By Peter M. De Lorenzo
Detroit. As yet another vaunted Monterey Car Week chugged to its inevitable close with the swells returning to their moneyed enclaves, wallets considerably lighter, and the carpal-tunnel crippled wretches in the media and other assorted hangers-on – plumped, lubricated and still hung-over from the endless largesse ladled upon them by the various manufacturers - struggled to retain even a shred of objectivity, the big takeaway from the week for me is the calculated dismantling of Cadillac happening right before our eyes.
When Johan de Nysschen was handed the reins of the once-iconic American luxury brand more than two years ago as the new president of Global Cadillac, he was given carte blanche by CEO Mary Barra and President Dan “I’m the next Chairman, just watch me” Ammann to “fix” Cadillac once and for all. The smart, prickly and feisty auto industry veteran, who did a noteworthy and highly successful stint running Audi’s U.S. operations and who stopped briefly for a cup of coffee at Infiniti, de Nysschen was handed one of the industry’s plumb assignments, and the measure of freedom he was given was unprecedented.
As de Nysschen set about fixing the long-neglected – and less-glamorous - “behind-the-curtain” dealer issues that had plagued GM’s luxury division for decades, he allowed Uwe Ellinghaus, who was brought over from BMW by the previous regime to be the division’s marketing guru, to run free and unattended, and amuck, as it turns out.
While de Nysschen was giving the dealers the bad news – Translation? Everything they knew to be true and did before was dead wrong, and Johan would show them the New Way into The Light – Ellinghaus hired a Millennial Posse of four, specifically devoid of auto experience to refocus Cadillac marketing on Millennials, who by 2020 will be the dominant consumers by far.
As de Nysschen beat up the dealers and altered their working lives forever, Ellinghaus completely subjugated Cadillac marketing to the whims and wishes of the “fab four” (as a writer at WardsAuto unfortunately dubbed them in a moment of ridiculous absurdity), and the results have been predictable. Despite the initial promise of the “Dare Greatly” image campaign eighteen months ago, Cadillac marketing has been a running joke of missteps, stumbles and juvenile-sounding voiceovers, with most of the effort instead devoted to the Cadillac House in SoHo, an “image space” designed to inject the brand into the hipness fabric of Manhattan (yet another idea ripped right from the Audi marketing playbook).
While this has been going on, of course, Cadillac has only two, count ‘em, products that are actually selling. The majestic Escalade, for some the one vehicle that represents the quintessential stupidity of the SUV craze in this country and for others, the one vehicle that projects exactly the kind of street image and impact that Cadillac should be all about; and the new XT5, which replaced the previous SRX in the portfolio. As for the ATS and CTS, they’re dead in the water, while the leftover XTS appeals to buyers that Cadillac marketers simply don’t care about anymore.
So while de Nysschen blatantly remakes Cadillac into an American Audi (every move he’s made with regard to the dealers has been taken out of the Audi playbook as well), Ellinghaus and his Millennial Posse are directing Cadillac marketing efforts at people who aren’t in the market, at least as of yet.
The ugly reality for Cadillac is that while de Nysschen hammers the dealers and Ellinghaus fumbles the marketing, the real nitty-gritty issue facing Cadillac – the ridiculous pricing regimen that exists with its vehicles at the retail level - has been left unaddressed. When de Nysschen assumed control over Cadillac, he promised that the ongoing absurdities that existed in the pricing of Cadillac models would be addressed. But in fact with the pricing of the CT6, the Cadillac brain trust has doubled down on the problem.
I addressed this in a lengthy response to a reader email, but it bears repeating here. Cadillac cars have been overpriced for years, the hot Escalade SUV – which transacts close to six figures on a regular basis - being an entirely different story. Why? The "old" way of doing things at Cadillac was to price its cars, which are admittedly excellent for the most part, right on the nose with Audi, BMW and Mercedes. The problem with that strategy is that, except for the outstanding "V" machines, the perception "out there" by real world consumers is that Cadillac, as good as the new models are, just isn't worth that kind of money. So, what ends up happening? Cadillac cars get heavily discounted with customer cash and dealer incentives at the retail level, which, surprisingly enough, takes the actual transaction prices down closer to where the cars should have been priced to begin with. How difficult is this for Cadillac operatives to understand?
When the first Lexus luxury sedan arrived here, Toyota executives made the conscious decision to price the car as much as $15,000 less than a comparable BMW or Mercedes, even though it was confirmed later that they were actually losing as much as $15,000 per car by doing so. This is called "taking the long view," which is absolutely anathema in the car business as is practiced here in the Motor City. Toyota operatives understood that they had to earn their way into the luxury big leagues, and it wasn't going to happen overnight. And look where they are today.
So what does the "new" Cadillac pricing model look like? Well, remarkably enough, it looks a lot like the “old” Cadillac pricing model. It’s not uncommon to see the new CT6, which arguably is the best Cadillac sedan ever built, sitting on dealer lots with MSRPs hovering around $80,000. Can you get CT6 models that cost less and that are still decent? Sure, but once you get into the "premium" option groups the CT6 gets very pricey.
What's wrong with this picture? It doesn't really matter how good the new CT6 is if the perception out there in ConsumerVille is that it's not as good as a Audi, BMW, Lexus or Mercedes-Benz. The harsh reality for Cadillac is that consumers should be able to get a loaded CT6, all in, for no more than $65,000.00. And that just isn't possible.
Cadillac operatives blew the whole pricing cadence of the CT6 and now they have the division right back to where it has been operating for the last ten years. And it's truly pathetic. But that's not the end of the story, oh no. This fall a new car will make its debut in the luxury arena in this country and it will be much more dangerous to the CT6 than any of those aforementioned luxury competitors. I predict the Genesis G90 (offered by Hyundai's new luxury division) is going to be priced correctly - meaning it will be geared to hammer the luxury + value equation home for consumers - and it is going to take it to the CT6 with devastating effect. I truly expected more from de Nysschen & Co., but the pricing mistake with the CT6 suggests to me that it's the same as it ever was with GM’s luxury division and that the Cadillac brain trust doesn't get it and apparently never will get it.
With this as background then, it should be said that it might all be a moot point, as de Nysschen’s salvation may be his thinly-disguised Master Plan - one blatantly suggesting that what’s going on in the U.S. ultimately doesn’t matter one bit – that begins with the premise that Cadillac’s profitability and growth will come from China, and that this will be the case for the foreseeable future.
The evidence of de Nysschen’s Master Plan? Cadillac unveiled yet another concept at Pebble Beach last week. After previously unveiling the stunning Ciel roadster (2011) and magnificent Elmiraj coupe (2013) concepts, Cadillac operatives unveiled the Escala Concept, calling it "the next evolution of Cadillac design and previewing the craftsmanship and technology being developed for many future models."
The difference with the Escala concept, according to Cadillac - or as I call it, the “Cadillac A9” - is that it's on a stretched CT6 platform, and it's supposed to be production intent, unlike the Ciel and Elmiraj. (In case you’re keeping score, the CT6 has elements of those aforementioned concepts in the front end so that its projected “face” on the street has presence and majesty in the “new” Cadillac idiom. It’s too bad that the rest of the car, especially from the side and the rear, falls apart and is about as memorable as yesterday’s news.)
“Escala is a concept with two clear objectives,” de Nysschen was quoted before yet another predictable Cadillac press event at Pebble Beach. (In case you missed it, you can read Peter’s blistering assessment of the manufacturers’ annual dance at Pebble Beach in last week’s column –WG)
“First, Escala is a statement of intent for the next iteration of the Cadillac design language, and also technical concepts in development for future Cadillac models. Secondly, Escala builds Cadillac’s aspirational character, signaling the brand’s return to the pinnacle of premium,” said de Nysschen. “Escala is a concept car, but one based upon the unrelenting rise of our product substance,” de Nysschen added. “Depending on the development of market segment for large luxury sedans, Escala is a potential addition to our existing product plan.”
First of all, “pinnacle of premium”? Let’s say that's a stretch by well, any stretch of the imagination. Do you know how many manufacturers have said that at intros of their luxury cars? How about every single one. Oh, and by the way, there are no "ifs," "ands" or "buts" going on here, folks, Cadillac is going to build this car as yet another part of de Nysschen's relentless push to remake GM's luxury division in the spitting image of Audi. And it's aimed right at China, which is where Cadillac operatives go to feel better about themselves.
Cadillac insists that Escala — Spanish for “scale” in case you were wondering, not a new Cadillac restaurant in SoHo — "is designed to be both a driver’s car and an indulgent flagship sedan." (Spanish for "scale"? No, it's the first six letters of ESCALAde. Can't wait for the Cadillac DE, which is Cadillac's "pinnacle of premium" way to say, "DUH" –WG)
At 210.5 inches in overall length, Escala is roughly 6 inches longer than today’s CT6. It seems like the rightful successor to the Ciel and the Elmiraj, at least from the front, but then you get to the side and the rear and you realize that it becomes a blatant copy – at least in spirit - of the design language used on the Audi A7, thus my “Cadillac A9” moniker.
Why is this happening? Why is General Motors Design, which has been on an incredible roll of late, copying a competitor’s product in spirit, or at all for that matter? Why does the Escala look like two different cars separated by the B-pillar? And the two-part answer? 1. Cadillac is now officially becoming “Audi-ized.” And 2. The Chinese market is dictating everything Cadillac does from this point forward.
The Escala concept looks like two cars separated by the B-pillar because that’s exactly what the design brief given to GM designers called for. GM says that Escala features a “dual personality” interior crafted with distinctly different zones: The front is about intensely focused modern technology, while the rear delivers relaxation. “My brief to the designers was to create a car you desperately want to drive, and also one in which you want to be driven,” Andrew Smith, executive director of Cadillac Global Design, said (in other words, it has to work for the “riders” in the Chinese market). “So rather than a single design, this interior consists of two themes. It was an opportunity for our designers to break the rules a little bit, exactly what Cadillac should do from time to time.”
Other than the fact that GM’s “crack” PR team has been out of ideas for years, I’m wondering now why Cadillac operatives even bothered to reveal the concept at Pebble Beach to begin with (except, of course, that they had to fly out auto and “lifestyle” journalists to Pebble Beach so that they’d positively gush over the Escala, which they did in rote regurgitation fashion). Why not just go straight to China and do it there? And here is another pertinent question, why does GM Design bother coming up with elegant names like Ciel, Elmiraj and Escala when the Cadillac brain trust is so enamored with alphanumeric nomenclature? Why not just call the Escala the Cadillac CT7 and be done with it? And how long before de Nysschen orders the removal of the name “Escalade” from its biggest and most profitable seller, in favor of XT10 for conformity's sake?
The de-Americanization of Cadillac is gaining steam under de Nysschen’s tutelage. Given carte blanche by Miss B. and the ubiquitous corporate schemer, Dan I Am, de Nysschen is remaking Cadillac in Audi’s image and the brand is rapidly being de-balled in favor of a kinder, gentler and more milk-toast version of itself for the ride-alongs in China.
Sounds like a recipe for, oh, I don’t know, how does a giant bowl of Not Good sound?
And that’s the High-Octane Truth for this week.
(Peter has more to say about the absurdity of Cadillac’s marketing plan as it pertains to racing in this week’s Fumes. –WG)
The Cadillac Escala Concept.