Cadillac's Euro reboot may have implications for US models, sales

[cawimmer430]

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.

    GM President Dan Ammann says he sees "enormous" potential for Cadillac globally.

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.

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."

       Cadillac will not move into the diesel market until the right engine is 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.

    Another advantage for Cadillac is its long heritage and legacy,
    something that the Japanese brands cannot claim.

"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.


Link: http://www.autoblog.com/2014/04/11/cadillac-euro-reboot-implications-us-models-sale/

[Galaxy]

Cracking the German market in particular will be very tough, acknowledges Ellinghaus. "Germans are stubborn and narrow-minded.

Ahh, the perfect PR strategy to insult potential customers! 

[2o6]

I think Cadillac really only has relevance in North America. They refuse to offer an estate car or diesel in their product, and the Chinese have largely been cold on Cadillac styling/ethos (instead, preferring Buick).

[12,000 RPM]

Caddy would be wise to abandon Europe. Wimmer embodies exactly why Caddy will never succeed in Europe. Caddy should focus on places with no nationalistic biases towards/against car brands like the US and China. Europeans would rather pay double for a stripper 320i than a fully loaded ATS 2.0T.

Not to mention, Europe looks to be moving away from cars in the long term.

http://blog.zooma.se/blog/bid/252574/Is-the-European-automotive-industry-approaching-peak-car

[giant_mtb]

I don't understand why they care so much about selling 2,000 cars a year in Europe. Let it go.

[2o6]

I don't understand GM.


They had Chevrolet in Europe, and started giving them halfway decent cars that got pretty good reviews (new Aveo/Sonic, Cruze, etc) designing cars specifically for Europe in mind, even at the detriment of the home market (Malibu), spend a ton of money on ads and sponsoring (world cup), then they PULL OUT OF THE MARKET.


Then they want to try and rehab a marque that has historically been ignored in that market, when they had a semi-successful one not that long ago.

[12,000 RPM]

I don't understand why they care so much about selling 2,000 cars a year in Europe. Let it go.

Same reason Caddy pigeonholed itself into the 3/5/7 brand architecture. They are mistakenly under the impression that Europe and the old German system are the way to luxury success.

Meanwhile, in 2013 Lexus nearly outsold the whole Caddy brand with just the RX and ES. And the Germans have been filling every niche like caulk, responding to the demands and changes of the market, as opposed to the goofy perceptions of analysts and idiots who subscribe to ideas like "halo cars".

Caddy has a good platform and good cars in the ATS and CTS, but their boring slab sides and conventional body styles will be their undoing. They are ~10 years late with these cars and the luxury market is in a totally different place.

[cawimmer430]

Wimmer embodies exactly why Caddy will never succeed in Europe.

Hmmm, let's see.

I live in a major European city where parking spaces are small and where garage spaces are barely big enough to fit an E-Class into.

Which Cadillac could I buy that's both small enough to comfortably live with in a European city, but also big enough inside to haul around all my gear? Where's the Cadillac 1-Series?

[2o6]

Hmmm, let's see.

I live in a major European city where parking spaces are small and where garage spaces are barely big enough to fit an E-Class into.

Which Cadillac could I buy that's both small enough to comfortably live with in a European city, but also big enough inside to haul around all my gear? Where's the Cadillac 1-Series?

Isn't the best selling BMW in your market actually the 3-series? And not counting MINI, BMW doesn't make a car smaller than the 1-series, which in itself really isn't that small.

[cawimmer430]

Isn't the best selling BMW in your market actually the 3-series? And not counting MINI, BMW doesn't make a car smaller than the 1-series, which in itself really isn't that small.

Yeah, the 3-Series slightly outsells the 1-Series from what I recall.

The 1-Series' isn't that small of car, true, but it's small enough to comfortably live with in the city. However, there are some parking garages here in Munich where you'll have a tough time parking a relatively small and compact car like the 1-Series since they're so narrow and cramped. Many parking garages and their parking spaces here are from the '50s, '60s and '70s - from a time when European cars were significantly smaller than they are now. The cars have grown in size, the parking spaces remain the same... 

[12,000 RPM]

Hmmm, let's see.

I live in a major European city where parking spaces are small and where garage spaces are barely big enough to fit an E-Class into.

Which Cadillac could I buy that's both small enough to comfortably live with in a European city, but also big enough inside to haul around all my gear? Where's the Cadillac 1-Series?

Even if Caddy made a 1 series size car I don't know that you or other Germans would buy them over Golfs and 1s. Not to mention the 1 is pretty much the worst small car space wise. You could have got a Prius or Auris or something instead.

Just like Americans like V8s and SUVs Europeans like European brands. There is no way for outsiders to overcome that.

[mzziaz]

Even if Caddy made a 1 series size car I don't know that you or other Germans would buy them over Golfs and 1s. Not to mention the 1 is pretty much the worst small car space wise. You could have got a Prius or Auris or something instead.

Just like Americans like V8s and SUVs Europeans like European brands. There is no way for outsiders to overcome that.

Both Japanese and Korean cars sell very well in Europe. The market isn't as nationalistic as you paint it to be.

[MX793]

Both Japanese and Korean cars sell very well in Europe. The market isn't as nationalistic as you paint it to be.

Depends on the segment.  Economy/mainstream cars, Europeans are fairly open to non-European marques.  Luxury/Premium segment cars?  Europeans like European cars.

[mzziaz]

Depends on the segment.  Economy/mainstream cars, Europeans are fairly open to non-European marques.  Luxury/Premium segment cars?  Europeans like European cars.

Well, it is kind go hard to know, since the non euro offerings have been so uncompetetive. Remember that even the value proposition that Caddy usually have in the US market disappears here. After WW2 all the way through the 60s, US brands were among the top dogs and highly sought after.

[Galaxy]

Depends on the segment.  Economy/mainstream cars, Europeans are fairly open to non-European marques.  Luxury/Premium segment cars?  Europeans like European cars.

Luxury/Premium segment is something the european makes do quite well though.

[12,000 RPM]

Both Japanese and Korean cars sell very well in Europe. The market isn't as nationalistic as you paint it to be.

I didn't say they don't sell at all. But Europeans prefer European cars to the point that the Asians/Americans looking to bank on expanding in that region should def reconsider. Especially in the luxury segment, where pretty much every Asian and American attempt has ended in failure.

[MX793]

Luxury/Premium segment is something the european makes do quite well though.

True enough.  It's also true that the typical Euro "premium" segment buyer would rather have a stripped BMW 320i with cloth seats than a Lexus IS250 with lots of bells and whistles for the same price.

[2o6]

True enough.  It's also true that the typical Euro "premium" segment buyer would rather have a stripped BMW 320i with cloth seats than a Lexus IS250 with lots of bells and whistles for the same price.

I don't think they're priced identically

[mzziaz]

True enough.  It's also true that the typical Euro "premium" segment buyer would rather have a stripped BMW 320i with cloth seats than a Lexus IS250 with lots of bells and whistles for the same price.

Methinks the typical Euro buyer would opt for the 320d, which is why Lexus is struggling. Perhaps they'll do better with the new hybrids, though.

[Laconian]

Why doesn't Cadillac have "the right engine"? Use a diesel from Opel. What the hell's so complicated?

[12,000 RPM]

I feel like diesel is falling out of favor in Europe.

Bottom line, GM could build the perfect car for Europe, and it would still get outsold 100:1 by a Golf or 3 series. Brands >> *

[Madman]

Unless Cadillac intends to roll out a class-competitive low emission diesel, European sales will be virtually nonexistent.

Why doesn't Cadillac have "the right engine"? Use a diesel from Opel. What the hell's so complicated?

Lexus tried that trick by sticking the Toyota Avensis diesel engine into the old IS to make an IS220d.  It didn't work.  The engine just wasn't refined enough for this class and the lack of an automatic transmission option didn't help, either.  Yep, you heard that right.  Even Europeans shopping for a premium sector car want automatics these days.

[mzziaz]

I feel like diesel is falling out of favor in Europe.

Bottom line, GM could build the perfect car for Europe, and it would still get outsold 100:1 by a Golf or 3 series. Brands >> *

GM already sells more Astras than VW sells Golfs in the UK, you idiot.

[AltinD]

GM already sells more Astras than VW sells Golfs in the UK, you idiot.

He said Europe, not UK, you brevik. 

[12,000 RPM]

GM already sells more Astras than VW sells Golfs in the UK, you idiot.

Was that really necessary?

And when did the UK become Europe?

[GoCougs]

GM already sells more Astras than VW sells Golfs in the UK, you idiot.

Trying too hard.

[Laconian]

What's the spread between high end and low end diesels? It seems to me that four-cylinders can only be made so refined.

[mzziaz]

Was that really necessary?

And when did the UK become Europe?

Sorry, but you are so blatantly wrong.

[mzziaz]

What's the spread between high end and low end diesels? It seems to me that four-cylinders can only be made so refined.

Refinement is one thing, MPGs and power delivery are other important factors. Older diesels can have a bit of a narrow power band.

[MX793]

GM already sells more Astras than VW sells Golfs in the UK, you idiot.

Vauxhall is a British brand (owned by an American corporation) and the Astra is a European designed and built car.  It's not an import by any stretch.