Cadillac's sales targets in Europe look doomed
01-23-07, 12:30 PM
#1
Speaks French in Russian
Thread Starter
Cadillac's sales targets in Europe look doomed
Cadillac's sales targets in Europe look doomed
While Cadillac introduces new models into Europe, industry watchers here are busily slashing their sales forecasts for the General Motors luxury brand.
And the recent launch here in Spain of three new gas-guzzling leviathans suggests that GM's attempt to sell in Europe's premium sector with Cadillacs, Corvette sports cars and Hummers is more of an attempt to sell a few more cars into niche sectors with high margins, rather than a serious attempt to storm the luxury citadel owned jointly by BMW, Mercedes and Audi.
Cadillac's European market entry began with the introduction of the CTS sedan in 2003, but sales were meant to be kick-started into real action in 2006 with the little BLS, the first European diesel in the storied history of the brand. The BLS, built at GM's Saab factory in Trollhattan, Sweden, and based on the Saab 9-3, was designed with Europe in mind. The CTS, and other huge-by-European-standards cars were never going to be more than minor efforts selling in small numbers more as curiosities than serious contenders.
Modest target
Cadillac said from the start that to build its brand in Europe would take time, and it was careful to post modest targets. Instead of using the existing Opel, Vauxhall and Saab network in Europe, GM decided to use a Dutch based company - Cadillac, Corvette and Hummer Europe (CCHE) - and set a modest opening target of 20,000 cars by 2010. But the BLS is stumbling - sales reached about 1,300 in 2006 after the launch in April. Overall Cadillac sales totaled about 3,000 in 2006, up from just over 2,000 in 2005. Although CCHE staunchly stands by its 20,000 by 2010 target, automotive consultancies are crunching their numbers and finding that less than half this is likely.
Walt Madeira, British-based Europe Sales Forecast Manager for CSM Worldwide, believes Cadillac sales will reach between 7,000 and 8,000 by 2010, with about 50 percent accounted for by the BLS. A BLS station wagon is expected to be added in 2007.
Jonathon Poskill, Senior Analyst, Europe, for J.D.Power Automotive Forecasting, has slashed his forecast again. Last year J.D. Power reckoned Cadillac would sell 16,000 vehicles by 2010; now this has been more than halved to between 6,000 and 7,000.
Madeira awaits promised improvements in the Cadillac dealer network, and improvements in brand awareness, or rather a change in the brand's perception, which is still associated with pink behemoths with outrageous clutter like fins and chrome.
Comically inappropriate
The three vehicles that CCHE is currently launching in Europe won't do much to dispel this old image. The Cadillac Escalade, Cadillac SRX and Hummer H3 are almost comically inappropriate gas guzzlers and will be thought of by some political campaign groups in Europe as outrageous and irresponsible examples of conspicuous consumption. None of these three vehicles will be powered by a diesel, a serious omission in Europe where every other car sold is a diesel. The luxury sector is even more diesel conscious and up to 80 percent of sales are diesel. Cadillac says there will be diesels soon, but won't say when. It does promise that in 3 years, all its vehicles will be offered with the ability to use bio-fuels or bio-diesel.
Many European politicians, newspapers and broadcast media have succumbed to extreme environmentalist arguments about global warming and the human influence that may or not be behind climate change. Highly taxed Europeans face yet more massive gasoline taxes, while airlines are also being targeted in apocalyptic terms as destroyers of the planet. DaimlerChrysler AG's chief economist's Van Jolissaint almost summed this up in a recent speech in Detroit at the automobile show.
"Europe seems to take a political position that some people might describe, not me of course, that some people might describe as quasi-hysterical, that the sky is falling: we have to dramatically change the way that we organize society today and forever," Jolissaint said.
No kowtowing from Cadillac
DaimlerChrysler complained Jolissaint's remarks were later mis-represented by a BBC report, making it appear as though the comments represented its position on global warming. DaimlerChrysler says human influence on global warming is not proven, but it nevertheless seeks to produce products which minimize potential impact on the climate.
You can't accuse Cadillac of kowtowing to the European environmental lobby.
The Cadillac Escalade is a huge, gas guzzling SUV with a 6.2 litre V8 engine producing 409 bhp, which consumes an average of 16.2 miles per imperial gallon and 383 grams per kilometre (g/km) of carbon dioxide.
The Cadillac SRX is powered by a 4.6 litre Northstar V8 producing 325 bhp, 16.7 mpg and 396 g/km. The Hummer H3's 3.7 litre in-line 5-cylinder motor produces 244 bhp, 14.5 mpg and 346 g/km.
The European Union, which may introduce mandatory regulations cutting CO2 emissions along the lines of the U.S. Corporate Average Fuel Economy (CAFÉ) rules, is expected to insist on an average of 120 g/km by 2012. The current voluntary target is a fleet-wide 140 g/km by 2008, which is unlikely to be met. A mandatory CO2 regime is likely to mean hefty financial penalties for companies like Cadillac.
CSM Worldwide's Madeira believes that products like the Escalade, SRX and Hummer H3 show Cadillac in Europe is just trying to sell a few more cars at high margins, rather than seeking to maximize sales.
Whopping price
The Escalade is priced at a whopping $92,500, including taxes and import duty, compared with a starting price in the U.S. of close to $55,000 before taxes.
Madeira also believes the sales strategy is wrong.
"They don't have the right products, there is a lack of diesels, and no entry level hatchback like a Golf competitor. (DaimlerChrysler's) Dodge chose to enter the European market with the Caliber with aggressive pricing. Cadillac is still seen as fairly expensive and consumers are unlikely to abandon their BMWs, Mercedes and Audis," said Madeira.
Making the BLS in Europe was also a mistake, according to Madeira, and it isn't different enough.
"It would have made more sense to make the BLS in the U.S., not least because the falling dollar would have made it a better financial opportunity. I see it as offering too little in terms of price and capability (compared with the main competitor, the BMW 3-series)," said Madeira.
J.D.Power's Poskitt was also disappointed by BLS sales.
"We expected the BLS to do better, but it's been significantly lower because they don't have the dealer network. We thought they would go through the GM (Opel, Vauxhall or Saab) network. We didn't expect them to go through a new Dutch network. Our earlier forecast was based on them really pushing the BLS. It's had quite good reviews though, it's well priced and well equipped, but let down by the ride and handling, which is important for Europeans," said Poskitt.
BLS production weak
"The estate (station wagon) coming out later this year will help sales, but looking at the (BLS) production numbers, they are very weak at the moment indicating that they are not ramping up production, so it's not taking off in the way it might have done," said Poskitt.
He felt the latest trio of vehicles wouldn't hit buyers' sweet spots.
"Look at what you can get instead (of an Escalade) - a BMW X5 or Range Rover Sport, and they have diesels. People are now more environmentally aware and these types of vehicles are quite the opposite of what people are looking for. They are the wrong types of vehicles to gain any real volume," Poskitt said.
CSM Worldwide's Madeira agreed, saying the new vehicles were "quite out of sync" for Europeans.
Cadillac has compared its attempt to scale European markets with Lexus, which took 15 years to get to the around 20,000 annual sales. This year Lexus European sales will be around 60,000 and are expected to reach between 90,000 and 100,000 by 2010. These numbers are miniscule compared with by both companies' U.S. sales, which are both currently more than 10 times higher than Cadillac's 20,000 sales target.
Madeira thinks Cadillac might still be successful, if, among other things, it develops products which excite Europeans.
"Given that the car industry is a marathon and not a sprint, Cadillac should look to build slowly but with solid product options for Europeans, which means diesel powered cars which show CO2 awareness and are passionate vehicles for the people who choose to buy the brand.
"For now, Cadillac has started the sales race limping and it's not been very quick off the starting line," said Madeira.
http://www.detnews.com/apps/pbcs.dll...TO02/701230304
While Cadillac introduces new models into Europe, industry watchers here are busily slashing their sales forecasts for the General Motors luxury brand.
And the recent launch here in Spain of three new gas-guzzling leviathans suggests that GM's attempt to sell in Europe's premium sector with Cadillacs, Corvette sports cars and Hummers is more of an attempt to sell a few more cars into niche sectors with high margins, rather than a serious attempt to storm the luxury citadel owned jointly by BMW, Mercedes and Audi.
Cadillac's European market entry began with the introduction of the CTS sedan in 2003, but sales were meant to be kick-started into real action in 2006 with the little BLS, the first European diesel in the storied history of the brand. The BLS, built at GM's Saab factory in Trollhattan, Sweden, and based on the Saab 9-3, was designed with Europe in mind. The CTS, and other huge-by-European-standards cars were never going to be more than minor efforts selling in small numbers more as curiosities than serious contenders.
Modest target
Cadillac said from the start that to build its brand in Europe would take time, and it was careful to post modest targets. Instead of using the existing Opel, Vauxhall and Saab network in Europe, GM decided to use a Dutch based company - Cadillac, Corvette and Hummer Europe (CCHE) - and set a modest opening target of 20,000 cars by 2010. But the BLS is stumbling - sales reached about 1,300 in 2006 after the launch in April. Overall Cadillac sales totaled about 3,000 in 2006, up from just over 2,000 in 2005. Although CCHE staunchly stands by its 20,000 by 2010 target, automotive consultancies are crunching their numbers and finding that less than half this is likely.
Walt Madeira, British-based Europe Sales Forecast Manager for CSM Worldwide, believes Cadillac sales will reach between 7,000 and 8,000 by 2010, with about 50 percent accounted for by the BLS. A BLS station wagon is expected to be added in 2007.
Jonathon Poskill, Senior Analyst, Europe, for J.D.Power Automotive Forecasting, has slashed his forecast again. Last year J.D. Power reckoned Cadillac would sell 16,000 vehicles by 2010; now this has been more than halved to between 6,000 and 7,000.
Madeira awaits promised improvements in the Cadillac dealer network, and improvements in brand awareness, or rather a change in the brand's perception, which is still associated with pink behemoths with outrageous clutter like fins and chrome.
Comically inappropriate
The three vehicles that CCHE is currently launching in Europe won't do much to dispel this old image. The Cadillac Escalade, Cadillac SRX and Hummer H3 are almost comically inappropriate gas guzzlers and will be thought of by some political campaign groups in Europe as outrageous and irresponsible examples of conspicuous consumption. None of these three vehicles will be powered by a diesel, a serious omission in Europe where every other car sold is a diesel. The luxury sector is even more diesel conscious and up to 80 percent of sales are diesel. Cadillac says there will be diesels soon, but won't say when. It does promise that in 3 years, all its vehicles will be offered with the ability to use bio-fuels or bio-diesel.
Many European politicians, newspapers and broadcast media have succumbed to extreme environmentalist arguments about global warming and the human influence that may or not be behind climate change. Highly taxed Europeans face yet more massive gasoline taxes, while airlines are also being targeted in apocalyptic terms as destroyers of the planet. DaimlerChrysler AG's chief economist's Van Jolissaint almost summed this up in a recent speech in Detroit at the automobile show.
"Europe seems to take a political position that some people might describe, not me of course, that some people might describe as quasi-hysterical, that the sky is falling: we have to dramatically change the way that we organize society today and forever," Jolissaint said.
No kowtowing from Cadillac
DaimlerChrysler complained Jolissaint's remarks were later mis-represented by a BBC report, making it appear as though the comments represented its position on global warming. DaimlerChrysler says human influence on global warming is not proven, but it nevertheless seeks to produce products which minimize potential impact on the climate.
You can't accuse Cadillac of kowtowing to the European environmental lobby.
The Cadillac Escalade is a huge, gas guzzling SUV with a 6.2 litre V8 engine producing 409 bhp, which consumes an average of 16.2 miles per imperial gallon and 383 grams per kilometre (g/km) of carbon dioxide.
The Cadillac SRX is powered by a 4.6 litre Northstar V8 producing 325 bhp, 16.7 mpg and 396 g/km. The Hummer H3's 3.7 litre in-line 5-cylinder motor produces 244 bhp, 14.5 mpg and 346 g/km.
The European Union, which may introduce mandatory regulations cutting CO2 emissions along the lines of the U.S. Corporate Average Fuel Economy (CAFÉ) rules, is expected to insist on an average of 120 g/km by 2012. The current voluntary target is a fleet-wide 140 g/km by 2008, which is unlikely to be met. A mandatory CO2 regime is likely to mean hefty financial penalties for companies like Cadillac.
CSM Worldwide's Madeira believes that products like the Escalade, SRX and Hummer H3 show Cadillac in Europe is just trying to sell a few more cars at high margins, rather than seeking to maximize sales.
Whopping price
The Escalade is priced at a whopping $92,500, including taxes and import duty, compared with a starting price in the U.S. of close to $55,000 before taxes.
Madeira also believes the sales strategy is wrong.
"They don't have the right products, there is a lack of diesels, and no entry level hatchback like a Golf competitor. (DaimlerChrysler's) Dodge chose to enter the European market with the Caliber with aggressive pricing. Cadillac is still seen as fairly expensive and consumers are unlikely to abandon their BMWs, Mercedes and Audis," said Madeira.
Making the BLS in Europe was also a mistake, according to Madeira, and it isn't different enough.
"It would have made more sense to make the BLS in the U.S., not least because the falling dollar would have made it a better financial opportunity. I see it as offering too little in terms of price and capability (compared with the main competitor, the BMW 3-series)," said Madeira.
J.D.Power's Poskitt was also disappointed by BLS sales.
"We expected the BLS to do better, but it's been significantly lower because they don't have the dealer network. We thought they would go through the GM (Opel, Vauxhall or Saab) network. We didn't expect them to go through a new Dutch network. Our earlier forecast was based on them really pushing the BLS. It's had quite good reviews though, it's well priced and well equipped, but let down by the ride and handling, which is important for Europeans," said Poskitt.
BLS production weak
"The estate (station wagon) coming out later this year will help sales, but looking at the (BLS) production numbers, they are very weak at the moment indicating that they are not ramping up production, so it's not taking off in the way it might have done," said Poskitt.
He felt the latest trio of vehicles wouldn't hit buyers' sweet spots.
"Look at what you can get instead (of an Escalade) - a BMW X5 or Range Rover Sport, and they have diesels. People are now more environmentally aware and these types of vehicles are quite the opposite of what people are looking for. They are the wrong types of vehicles to gain any real volume," Poskitt said.
CSM Worldwide's Madeira agreed, saying the new vehicles were "quite out of sync" for Europeans.
Cadillac has compared its attempt to scale European markets with Lexus, which took 15 years to get to the around 20,000 annual sales. This year Lexus European sales will be around 60,000 and are expected to reach between 90,000 and 100,000 by 2010. These numbers are miniscule compared with by both companies' U.S. sales, which are both currently more than 10 times higher than Cadillac's 20,000 sales target.
Madeira thinks Cadillac might still be successful, if, among other things, it develops products which excite Europeans.
"Given that the car industry is a marathon and not a sprint, Cadillac should look to build slowly but with solid product options for Europeans, which means diesel powered cars which show CO2 awareness and are passionate vehicles for the people who choose to buy the brand.
"For now, Cadillac has started the sales race limping and it's not been very quick off the starting line," said Madeira.
http://www.detnews.com/apps/pbcs.dll...TO02/701230304
01-23-07, 12:35 PM
#2
Europeans hate American cars in general...
Considering how Top Gears' Jeremy Clark looks at Cadillac (and how he mirrors the generalized European outlook to American cars) [see his review of the CTS-V with this link ], I can only imagine that it'll be a very steep uphill battle to gain European favor...
01-23-07, 01:21 PM
#3
Super Moderator
In Mexico, which is very similar to Mexico in terms of its luxury market (but Acura just got here, no Lexus and Infiniti is 1 vehicle), the moment that BMW and Mercedes and to a lesser extent Audi, bye-bye when Cadillac and Lincoln that from what my uncle told me were what every wealthy person had up to that point.
01-24-07, 08:06 PM
#4
Lexus Champion
Trying to sell a vehicle made in Sweden as a Cadillac is just plain stupid. Cadillac is synonomus with Big American Iron, so why would anyone there want to buy a fake Caddie?? Another example that GM has no frickin' clue as to how to market the grand names in their stable. They deserve what they get.
01-24-07, 08:16 PM
#5
Guest
Posts: n/a
Caddy's and GM's image in Europe is horrible for one. They see the Escalade and H2 as "what is wrong with America" lol....
The BLS, I said it when we had a thread about it, was total B.S. I actually liked the styling but a FWD caddy that is really a Saab??
lmfao
The BLS, I said it when we had a thread about it, was total B.S. I actually liked the styling but a FWD caddy that is really a Saab??
lmfao
01-25-07, 06:56 PM
#6
Any moron with single eye could have seen that BLS will tank in Europe. No offense to anyone, but nobody in Europe likes that styling.
It is just another example of how incompetent GM is.
It is just another example of how incompetent GM is.
01-26-07, 09:00 AM
#7
Lexus Fanatic
Trying to sell a vehicle made in Sweden as a Cadillac is just plain stupid. Cadillac is synonomus with Big American Iron, so why would anyone there want to buy a fake Caddie?? Another example that GM has no frickin' clue as to how to market the grand names in their stable. They deserve what they get.
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