MSRP. With that being the goal, I believe CTS (CT5) is fine as is. Say what you want about Cadillac's sales strategy, marketing, or pricing, the car itself is not the problem. ATS needs to be bigger for sure. Cadillac benchmarked the B7 A4, E90 3-series, and the W204 C-Class during development of ATS and as a result, it is now one size smaller than the B8 A4, F30 3-seres, and W205 C-Class; Audi, BMW, and Mercedes have filled the size void with A3 sedan, upcoming FWD 1-series sedan, and the CLA-Class. So what needs to be done here is pretty obvious... make the next ATS (CT3) size competitive. Regarding the subcompact sedan challenger... I think it's probably a little premature. I wouldn't bet on de Nysschen's idea of RWD subcompact car coming to fruition. GM's board is not going to like the idea... think about the logic: 1. Alpha platform is expensive, but de Nysschen wants to charge 10% less than the current ATS... so squeezing the margin even further. 2. Customers in this size class do not care which wheel is being driven as evident that most BMW 1-series owners in Europe (Europe!) think it is FWD. Audi and Mercedes have been selling FWD cars in this size class for nearly 15 years and has proved that RWD is irrelevant. 3. Given #1 and #2 above, the choices are charging 10% less for Alpha or charging 50% more for a Delta III sedan - I think it's easy to see how the chips will fall on this one, Cimarron comparison and all - FWD is going to win the business case. Edited January 20, 2015 by bzcat 1 Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted January 20, 2015 Share Posted January 20, 2015 (edited) I don't expect that to be anything other than an upscale Taurus in the same vein as the "Fusion" MKZ. However, you said, "all new design" -- The CD4 MKS will be an 'all new design'. And don't hold your breath waiting for *any* Lincoln product that cannot be described as an "upscale" Ford. Edited January 20, 2015 by RichardJensen Quote Link to comment Share on other sites More sharing options...
Fgts Posted January 20, 2015 Share Posted January 20, 2015 No but they did raise prices pretty high which limited sales, so that part is similar. There is a pretty significant price jump from an Escape Titanium to a MKC - I think it was around $6K. That reminded me Caddy wanted to raise prices to weed out the bargain buyers anyway. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted January 20, 2015 Share Posted January 20, 2015 Yeah, well, that represented more of their customer base than they thought. Quote Link to comment Share on other sites More sharing options...
grbeck Posted January 20, 2015 Share Posted January 20, 2015 That reminded me Caddy wanted to raise prices to weed out the bargain buyers anyway. But then GM forgot to adjust production to reflect the new (lower) level of demand, once the bargain hunters went somewhere else. Quote Link to comment Share on other sites More sharing options...
akirby Posted January 20, 2015 Share Posted January 20, 2015 Price alone doesn't make a bargain hunter. It has to do with where you price your products relative to the competition. e.g. a $50K CLA is expensive whereas a $50K S class is dirt cheap. Quote Link to comment Share on other sites More sharing options...
akirby Posted January 20, 2015 Share Posted January 20, 2015 I still can't believe they paid dealers cash just to ORDER vehicles (not to actually SELL them). Reminds me of the company that paid welders 15 cents for a good weld and 25 cents to fix a bad weld even if it was originally done by the same person. So if you do it badly you get 40 cents (15 for the first one and 25 to fix it). The defect rate was enormous. Then they started paying 20 cents per weld and if it was bad you had to fix it for free. The defect rate dropped to almost nothing overnight. Go figure. Quote Link to comment Share on other sites More sharing options...
jpd80 Posted January 20, 2015 Author Share Posted January 20, 2015 (edited) I find it amazing that the V8 which is a GM hallmark is no longer readily available in Cadillac cars. Perhaps De Nysschen and his Cadillac team are missing the obvious.... .What's the point of a RWD with no V8 available as an option. Cadillac expects CTS buyers to pay upwards of $64K with still no V8 in sight, how on earth does that appeal to American buyers? I think we're seeing is the resilient buyer core of 2,000/mth sales exposed while the other 2,000-3,000 buyers have stepped out. Edited January 20, 2015 by jpd80 Quote Link to comment Share on other sites More sharing options...
bzcat Posted January 21, 2015 Share Posted January 21, 2015 (edited) I find it amazing that the V8 which is a GM hallmark is no longer readily available in Cadillac cars. Perhaps De Nysschen and his Cadillac team are missing the obvious.... .What's the point of a RWD with no V8 available as an option. Cadillac expects CTS buyers to pay upwards of $64K with still no V8 in sight, how on earth does that appeal to American buyers? I think we're seeing is the resilient buyer core of 2,000/mth sales exposed while the other 2,000-3,000 buyers have stepped out. I don't mean this as a put down but you are in Australia... I don't think you are very in touch with the luxury car market in the US. V8 is not really a thing... sure, Mercedes and BMW still offer V8 in their midsize car but they account for such a tiny % of sales. The vast majority of the market is 4 and 6 cylinders and Cadillac has not one but two competitive products in this segment. Cadillac sales are hitting a wall because it cannot bring down the monthly lease payments due to lack of captive bank to subsidize the residuals. I don't think the lack of V8 has anything to do with the state of Cadillac sales. Also, to put it in context, CTS outsold Audi A6 in 2014. CTS + XTS would put Cadillac right in #2 spot in midsize luxury sedan sales in the US market, ahead of BMW and just behind Mercedes. Midsize Luxury Car Sales 2014 Mercedes E-Class 66,400 BMW 5-Series 52,704 Cadillac CTS 31,115 Cadillac XTS 24,335 Audi A6 23,941 Lexus GS 22,198 Lincoln MKS 8,160 Infiniti Q70 5,034 Acura RL/RLX 3,413 Volvo S80 1,753 Cadillac has a real issue with ATS/compact size luxury car. It doesn't really have a problem with selling mid size luxury cars, V8 engine or not. XTS sales are falling as you'd expect for a 4 year old car while CTS is only down slightly. Would Cadillac like to increase sales? Sure... but it is fighting an uphill battle with stated (not actual) residual value on lease contracts. Compact Luxury Car Sales 2014 BMW 3/4 Series 142,232 +19.0% Mercedes C-Class 75,065 -14.9% - some of the decrease probably went to CLA but also there was a model change which limited availability (e.g. still no C300, only C300 4Matic etc) Lexus ES 72,508 -0.1% Audi A4/A5/Allroad 55,299 -9.0% (33,993+16,620+4,686) Lexus IS/RC 53,320 +52.3% (51,358+1,922) Infiniti Q50/Q60 44,639 (36,899+7,740) +61.6% - note the increases is offset by -48.5% decline in Q40 due to model name change Lincoln MKZ 34,009 +5.1% Cadillac ATS 29,890 -22.0% Acura TL/TLX 29,743 +22.3% (10,616+19,127) - increase is offset by decline in TSX Volvo S60/V60 25,447 +9.6% (20,457+4,990) - all the increases are driven by addition of V60 as the S60 sales fell by 12% Infiniti Q40/G37 15,590 -48.5% Acura TSX 6,287 -64.0% I added the % change to illustrate the problem. The "big picture" here is BMW and Lexus continue to dominate. MKZ outsold ATS... by a significant margin. ATS has the biggest % decline that was not model name change related. Subcompact Luxury Car Sales 2014 Mercedes CLA-Class 27,365 +93.9% Audi A3 22,250 +2,496.3% - the % increase is not a typo :punched: Acura ILX 17,854 -12.6% Lexus CT 17,673 +17.3% BMW 1/2 Series 7,220 +1.7% This is the segment that de Nysschen wants to enter with a RWD product based on the next generation Alpha platform. I think even BMW would say "good luck with that". Mark my words... the subcompact Cadillac will be FWD. Edited January 21, 2015 by bzcat Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted January 21, 2015 Share Posted January 21, 2015 OTOH, I think it's a bit odd for a manufacturer to insist on RWD and 'driver's cars' and then limit V8s to a very narrow segment of high priced specialty cars (at least in the CTS. ATS is less of an issue). Of course, CAFE might be a factor---GM's V8s are either efficient or powerful. Quote Link to comment Share on other sites More sharing options...
bzcat Posted January 21, 2015 Share Posted January 21, 2015 (edited) OTOH, I think it's a bit odd for a manufacturer to insist on RWD and 'driver's cars' and then limit V8s to a very narrow segment of high priced specialty cars (at least in the CTS. ATS is less of an issue). Of course, CAFE might be a factor---GM's V8s are either efficient or powerful. I think CAFE plays only a minor role. The likely culprit is the market itself... The midsize luxury car segment is totally moving towards smaller engines (at a very rapid pace I may add) and Cadillac is right to not expand significant sums to certify such a powertrain option that may account for 3 or 4% of additional sales. GM doesn't need to lose money on 2,000 or so CTS V8 it may sell a year to help offset the development cost of the LS V8 program... they have plenty of volume already from pickup trucks to Corvette etc to carry the load. BMW and Mercedes have a completely different calculations... they know going in that they are not going to meet CAFE so the fines are baked into their business model. And once they determined that they are doing a V8 due to needs from high performance models, SUVs and fullsize sedan etc. additional volume at midsize sedan can and do help offset the cost of powertrain development. The business case for CTS V8 might have been different had the CT6 large sedan been approved earlier but that was during the bankruptcy days and we know what happened so no need to re-litigate it. Safe to say that CTS V8 was probably evaluated and logically rejected on those basis. Edited January 21, 2015 by bzcat Quote Link to comment Share on other sites More sharing options...
jpd80 Posted January 21, 2015 Author Share Posted January 21, 2015 (edited) I think CAFE plays only a minor role. The likely culprit is the market itself... The midsize luxury car segment is totally moving towards smaller engines (at a very rapid pace I may add) and Cadillac is right to not expand significant sums to certify such a powertrain option that may account for 3 or 4% of additional sales. GM doesn't need to lose money on 2,000 or so CTS V8 it may sell a year to help offset the development cost of the LS V8 program... they have plenty of volume already from pickup trucks to Corvette etc to carry the load. BMW and Mercedes have a completely different calculations... they know going in that they are not going to meet CAFE so the fines are baked into their business model. And once they determined that they are doing a V8 due to needs from high performance models, SUVs and fullsize sedan etc. additional volume at midsize sedan can and do help offset the cost of powertrain development. The business case for CTS V8 might have been different had the CT6 large sedan been approved earlier but that was during the bankruptcy days and we know what happened so no need to re-litigate it. Safe to say that CTS V8 was probably evaluated and logically rejected on those basis. I wonder if that was the same logic that determined premium pricing for CTS would not affect sales and production, the 64K CTS-V in Sigma will now cost $80K in Alpha while the former $64K slot is filled bya TTV6... Quite honestly, the cost of a 6.2 in CTS is peanuts compared to the potential to draw buyers graduating from other GM brands or maybe that the image problem Cadillac wants to stop - maybe they don't want to attract what they consider "low brow" customers... Also, the point regarding aggressive leasing is a good one, much of the luxury market swings on leasing numbers that "work" for buyers and if cadillac cannot match aggressive leases from BMW and MB, then no wonder they are struggling This could be a battle that needs to be fought on two fronts, being able to lease aggressively and looking closer at what vehicles buyers want, the ones that pay the bills and justify input costs, not just the ones that improve your company's image.... Edited January 21, 2015 by jpd80 Quote Link to comment Share on other sites More sharing options...
akirby Posted January 21, 2015 Share Posted January 21, 2015 How many buyers looking at a BMW or Mercedes even consider a Cadillac in the first place? Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.