July 10, 2009
GM: Government Motors spells the end for Cadillac?
Robert Farago continues his deathwatch for GM, this time conducting a pre-mortem on the never-ending decline and fall of Cadillac.
Cadillac is supposed to be the ne plus ultra of automotive brands: the “standard of the world.” Since its pre-War heyday, Cadillac’s brand management has rivaled Neville Chamberlain’s foreign policy for craven expediency. Cadillac has been a deeply damaged division for decades. In 2007, TTAC’s Paul Niedermeyer charted Cadillac’s decline and fall in gory detail. Since then, the brand’s rep has retreated even further into its last redoubt: the consumer’s imagination.
“We all use the expression ‘the Cadillac of toasters’ or ‘the Cadillac of something else,’” deposed Car and Driver Editor Csaba Csere reassures the Detroit News. “It still means ‘the best of’ to a lot of people.” News flash: my thirty-something appliance guy calls KitchenAid the “Lexus of dishwashers,” without apparent irony. Cadillac’s brand expectations have been unrealized for so long that even the idea of Cadillac as the ultimate object of desire is rapidly disappearing.
This transition reflects reality. At best, Cadillac’s current cars are competitive (CTS, Escalade). At worst, they’re pathetic (STS, DTS, BLS). Somewhere in between, they’re inappropriate (SRX, EXT, forthcoming CTS SportsWagon and Converj plug-in hybrid). None of these Cadillac models are class-leading—never mind world-beating.
Cadillac’s mid-year sales stats tell the tale. At 33,043 units, they’re neck and neck with Acura (32,637), trailing Lexus (44,942) and getting crushed by Mercedes and BMW (65,160 and 75,443 respectively). Meanwhile, Audi’s in hot pursuit (28,347).
Equally disheartening for fans of the Cadillac brand, the automaker’s margins are nowhere near those of its competitors. Cadillac is discounting heavily to move the metal—sending exactly the wrong message about the brand’s inherent “value,” eroding Caddy’s cachet to ever-lower levels. Not to put too fine a point on it, they’re in a death spiral.
There’s only way for Cadillac to recapture faded glory. Cut the crap and build the best. The best no-holds-barred luxury cars. Stylish, no excuses vehicles, meticulously engineered, rock solid. And then they have to create a dealer network that kisses customers’ asses like none before.
Never. Gonna. Happen.
The German automakers sold more than five times as many cars as Cadillac! To Americans! The Japanese are also -- unsurprisingly -- crushing the marque. How far the mighty have fallen.
Farago's explanation for the impossibility of a successful government-run luxury brand can be summed up in one word: Bailout. In his opinion, the public, already unhappy about the billions "invested" in this rescue, simply won't tolerate their money being used to build a world-class, high-end set of wheels they could never afford to own.
And yet, Farago opines, there's no way in hell the Auto Czar will allow Government Motors to give Cadillac the chop, highlighting the myriad problems with the feds applying Big Gummint logic to Big Bidness.
Posted by Mike Lief at July 10, 2009 07:43 AM
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