Cadillac Expands to Become Separate Business Unit, Adds New York Headquarters
2014-09-23

NEW YORK – As part of the continued expansion of Cadillac, General Motors today announced a strategic realignment that will establish the flagship brand as a separate business unit. In addition, the new Cadillac organization will expand to New York with a new global headquarters opening in 2015.

The realignment affirms Cadillac's importance to GM's strategy. Creating a new Cadillac business unit enables it to pursue growing opportunities in the luxury automotive market with more focus and clarity.

"With the relentless upward repositioning of successive new-generation Cadillac products, the next logical step is to provide Cadillac more freedom to cultivate the brand in pursuit of further global growth," said GM President Dan Ammann.

"Cadillac's mission is to reinstate the brand to a pre-eminent position among global luxury brands, a bold challenge requiring a distinct and focused new organization," Ammann said. More than a division or brand, Cadillac is becoming a center of excellence for our company."

Johan de Nysschen, who joined Cadillac as its new president in August, will be responsible for the brand's overall operational performance.

Cadillac's leadership council is headed by de Nysschen, and consists of Jim Bunnell, vice president of sales and service; Uwe Ellinghaus, chief marketing officer; David Colasinski, chief financial officer; David Leone, executive chief engineer, and Andrew Smith, executive director of design. Further expansion of the Cadillac leadership team will be announced later.

Expansion Includes New York Headquarters

The plan includes expansion to New York City in the form of a multipurpose brand and event space in conjunction with modern loft offices located in the heart of a city renowned for establishing trends and setting standards for the global luxury market.

While the majority of functions with oversight and responsibility for both global and U.S. operations will be located at the new global headquarters, there will be no change to technical product development teams located in Michigan, nor does the plan impact manufacturing or assembly operations. Cadillac management is reviewing options for which specific staffs will be based in New York and which will remain in current locations in the Detroit-area or elsewhere.

Cadillac has operations in more than 40 countries. The brand's ongoing growth has been driven by an expanded product portfolio, leading to 28 percent global growth in 2013 and an increase of about 10 percent so far this year. Cadillac sales in China have grown 75 percent year to date.

"We are very proud of our Detroit roots and heritage, and the majority of the Cadillac workforce will remain in Michigan," de Nysschen said. "But there is no city in the world where the inhabitants are more immersed in a premium lifestyle than in New York. Establishing our new global headquarters in Soho places Cadillac at the epicenter of sophisticated living. It allows our team to share experiences with premium-brand consumers and develop attitudes in common with our audience."

Company officials thanked New York Gov. Andrew Cuomo for his active support of and involvement in establishing the creation of Cadillac NYC.

"To have an iconic American brand like Cadillac choose Manhattan for its global headquarters is another example that this city is a growing hub of innovation," said U.S. Sen. Chuck Schumer. "New York continues to be a magnet for the best and the brightest companies and workers alike, and as Cadillac continues on its impressive growth trajectory as a global brand, I'm thrilled it will do so based in New York City."

Cadillac has been a leading luxury auto brand since 1902. Today Cadillac is growing globally, driven by an expanding product portfolio featuring distinctive design and technology. More information on Cadillac appears at www.cadillac.com. Cadillac's media website with information, images and video can be found at media.cadillac.com.

General Motors product chief Mark Reuss elaborated Tuesday on Cadillac's move to New York in 2015, saying it will "elevate" the brand and allow it to reach new customers.

"We're going to take it to a place [New York] to change the way that we do business around the brand of Cadillac," Reuss said at an event in Detroit.

About 50 people will set up shop in the trendy neighborhood of Soho, GM confirmed Tuesday. According to Reuss, the roles have not been specified, but it's expected to include sales and marketing staff. A headquarters in the NYC cosmopolitan setting could allow Cadillac to better understand consumers on the coasts, where the brand struggles against Mercedes, BMW, Audi, Lexus and others, Reuss added.

"We're not on the radar of some of the people we'd like to be on," he said.

The move to New York represents a complete reset for Cadillac, and it will be cast as a standalone business unit. Reuss said Cadillac's president, Johan de Nysschen, and chief marketing officer, Uwe Ellinghaus, will re-examine the brand's sales and marketing strategy. Cadillac also named a new vice president of US sales, Jim Bunnell, on Monday.

Despite well-received products, Cadillac sales have struggled this year, dropping 4.7 percent to 114,008 units through August.

"We have to have some new thinking in how we go to market," Reuss said. "The brand perception of what these products align to has been lagging."

The move to New York comes as Cadillac prepares to launch as a new flagship sedan to compete with the Mercedes-Benz S-Class, BMW 7 Series and other large luxury cars. Reuss declined to reveal the name of the new Cadillac on Tuesday.

Ironically, the news of Cadillac's move to New York – and away from Detroit – came on the same day as a conference that discussed Michigan's impact on the auto industry. Reuss, a native of Michigan, said he "really supports" the move, noting Cadillac's engineering and design staff will still be based in his home state, where four Cadillac models are also assembled.

Cadillac will get an all-new V-8 about the end of this decade from a modular engine family that will entail four- and six-cylinder engines as well. If Cadillac’s new president, Johan de Nysschen, has anything to say about it, the V-8 will power a halo or two beyond the large, rear-wheel-drive 2016 Mercedes S-Class competitor coming in late 2015. Maybe even a sports car or two.

In this interview, de Nysschen revealed that Cadillac will file separate financial results within General Motors to help make such new products possible. The South African native enjoyed this kind of luxury at Audi AG, where he most recently served as its chief for the North American market. As a separate AG under the Volkswagen Group umbrella, Audi doesn’t have to mix in its financials with thin-margin VW’s.

Most of de Nysschen’s career was spent at Audi, until he left about two years ago to head up Nissan’s Infiniti premium brand globally out of Hong Kong. He returned to metro Detroit, where his wife is from, in August and spoke with us after just one month with Cadillac.
He also talked about the need for more Cadillac crossovers, including a model between the SRX and Escalade in size, which sounds like a three-row model off the Lambda (Buick Enclave) platform. He confirmed the luxury brand will follow up the ELR plug-in hybrid with a similar model. His discussion about the need to share platforms and powertrains sounds like good news for the long-rumored rear-wheel-drive Buick halo off the new, large Omega platform.

Is there a future for ELR?
I am fascinated by the technology and completely convinced of the longer term potential. I read (a news story) recently claiming there will be no ELR successor. I can tell you that’s complete nonsense. Whether the successor to ELR is exactly a compact two-door coupe is still under evaluation.

Why did GM hire you away from Infiniti?
I would like to think that they recognize that I’ve had 23 years of premium brand experience, which gave me the opportunity to learn from very smart people. I would like to bring the benefit of what I’ve learned and experienced to the table at General Motors … The only thing I’ve done is premium. I have a clear set of principles that I think have stood me in good stead at Audi and also at Infiniti. The principles remain the same. It represents, personally, a wonderful career opportunity to be at the head of an iconic brand such as Cadillac, which has access to the technical and financial resources of an industry titan. I think those two really do need to go hand in hand.

And to be quite candid with you, I probably have 10, 15 years left of my career. And so I am in a hurry. I have a great deal I want to achieve, and I think my starting point at Cadillac is an excellent one. Great brands always take a long time to develop and evolve.

Cadillac still has a perception problem, though.
We need to get the brand restored as a pre-eminent global premium brand. And in such a way that it resonates with and is relevant to the young-minded premium consumer, because the millennials are going to be, by the end of this decade, responsible for buying 50 percent of cars in the premium sector. Part of the job that the team and I have is not so much elevating the brand, but of repositioning it to that point where it enters the consideration set of these young buyers. The brand needs to be rejuvenated, so to speak. And that is part of what success will look like.

The CTS and ATS have exceptional dynamics, and yet Cadillac’s still an American luxury brand. Where do you take that in the future?
I think it would be a complete mistake to imagine, when it comes to premium brands, that the world simply prefers European tastes just because the Germans have been so successful. If we tried to emulate the Germans’ recipe, I doubt we could be more German than the Germans. But what we could do extremely well is also be true to our roots and present modern, contemporary, progressive American luxury. The design language of Art and Science probably needs to evolve further. This is the dialogue I’m having with the (design) team. We have the opportunity at Cadillac with the obvious gaps that I want to discuss with the team. As we define vehicle concepts that have to fill those gaps in our lineup, this gives you the opportunity, as you enter new segments, to refine the design language.

Which gaps?
We only have two sport/utilities. It’s a sad day when the Germans have more crossovers than we. There’s clearly some room for us to do something between SRX and Escalade; I think there’s an opportunity even to do something sub-SRX. We want to grow the Cadillac line as a business, but we also want to improve the quality of the business, to create cars of the product substance [that lends] credibility to the brand. The vehicle dynamics and the craftsmanship and build quality that give us great power in the premium segment costs money. If you raise the product substance from where Cadillac might have been 10 years ago, the entry point into the Cadillac brand in terms of price has got to go up. Otherwise, you go out of business, right? So, I have to improve the quality of the business by higher price points but, at the same time, we want to maintain volume growth of the car line and generate incremental volume by entering new market segments where the brand is not present.

We first need to look for geographic growth, and most of that’s going to come from China … so we can seek to get growth for the existing car lines with the current investment level from those markets, while, in the U.S., we flatline the growth and seek to improve the quality of the business. Overall revenues increase even though sales volumes don’t increase. This is the only way that you can justify the investments into the new product.

But that is not enough. In order to give our dealers in the U.S. volume growth … the dealers have to step up to the plate now and support this evolution of the brand; those investments in facilities and people and processes and so on need to be financed. The way [to satisfy them with volume growth] is by entering these new market segments, which gives them incremental volume opportunity.

Can Cadillac be credible in Western Europe?
Consumers of premium goods, whether they are watches or high-end pens or handbags or automobiles, they tend to be internationally mobile. It’s important that they experience the brand consistently around the world. Louis Vuitton in Tokyo and Paris and New York are the same. It also holds true for automobiles. Not only do you need to position and portray the brand consistently around the world, you also need to be seen to be present. And Europe, in a way, one could argue, is like the spiritual home of the whole concept of premium automobiles. On the other hand [those brands are not going to say,] “Cadillac, come in and take our customers away.” We need to get our portfolio sorted; we need to get our powertrain strategy sorted. Having such a strong focus on China helps us to prepare for what must come, which is an attack on Europe. And I use that word a little bit provocatively, but we must attack Europe from a position of strength.

Beyond the 2016 large sedan, is there room for Cadillac to do a halo car?
There are probably two cars beyond that at least, maybe more. I don’t think [the large sedan] will ultimately represent the pinnacle of Cadillac’s entry into the real top end of aspirational cars. We have room for a car above that, and then these would be very prestigious, very high-performance but luxury cars. I think one also needs some spice in the meal. I’m a performance enthusiast myself. We should also look at one or two sports cars that you buy for emotional reasons, not for practicality, but because they are so sexy and so fun to drive.

How important is it for Cadillac to have V-8 power going forward?
We will have a new engine family that is very highly modular and can be structured for four, six or eight cylinders, not only with performance in mind but it must perform better and be more efficient than the old engines.

How soon will we see this engine family in Cadillac’s lineup?
First we will do smaller capacity engines with the priority on China, and so the eight-cylinder engines will come toward the latter part of this decade, which will give you a hint also for where we are taking the discussion on the expansion of our future product line.

I would guess the V-8 version would be exclusive to Cadillac.
I would want to work very hard to keep the architecture unique for Cadillac. On the other hand, I must also consider that there might be some other important markets and market segments where, if I chose to enter them with a unique Cadillac platform, the cost of entry must be so high that I can’t make it pencil. So then I have a choice -- I either don’t participate, or I see what other assets exist within the General Motors portfolio. And I’ve learned this playbook from the Volkswagen Group. There will be some models that will be absolutely standalone, pure, thoroughbred Cadillac. And then there are some where we must make sure those cars capture the Cadillac values but where it might be OK to share componentry. I don’t want to use a brand name. But if another brand in the stable decides they want to use a Cadillac asset and they are willing to accept the higher cost that’s associated with the asset, that helps us amortize the cost.

We are going to start tracking the financial performance of Cadillac separately from the rest of General Motors. We might do it internally first, but I want to track our business and be accountable for the financial result. When you’re a mainstream brand, then you’ve got to have very stringent criteria for the financial performance of each individual product. In the high-volume business, margins are razor-thin. If you don’t manage your project before the process of conception, you’ll lose your pants. For Cadillac, some cars have to make volume for us, some cars have to make money, and some cars have to make image. And sometimes you are fortunate enough that one car does all of those. But if you were to apply these very stringent financial criteria to individual projects you’ll probably never do the halo cars. The way to measure it properly is to say, “Well, how did they help the pricing power on the rest of the cars?”—that’s their contribution.

Will you chase niches the German luxury brands are establishing?
You run the risk of presenting one customer with the choice of three cars. That’s not a good plan because you’ve incurred development costs for three cars. And Cadillac will definitely not be going down that road.

I think it would be a complete mistake to imagine, when it comes to premium brands, that the world simply prefers European tastes just because the Germans have been so successful. If we tried to emulate the Germans’ recipe, I doubt we could be more German than the Germans. But what we could do extremely well is also be true to our roots and present modern, contemporary, progressive American luxury. The design language of Art and Science probably needs to evolve further. This is the dialogue I’m having with the (design) team. We have the opportunity at Cadillac with the obvious gaps that I want to discuss with the team. As we define vehicle concepts that have to fill those gaps in our lineup, this gives you the opportunity, as you enter new segments, to refine the design language.

There’s clearly some room for us to do something between SRX and Escalade; I think there’s an opportunity even to do something sub-SRX.

(Reuters) - Cadillac's new boss plans a blitz of new products by 2020, from a pure battery-electric car to an ultra-luxury sedan, that he hopes will help resurrect General Motors' (GM.N) struggling premium brand and make it a global powerhouse.

Johan de Nysschen, a former Audi and Infiniti executive who joined GM in August, shared with Reuters some key elements of his plan to revive Cadillac, in an interview last week at the Paris auto show.

The centerpiece of that strategy, confirmed by de Nysschen for the first time, is an expansion of Cadillac's product portfolio, potentially from five to 10 models over the next six years.

South African-born de Nysschen, Cadillac's third boss in two years, has taken over a 112-year-old brand that is being pummeled on its home turf by the German luxury manufacturers, which have blanketed the sector with mainstream and niche models and are outselling their Detroit rival by 2-1 in the U.S. market.

De Nysschen said Cadillac has "just signed off on" a range-topping luxury sedan that will come to the market at the end of the decade and likely will be called CT8 or CT9. He added it would compete head to head with long-wheelbase versions of the BMW 7 Series and Mercedes-Benz S-Class.

He also confirmed that Cadillac will offer a plug-in hybrid version of the new CT6 sedan that is scheduled to arrive in late 2015, and said a pure battery-electric car is part of the plan to expand Cadillac's model range. De Nysschen also said a successor to the slow-selling ELR plug-in hybrid is being developed, but it may not be a two-door coupe like the present model.

De Nysschen is already trying to shake things up. Last month he announced plans to move the brand's headquarters from Detroit to Manhattan, to give it more independence from the corporate parent. He and former BMW executive Uwe Ellinghaus also established a new letters and numbers naming scheme for future models, similar to those used by many overseas luxury brands.

The image gap between Cadillac and its powerful German rivals was underscored by Interbrand's annual top global brands list, released on Thursday, where Daimler's (DAIGn.DE) Mercedes, BMW (BMWG.DE) and Volkswagen's (VOWG_p.DE) Audi ranked 10th, 11th and 45th, respectively.

Cadillac failed to crack the top 100.

GM has labored for years to rebuild Cadillac into a global brand, but it has constantly stumbled in efforts to re-establish Cadillac's stature in its home market. Among the more recent issues confronting de Nysschen and his team: Too many unsold cars on U.S. dealers' lots, yet not nearly enough of the right products to blunt the Germans' assault. Critics have also charged Cadillac lacks a clear focus and cohesive marketing strategy.

Closing the gap with the Germans will take at least two decades, TrueCar (TRUE.O) executive vice president Larry Dominique said: "Cadillac needs to find itself, define the brand and then execute consistently over those 20 years."

Without confirming their existence, de Nysschen strongly hinted that Cadillac is also considering at least two new crossover models, one positioned below the current SRX and one above. Both would compete with similar entries already offered by the Germans. And he alluded to a smaller sedan that could be slotted below the ATS and aimed at the BMW 1 Series and Mercedes CLA.

Industry sources in Detroit said Cadillac has quietly discussed plans for all three models with auto suppliers.

The sources, who asked not to be named, said the small sedan is tentatively scheduled for production in 2018 and could share underpinnings with the redesigned Chevrolet Cruze. The smaller crossover, which is tentatively planned for 2017, also would likely adapt the platform of the next-generation Cruze.

A redesigned SRX mid-size crossover is due in 2016, the sources said, and Cadillac is evaluating a larger, seven-passenger crossover for 2017-2018.

In keeping with Cadillac's new naming scheme, the future crossovers are expected to carry the designation XT to distinguish them from sedans that will be called CT. Each model also will carry a single digit from 1 to 9, de Nysschen said.

He said the brand will have few carryover models in six years, adding, "Probably 90 percent of Cadillacs sold in 2020 are cars that are (still) on the drawing board."

He said Cadillac plans to build the new CT6 sedan and the successor to the SRX in China, where the brand expects to boost sales this year to 75,000 cars from 50,000 in 2013. Much of that growth is likely to come from the ATS sedan, especially a long-wheelbase version that just went into production in Shanghai.

He said growth in Europe would likely not occur before 2020: "We have about five years before we can come to Europe (with) the right products."