- Apr 11, 2014
Cadillac's Euro reboot may have implications for US models, sales
Over the past 20 years, the General Motors premium nameplate has tried and failed multiple times to break into the European market. This time around, Cadillac recognizes that progress will be modest at best, and depends on specific changes to models, some of which may impact the brand's US lineup. Planned new sales tactics in Europe may also impact the way Cadillac does business on this side of the pond.
GM President Dan Ammann says he sees "enormous" potential for Cadillac globally.
GM President Dan Ammann says he sees "enormous" potential for Cadillac globally. "Our goal is to take a much more consistent long term approach than what the company used to historically," he tells Autoblog.
For Uwe Ellinghaus, Cadillac chief marketing officer, this means a slow and steady strategy for the European market. Ellinghaus, a former BMW executive, sees annual sales volumes reaching around 2,000 units for the next few years. That, of course, is a drop in the bucket compared to the German luxury brands' sales totals. But being the underdog is not necessarily a bad prospect, says Ellinghaus. Cadillac lacks a properly developed dealer network in Europe, but this gives the brand an opportunity to experiment with a new approach. "I think the future of retail in the automotive industry is without bricks and mortar, at least in comparison to what we do now, which is investing multi-millions in dealerships all over the country," he notes.
"Because of our limited volume, it will be easier to take care of customers on an individual basis. So we see a competitive advantage there and can pioneer a new retail format, with pop-up stores, virtual stores and a flagship store, maybe. If this approach works we then roll it out in rest of the world."
Ellinghaus says with the ATS sedan and coupe and the larger CTS sedan, the brand can easily reach the 2,000-unit mark in Europe. What's needed to progress further is a diesel engine, which is de rigeur on all models offered by the German brands. But Ellinghaus says Cadillac will not move into the diesel market until the right engine is available, which is not for a few years. "Until then we will rely on customers who don't need to buy a car that meets the lowest CO2 emissions limit," he says, "or buyers who do not have company policies that force them to lowest engine variant available."
The fact that some of Cadillac's offerings are high performers, like the current CTS Vsport and forthcoming next-gen CTS-V, means the US brand will be competing with top-end German models from Mercedes-Benz AMG, Audi RS and BMW M variants. "So from a brand-building perspective, I like it," says Ellinghaus, "because you can only build a brand from the top down, never bottom up."
Cadillac will not move into the diesel market until the right engine is available.
In terms of 'green' models, Cadillac only has one offering, the extended-range electric plug-in ELR, but at least that goes on sale in Europe next year.
"One thing is for sure," adds Ellinghaus, "if we say we want to elevate Cadillac to a global premium brand, we can't leave Europe untapped. Our new cars already rival Europe's best and even win some comparison tests. Five years ago, that would have been beyond imagination for any Cadillac. So the product is there, the brand is not yet, but we will build brand image slowly and steadily and not dump cars into the market."
The focus on new retail sales tactics will bring significant changes to dealers in Europe and potentially the US, says Cadillac. Audi and BMW have gone to 'virtual' dealerships in some cities, notes Ellinghaus. "We want to control better not just the transaction prices but the quality of the experience at the dealer customer touch points. This industry has one common Achilles heel, and this is that the dealers do not like automakers to get too far into their business," he says.
"But we have an opportunity to show them that it will be for our mutual benefit if we interfere more, if we do lead management and prospecting to a level that will aid the dealer. We will pioneer this in Europe and if it goes well, we will take it to the US to enhance the customer experience."
Another advantage for Cadillac is its long heritage and legacy, something that the Japanese brands cannot claim.
One Cadillac flaw that bothers Ellinghaus is the brand's confusing naming strategy. "We need to revise our entire nomenclature, especially with our expanding portfiolio. We need something better – not just a copy of German practice. There are better ways to give buyers guidance in terms of hierarchy and size than the current names and acronyms."
Cracking the German market in particular will be very tough, acknowledges Ellinghaus. "Germans are stubborn and narrow-minded. We will not conquer the vast majority of our future sales from Audi, BMW or Mercedes-Benz. We are not German but we are the distinctive face in the crowd. We will appeal to those who don't want what everybody else has in the neighborhood, an Audi A6 or E-Class Mercedes."
"We have a great potential for customers moving up from volume brands into the premium sector."
Another advantage for Cadillac is its long heritage and legacy, something that the Japanese brands, Lexus and Infiniti, cannot claim. While the lack of heritage matters little to US buyers, it appears to be a big issue in Europe, where Lexus has struggled for years to make an impact.
"People crave authenticity, so we have a better chance than the Japanese brands, who have tried to conquer the premium sector in Europe but have failed, regardless of the perfect quality of their cars," says Ellinghaus.