Cadillac's Euro reboot may have implications for US models, sales
#1
Cadillac's Euro reboot may have implications for US models, sales
Firmly on the comeback trail in the US, Cadillac is still trying to get out of the starting blocks in Europe. At the Geneva Motor Show in March, Cadillac' senior execs revealed plans to grow the brand's presence in a luxury market dominated by the big three German marques, Audi, BMW and Mercedes-Benz.
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. "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."
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."
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.
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. "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."
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."
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.
#2
Another advantage for Cadillac is its long heritage and legacy, something that the Japanese brands,
#3
There was a major dark period though starting in the 70's up until recently. They have some impressive products now.
#4
i dont know why are they even talking about goal of 2000 sales... thats hilarious. What is that, 166 cars sold per month in Europe? 20 in Germany, 15 in England, 3 in Spain, etc, etc? lol.
What a bunch of nonsense. Lexus sold 43k in Europe in 2013... while not a lot, 43k is a lot more than 2k goal Cadillac has.
What a bunch of nonsense. Lexus sold 43k in Europe in 2013... while not a lot, 43k is a lot more than 2k goal Cadillac has.
#5
i dont know why are they even talking about goal of 2000 sales... thats hilarious. What is that, 166 cars sold per month in Europe? 20 in Germany, 15 in England, 3 in Spain, etc, etc? lol.
What a bunch of nonsense. Lexus sold 43k in Europe in 2013... while not a lot, 43k is a lot more than 2k goal Cadillac has.
What a bunch of nonsense. Lexus sold 43k in Europe in 2013... while not a lot, 43k is a lot more than 2k goal Cadillac has.
Also consider that Lexus has been in the European market for more than a decade hence they were able to establish a foundation there...............while Cadillac is starting fresh (only launched in EU a few years ago).
Anyways, I wish Cadillac success.
And please, open up more dealerships in Asia (outside of Taiwan and Korea)
#6
i dont know why are they even talking about goal of 2000 sales... thats hilarious. What is that, 166 cars sold per month in Europe? 20 in Germany, 15 in England, 3 in Spain, etc, etc? lol.
What a bunch of nonsense. Lexus sold 43k in Europe in 2013... while not a lot, 43k is a lot more than 2k goal Cadillac has.
What a bunch of nonsense. Lexus sold 43k in Europe in 2013... while not a lot, 43k is a lot more than 2k goal Cadillac has.
Not offering a diesel option is going to kill them in Europe IMO. Really I wouldn't even sell Cadillac there without some sort of diesel option. BMW offers 7 different diesel engines in their 3 series, ranging from 114hp miser to a 309hp/462lb-ft torque hot rod.
IMO on a premium car you should offer at least 2 diesel options, a miser and a performance option. Nobody in Europe is going to take you serious until you have state of the art diesel engines figured out.
#7
Agreed. Even 10 to 20k units would be a decent number to make it worth their while, that would be a reasonable goal for the next couple years.
Not offering a diesel option is going to kill them in Europe IMO. Really I wouldn't even sell Cadillac there without some sort of diesel option. BMW offers 7 different diesel engines in their 3 series, ranging from 114hp miser to a 309hp/462lb-ft torque hot rod.
IMO on a premium car you should offer at least 2 diesel options, a miser and a performance option. Nobody in Europe is going to take you serious until you have state of the art diesel engines figured out.
Not offering a diesel option is going to kill them in Europe IMO. Really I wouldn't even sell Cadillac there without some sort of diesel option. BMW offers 7 different diesel engines in their 3 series, ranging from 114hp miser to a 309hp/462lb-ft torque hot rod.
IMO on a premium car you should offer at least 2 diesel options, a miser and a performance option. Nobody in Europe is going to take you serious until you have state of the art diesel engines figured out.
For one whole year, the only engines they had were 3.7 liter V6 (VQ37VHR) and 5.0 liter V8 (VK50VE). It's no wonder why they old sold less than 1,000 units on its first year in Europe
The 3.0 liter Diesel Engine (V9X) only came in a year after.
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#8
Lexus sales in Europe have increased over the years thanks to its hybrid offerings to hit (or be close to) the coveted CO2 emission standards while being fuel cost friendly. Caddy has the ELR only at this time and if pricing is anything like the US, they will continue to struggle. It will be a slow progress over many years but at least they have the right mind to be realistic and strategic about this.
Hmm, more name changes??? Well, here in N. America we're used to ATS, CTS, XTS, SRX, and Escalade and don't find it that bad. However if they want consistency, they'll have to drop the Escalade name which will have Caddy loyalists screaming. But then again, does anyone one miss "Sedan deVille" or Brougham"
Hmm, more name changes??? Well, here in N. America we're used to ATS, CTS, XTS, SRX, and Escalade and don't find it that bad. However if they want consistency, they'll have to drop the Escalade name which will have Caddy loyalists screaming. But then again, does anyone one miss "Sedan deVille" or Brougham"
#9
Well, for a small player (in the European market), Cadillac has to start from somewhere.
Also consider that Lexus has been in the European market for more than a decade hence they were able to establish a foundation there...............while Cadillac is starting fresh (only launched in EU a few years ago).
Anyways, I wish Cadillac success.
And please, open up more dealerships in Asia (outside of Taiwan and Korea)
Also consider that Lexus has been in the European market for more than a decade hence they were able to establish a foundation there...............while Cadillac is starting fresh (only launched in EU a few years ago).
Anyways, I wish Cadillac success.
And please, open up more dealerships in Asia (outside of Taiwan and Korea)
Lexus is not successful in Europe, especially since most of theirs sales are in Russia. Lexus is sucessful in few countries in Europe. NX might change this for better.
So if Lexus sales are not good enough with 44k, then Caddy and its 2k goal is simply not worth talking about.
p.s. Fun fact - Caddy sold 36 cars in Feb/2014 in Western Europe.
#10
"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.
#11
also - Lexus sales dropped drastically after the crisis hit europe, a lot of it due to the price of fuel almost doubling and nobody buying petrol engines in luxury cars anymore... cars like M3 and M5, as well as 535i and other great petrol engines that were common sight pre-2008, are now impossible to see.
Last year, while much better than in 2009, Lexus sales in Europe are still half of what they were in 2007.
Russian sales help a lot.
Lexus probably has maybe 7-8 markets where they get "serious" sales in complete Europe.
NX will help this a lot, RC will a bit and also so will new turbo engines and 300h models.
Last year, while much better than in 2009, Lexus sales in Europe are still half of what they were in 2007.
Russian sales help a lot.
Lexus probably has maybe 7-8 markets where they get "serious" sales in complete Europe.
NX will help this a lot, RC will a bit and also so will new turbo engines and 300h models.
#12
also - Lexus sales dropped drastically after the crisis hit europe, a lot of it due to the price of fuel almost doubling and nobody buying petrol engines in luxury cars anymore... cars like M3 and M5, as well as 535i and other great petrol engines that were common sight pre-2008, are now impossible to see.
Last year, while much better than in 2009, Lexus sales in Europe are still half of what they were in 2007.
Russian sales help a lot.
Lexus probably has maybe 7-8 markets where they get "serious" sales in complete Europe.
NX will help this a lot, RC will a bit and also so will new turbo engines and 300h models.
Last year, while much better than in 2009, Lexus sales in Europe are still half of what they were in 2007.
Russian sales help a lot.
Lexus probably has maybe 7-8 markets where they get "serious" sales in complete Europe.
NX will help this a lot, RC will a bit and also so will new turbo engines and 300h models.
#13
i dont know why are they even talking about goal of 2000 sales... thats hilarious. What is that, 166 cars sold per month in Europe? 20 in Germany, 15 in England, 3 in Spain, etc, etc? lol.
What a bunch of nonsense. Lexus sold 43k in Europe in 2013... while not a lot, 43k is a lot more than 2k goal Cadillac has.
What a bunch of nonsense. Lexus sold 43k in Europe in 2013... while not a lot, 43k is a lot more than 2k goal Cadillac has.
#14
So what I've gathered from this post is that you think it is "nonsense" that Cadillac is setting a realistic goal given the product it has to offer. When Caddy gets some euro-centric offerings out there (i.e. diesel engines) then I'm sure you'll start to see more ambitious goals. They're just starting out and clearly don't have the product in the pipeline yet to support higher sales.
If you look at their "goals", in 2003 they said they plan 20,000 in Europe, then in 2010 they also had some goals as well... well now they sell 56 per month.
I think this is fluffy PR that means nothing.
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