Why Cadillac thinks it needs to succeed in Europe to sell cars elsewhere

[cawimmer430]

Why Cadillac thinks it needs to succeed in Europe to sell cars elsewhere



Ward's Auto has taken an interesting look at the renewed focus General Motors is showing towards Cadillac in Europe. Susan Docherty, president and managing director of Chevrolet and Cadillac in Europe (pictured), says in order for the luxury brand to thrive in China, it first needs to succeed in the old country. The reason? Chinese buyers look to Europe for cues as to what's deemed worthy of the term "luxury." There are hurdles to the plan, however. In addition to the fact that the EU is flooded with high-end nameplates, GM doesn't necessarily have the distribution network in place to put buyers behind the wheel.

Combine that with persistent economic woes and Cadillac's checkered past marred by a lack of diesel engine options and a bankrupt distributor, and the road ahead for the brand looks like less of an uphill climb and more like a straight-up cliff face. But Docherty is optimistic and says she has a plan for the brand. We recommend heading over to Ward's for a closer look at the full read.



Link: http://www.autoblog.com/2013/02/26/why-cadillac-thinks-it-needs-to-succeed-in-europe-to-sell-cars-e/

---------------------------------------------------------------------------------------------------------------------------------


Europe Image-Building Ground for Cadillac's Global Plan
Feb. 25, 2013 James M. Amend | WardsAuto   



"If a luxury brand is successful in Europe, whether (it's) Chanel or Prada, or Mercedes or BMW, people in parts of Asia look to see what Europeans validate as true luxury," GM executive Susan Docherty says.

DETROIT – Susan Docherty, president and managing director of Chevrolet and Cadillac in Europe, says the luxury brand's global aspirations hinge on its success in Europe and claims reuniting Opel with other General Motors brands in the region will save the auto maker millions of dollars annually.

"We have to make Cadillac successful in Europe," she tells WardsAuto in an interview here.

That's because Chinese consumers "validate their luxury experience on what they see from European luxury brands," says Docherty, who was dispatched to Zurich, Switzerland, from General Motors International Operations based in Shanghai where she led sales, marketing and aftersales, to oversee the launch of GM's bookend brands in Europe last year.

GM in 2011 laid out a roadmap for its global operations with Chevrolet as its volume brand and Cadillac as the chief luxury marque. GMC and Buick would function as regional complements.

But whereas Chevrolet arguably hit the ground running after assimilating much of South Korean Daewoo's global product and distribution footprint, a process that began in 2005, Cadillac is starting from scratch in Europe and Asia.

Limited distribution of the GM luxury brand in Europe stalled in 2009, when Kroymans, its local importer, went bankrupt. However, Cadillac's success was in question before the collapse, because the brand lacked the diesel powertrains European car buyers demand. Authenticity of the product also was suspect.

"We've had a number of different strategies over the years," Docherty admits. "We know which ones don't work."

GM re-launched Cadillac Europe in 2010 with the North American-built CTS sedan, CTS sports wagon, CTS coupe, Escalade and hybrid Escalade fullsize SUVs and the SRX midsize cross/utility vehicle.

The SRX now ranks as Cadillac's most-popular vehicle in Europe, and the all-new ATS 2.0L turbo gasoline compact sports sedan joins the lineup this year. Yet, the brand still lacks the diesels it needs to fully compete.

Sales expectations, therefore, remain modest. Last year, Cadillac delivered 2,274 vehicles in Western and Central Europe, including Russia, according to WardsAuto data. GM in the near-term targets about 3,000 units annually from the brand's 37 dealerships.

"The secret recipe for Cadillac in Europe is a diesel powertrain across the lineup, (and) vehicles that are the right size and can compete on (emissions)," Docherty says.

The European Union will move to a fleet carbon-dioxide emissions standard of 95 g/km by 2020. Vehicles not meeting their targets will continue to face steep taxation.

Docherty declines to provide a timetable on the diesel powertrains, although North America will get an oil-burner for the ATS, so it stands to reason Europe would see it first. She also admits the compact ATS narrowly misses the sweet spot for European luxury buyers, suggesting a slightly smaller sedan or compact utility/vehicle should be added.

"As we grow throughout the end of this decade, we have to be looking at products like that to be considered a serious player," Docherty says, which then will translate to success elsewhere in the world, especially in the booming Chinese market where the growth potential for luxury appears limitless.

GM currently sells the Cadillac SLS, CTS line, SRX and Escalade Hybrid in China. Only the SLS is built locally, while the others are imported with steep taxes. Plans call for local production of the XTS sedan to begin later this year, which eventually will supplant the SLS.

GM also is eying local production of the ATS, which will be imported to China in the near term.

"If a luxury brand is successful in Europe, whether that brand is Chanel or Prada, or Mercedes or BMW, people in parts of Asia look to see what Europeans validate as true luxury," says Docherty, who previously held chief marketing and sales positions for GM in Asia and the U.S.

"So we have to get Cadillac rocking and rolling in Europe to get it going in China."

The trick for Chevrolet in Europe, she says, will be acquainting consumers with products beyond Corvette and Camaro. Although neither car sells in volume in the region, their global notoriety make performance a top-of-mind attribute of Chevrolet among consumers.

But most European buyers cite exterior design and value as their reason for purchasing a Chevrolet.

"What they don't know is (the) Spark and Aveo and Cruze and Orlando, and the newest one we're about to launch, (the) Trax," Docherty says. "Not only are we trying to (raise) the opinion of Chevrolet and Cadillac, we've got to increase the overall awareness."

The Chevy Trax cross/utility vehicle, which launches sales this month in South Korea where it is produced, arrives in Europe in the coming weeks to join the popular small SUV segment there, which GM forecasts will grow 15% annually through 2015. It arrives with a 1.7L diesel engine among the three powertrain choices.

"So (GM) is making the commitment to grow Chevrolet by giving us the specific powertrains we need to succeed," Docherty says.

Chevrolet also has a new global marketing message with "Fine New Roads" and major sponsorship with the Manchester United football club. The team's global brand is among the strongest in all of sports. The sponsorship includes the Chevrolet bow-tie emblem on the team's jerseys next year.

Manchester United reaches more fans than any other team in any other sport. A match earlier this year with rival Liverpool netted 550 million viewers, or three times the number of American football fans who watch the Super Bowl.

In the past 18 months, GM has launched 10 new Chevrolet products in Europe, with the brand delivering 401,094 units in Western and Central Europe last year, including Russia, according to WardsAuto data. Market-leader Volkswagen, by comparison, sold 2.08 million units in 2012.

"We're a small player in Europe but with some pretty big ambitions for growth," Docherty says. "We want to play a key role in helping Chevrolet grow globally."

Docherty dismisses the notion efforts to expand Chevrolet and Cadillac sales in Europe might be hindered by the weak economy. After all, she says, auto makers in the region still will deliver an estimated 14.5 million units this year.

"That's still a hell of a big market," she says. "I say to my team that '14 million people are going to be out there buying a car. We just need to get our fair share.'"

Docherty says GM continues to make progress reuniting Opel with other GM brands in Europe. The auto maker broke off Opel from its operations there when it dissolved GM Europe ahead of its U.S. bankruptcy in 2009. The plan was to sell Opel, but GM later changed course and chose to restructure the unit.

Now GM must integrate Opel with its other brands and eliminate duplicate work in areas such as back-office administrative functions and front-office areas such as aftersales. The auto maker also continues to bring its disparate information-technology platforms together, including Daewoo legacy systems dating back to earlier in the previous decade.

"It's worth millions," Docherty says of the potential efficiency gains.



jamend@wardsauto.com


Link: http://wardsauto.com/europe/europe-image-building-ground-cadillac-s-global-plan

[Raza]

If that's the case, why do the Chinese buy Buicks at record pace?  Is Buick secretly really popular in Europe?

[veeman]

If that's the case, why do the Chinese buy Buicks at record pace?  Is Buick secretly really popular in Europe?

i think well to do chinese buy buick, because the german luxury makes are too expensive.  i doubt buick competes with those looking to buy a bmw, mercedes, or audi.

in order for cadillac to crack the market the really rich chinese play in, which are the german luxury makes, they need to demonstrate they can go toe to toe with them; and that means competing successfully in europe.  someone who can afford a german luxury car in china is very very wealthy, unlike in america where you don't necessarily have to be.  in this stratosphere, image means a lot, just like it does everywhere. 

gm needs to thank their stars everyday that their is lingering animosity between the chinese and japanese, otherwise, lexus would have wiped the floor with buick.

[cawimmer430]

If that's the case, why do the Chinese buy Buicks at record pace?  Is Buick secretly really popular in Europe?

Isn't Buick a semi-luxury brand?

Europeans buy Opel cars, which these days are pretty much Euro Buicks. But I think Buick was one of the first American brands to be sold in China and they were popular with the government and the emerging elite classes at the time, which is why Buick enjoys a good reputation in China. Someone correct me if I am wrong.

[Laconian]

I think you are correct. China has special affection for the first mover Western brands.

[cawimmer430]

And I don't think Buicks are compared to BMWs and MBs in China.

[2o6]

And I don't think Buicks are compared to BMWs and MBs in China.

Audi,VW and Buick were the first real brands to China. They are cornerstonea of that market.

[NomisR]

Audi,VW and Buick were the first real brands to China. They are cornerstonea of that market.

Audi's definitely gaining popularity but VW's seems to not be as popular now as is Buicks.  Everyone who can just now afford a car are probably buying a POS Chinese brand, and those who can afford more are not getting an American car.  VW was largely associated with taxis with the VW Santana 2000, so people don't get that, but VW is losing the taxi market to Hyundai too. 

[veeman]

vw is doing quite well in china currently.

january auto sales in china:

http://chinaautoweb.com/2013/02/best-selling-models-in-january/

[Colin]

Here we go again.

Cadillac have had at least 3 completely abortive false starts in Europe in the last few years, and each has been an utter disaster........... unless they offer product that is what Europe wants - which means diesel engines with ultra low CO2 ratings - then they stand no chance. Even then, this may not be enough, as Lexus have found out. Their European sales have dropped to negligible for most of their cars in most European markets. Cadillac also need to produce a car with an interior style that is far closer to the German trio/Jag/Volvo than their current offerings.. then and only then will the lack of dealers become their next problem (fixable given the reach of the network for other GM brands).  Even after all that, dislodging the herd from their current default options will be extremely hard. Maybe simply too hard. 

[TurboDan]

Throw an Opel diesel into the ATS and produce an updated XLR for the upscale market. Problem solved.

[cawimmer430]

I wonder how the SRX can be the most "popular Cadillac model" in Europe. It comes with two thirsty gas engines and no diesel engine option.

But the Cadillac that really needs a diesel is the Escalade. The Hybrid version must get worse mileage than the regular V8 model on the highway thanks to all the extra weight...

[NomisR]

Here we go again.

Cadillac have had at least 3 completely abortive false starts in Europe in the last few years, and each has been an utter disaster........... unless they offer product that is what Europe wants - which means diesel engines with ultra low CO2 ratings - then they stand no chance. Even then, this may not be enough, as Lexus have found out. Their European sales have dropped to negligible for most of their cars in most European markets. Cadillac also need to produce a car with an interior style that is far closer to the German trio/Jag/Volvo than their current offerings.. then and only then will the lack of dealers become their next problem (fixable given the reach of the network for other GM brands).  Even after all that, dislodging the herd from their current default options will be extremely hard. Maybe simply too hard. 

Funny thing is, what European wants is typically not what Chinese people wants as what Chinese wants is more similar to what Americans want.  But they look to what European wants to find what they should buy even if that's not what they want. 

[Laconian]

And I love how Europe is phrased upfront as a means to an end in China. So clearly they don't care about Europe.

[2o6]

China doesn't like Cadillac for similar reasons Europe doesn't. The displacement tax makes Cadillac seriously uncompetitive in the Chinese market. Buick has the market better suited than Cadillac does.

[Colin]

And I love how Europe is phrased upfront as a means to an end in China. So clearly they don't care about Europe.

Population of Europe?

Population of China?

Hence size of potential market?

QED.

[AltinD]

Throw an Opel diesel into the ATS and produce an updated XLR for the upscale market. Problem solved.

XLR? Really?

[CALL_911]

XLR? Really?

+1

[NomisR]

China doesn't like Cadillac for similar reasons Europe doesn't. The displacement tax makes Cadillac seriously uncompetitive in the Chinese market. Buick has the market better suited than Cadillac does.

Well, the people who can afford luxury cars won't really buy Cadillacs because they want to go more upscale.  Displacement taxes isn't really an issue because when I was in China, all the luxury vehicles are high end models, such as S class, 7 series, A7, and all high displacement models.  You don't see a lot of low displacement high end models you see in Europe or entry level models in rest of the world.  It's just brand reputation too. 

[cawimmer430]

Well, the people who can afford luxury cars won't really buy Cadillacs because they want to go more upscale.  Displacement taxes isn't really an issue because when I was in China, all the luxury vehicles are high end models, such as S class, 7 series, A7, and all high displacement models.  You don't see a lot of low displacement high end models you see in Europe or entry level models in rest of the world.  It's just brand reputation too. 

There are special models for the Chinese market like an S280 or a FWD Audi A8 3.0 TFSI.

[NomisR]

There are special models for the Chinese market like an S280 or a FWD Audi A8 3.0 TFSI.

Never seen one..  must be the peasants that are buying those..

[AltinD]

There are special models for the Chinese market like an S280 or a FWD Audi A8 3.0 TFSI.

Those are sold in many markets, even here .... and the S280 has been replaced with the S300 since the facelifted model came oout, not to mention there is a 2.8 A8 or the 730i model by BMW :P