Cadillac Wants to Split From GM, But Will It Work?
For decades, drivers had to climb an automotive family tree to get to the car they wanted, and in the case of General Motors, there were several branches to grasp before getting to the echelon of its offerings. Car buyers typically started at the bottom, with a GMC or a Chevy, then moved up to high-performance Pontiac somewhere before reaching forty. After that it was on to the Oldsmobile for a few years until the Buick came into the picture, for you were now nearing retirement time and felt that a little luxury would help ease any lower back pain. Then retirement comes, and there is no other place to go but up, with that prized Cadillac waiting for you, as retirement and a gargantuan, luxury sedan somehow always seem to go hand-in-hand.
This was a well thought-out plan by General Motors and is the primary reason why there have been so many offshoots from the Detroit-based company over the years. Back in the days of Don Draper and the Cuban Missile Crisis, affluent people bought a new car every decade or so, and if you had something for them to work toward, that offered a step-up in performance, prestige, or opulence, then chances were quite good that you could make a man a GM guy for life.
But things aren’t so simple anymore, and nowadays it seems like people don’t have as much brand loyalty as they used to when it comes to cars. Even Kia now offers a $67,000 luxury car in order to compete with the most amazing automobiles in BMW, Mercedes, and Cadillac’s line-up. Buyers aren’t interested in climbing the automotive tree; they already have boatloads of spending cash, so don’t be surprised if they want to buy a top-tier luxury car several decades prior to retirement.
Long gone are the Oldsmobile and Pontiac badges, and in their place sits streamlined online buying processes, compact crossovers, iPhone connectivity and media interfacing, courtesy of on-board WiFi. The buyers have changed just as much as the buying process has, and because of this and many other reasons, Cadillac has announced that wishes to split from the mothership because it wants to see “a shift in focus to quality before quantity,” with younger buyers being the target market from here on out.
When Cadillac’s brand chief, Johan de Nysschen, first spoke to Wall Street analysts during a conference in New York, eyebrows were raised when he said that operating separately from General Motors had become one of the ultimate goals for the brand. Sure, Cadillac sales aren’t a rolling giant, but no one expects them to be, for a high-end luxury brand. So in an effort to make itself more of a lone wolf, the former Audi and Infiniti president has been busy distancing the company from its all-powerful parent over the past year, with the most recent shift being the uprooting of all of Cadillac’s executives along with the majority of its marketing and sales team for a fresh start in the SoHo district of New York’s lower Manhattan.
With eyes aimed at the future, de Nysschen plans to have Cadillac report its financial earnings and losses to GM by 2017, at which point he says Cadillac will have “a far higher degree of autonomy and self sufficiency.” He also wants the brand to distinguish itself not just in how its dealerships operate, but in every aspect of the business, with brand recognition and marketing at the top of the priority list. Redesigning dealer-incentive programs is also a huge part of what this new direction entails, making a focus on brand-building instead of sales performance more of a priority, as customers continue to shy away from dealerships in favor of online shopping.
De Nysschen said at the J.P. Morgan Auto Conference that for the time being Cadillac is doing well and continues to make a “very sizable contribution to the overall profit at General Motors,” with the brand selling 263,697 vehicles last year alone — about 3.4% of the global luxury market. However, Cadillac continues to be plagued by an image problem, as well as what de Nysschen calls a “very narrow product portfolio” even though he admits that new offerings won’t arrive until early 2018 or later due to this shift in power.
So until then, Cadillac plans to ramp-up its marketing techniques in the hopes of attracting younger buyers based on the success they saw with the “Dare Greatly” campaign back in February (which de Nysschen says is still “resonating really strongly” with millennials). This demographic is slowly becoming wealthy enough to afford cars of Cadillac’s caliber, and Cadillac plans to sell 500,000 units globally by 2020. If de Nysschen’s “massive product offensive” does indeed come into existence without issue, then half a million luxurious Cadillacs is totally doable based on the number of units they sold last year alone.
However, there’s no telling if Cadillac’s separation from GM will go smoothly. Things could get really nasty in a hurry; lawsuits and copyright laws will be lurking at every twist as the plan unfolds. There’s also GM’s other luxury line: Buick has also been suffering from brand identity issues over the years, and while it’s trying to zero-in on the younger generation of affluent driver, the last thing it needs is a boost in competition from Cadillac, which has been swiping Buick sales for years.
So maybe Buick should take a few pages out of Cadillac’s playbook by throwing supercharged Corvette motors into the mix, offer sportier sedans and crossovers, while vigorously conducting in-depth focus group sessions in order to pinpoint exactly what Millennials would want in a luxury brand. This is a generation that has rallied behind companies like Subaru for its environmental stewardship, opted to go with performance models when analysts think they want economy, and while these buyers want nothing to do with many of the styling ques found in Buick and Cadillac’s badge and grille, they also love vintage models from the 1960s and the branding associated with them. These are all things de Nysschen and his team are taking into consideration over in SoHo as we speak, and if Buick doesn’t want to be left in the dust, it had best up its game if it wants to also “Dare Greatly.”
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