No. 757,
July 23, 2014

About The Autoextremist

What do you do when when you've been immersed in all things automotive since before you took your first steps? When you're the scion of an automotive family in an automotive town in its very own automotive universe? When you've forgotten more about cars and motorsports and everything and everyone involved in the business than most people will ever know? When cars aren't just in your blood, but also in your bones and your brain and the very air you breathe? If you're Peter M. De Lorenzo, you ramp it up a bit further. National commentator, industry consultant and author (as well as former superstar ad man), De Lorenzo's daily (and nightly) focus for the past 15 years has been Autoextremist.com, a weekly Internet magazine devoted to news, commentary and analysis of the auto industry and the business of motorsports. Translation: De Lorenzo likes to tell the truth about what's really going on behind the scenes in the car business. And sometimes, things get ugly. Real ugly. But he is as passionate with his praise as he is with his critiques, and Autoextremist has become a weekly "must read" for leading professionals in all industries. De Lorenzo is considered to be one of the most influential voices commenting on the business today. It's the very definition of a high-octane life. And it's what fuels De Lorenzo to keep the pedal down - hard. He won't stop because he can't stop. A bit tired, perhaps? No way. De Lorenzo is one of the most untired people we know.

De Lorenzo's latest book is Witch Hunt (Octane Press  witchhuntbook.com). It is available on Amazon in both hardcover and Kindle formats, as well as on iBookstore. De Lorenzo is also the author of The United States of Toyota.

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The Autoextremist - Rants


Saturday
Jul122014

An excellent move for Cadillac. But...

By Peter M. De Lorenzo

Detroit.
The news that GM is bringing in Johan de Nysschen to run Cadillac qualifies as a big deal in this business. It's great for GM and even better for Cadillac, a truly excellent - and unexpected - move by the brain trust down at the Silver Silos.

Johan de Nysschen is not only a seasoned pro with an outstanding track record, he's simply one of the brightest minds in this business. His most recent stint at Infiniti is not why GM went after him, because the Infiniti assignment turned into a relentless slog for de Nysschen punctuated by the endless quagmire that defines the Nissan bureaucracy as writ large by Carlos Ghosn. No, the real reason GM went after him was because of his stellar performance at Audi of America, where he literally pulled VW's luxury-performance division up by its lapels and willed it to greatness, but more on that later.

de Nysschen's push to take Infiniti to the big leagues was met with resistance every inch of the way, because the legendary Nissan bureaucracy - and the ponderous "Nissan Way" of doing things - put paid to the notion that the powers that be at Nissan were truly ready to make the commitment that it would take to pull Infiniti up from its second-tier status to become the Japanese Audi.

And de Nysschen struggled mightily with that reality for two long years, pushing, cajoling, threatening and pushing some more, to no avail. He pushed Infiniti to garner some genuine performance credentials, because Nissan's luxury division was just waffling in the breeze of indecision. He aligned Infiniti with the Red Bull Racing Formula 1 team and signed its star driver and multi-World Champion Sebastian Vettel in an attempt at jump-starting the brand's street cred. And even though it was too early to tell if it was going to work over the long run, Infiniti started to move the needle at least a little.

But it was going to be a long hard road, easily a decade before Infiniti would start seeing results in the marketplace, that's how far afield the brand is from being in the thick of the fight. de Nysschen tried to get the Nissan bureaucracy to understand what they were up against and he kept bumping heads with the reality that the company was not only not ready, they didn't have the will to succeed. The Nissan bureaucracy believed it could kinda-sorta do enough to make Infiniti a player, but it wouldn't be nearly enough and it just wasn't going to play out that way and de Nysschen knew it.

Infiniti needed product and all de Nysschen got from the Nissan hierarchy were excuses and reasons for platform and product delays, and he then came to grips with the ugly reality that the one thing Infiniti desperately needed - a genuine, dedicated product cadence - was not on the horizon, at least not enough to make a difference. And all of this played into de Nysschen's thinking when GM came calling for its Cadillac brand.

So that's the back story.

The reality for Cadillac in some respects was even uglier. Here was a brand that had upwards of $10 billion (at least) spent on it over the last decade and change, with definitive hits and enough misses to keep the powers that be up nights, tossing and turning over the fact that for all of the money spent on GM's luxury division the results just weren't there, at least not to the degree that was expected, or needed, for that matter.

The performance V-Series stuff was dazzling and the fanboy car magazine accolades were great, but at the end of the day Cadillac sold Escalades while the rest of the product portfolio lurched in fits and starts, depending on the apportionment of marketing attention and money. For example? Cadillac put an all-hands-on-deck push to make the ATS, its BMW 3 Series fighter, a hit, which it was - at least for a while - but in doing so the rest of its car lineup languished in the market. Then, when it came time to push its outstanding new CTS in the market, the ATS fell off of the table completely.

To make matters worse, GM marketing executives got ultra-aggressive with Cadillac pricing, misinterpreting the fanboy accolades and genuinely good product reviews as permission to charge BMW prices - on the nose - for its cars, which was a complete and utter disaster at the dealer level. Why? Even though GM marketers believed they should be able to charge BMW prices for its cars, which is somewhat understandable, the Cadillac image in the real world wasn't aligned with consumer perceptions, which generally pegged Cadillac as doing interesting stuff, but not interesting enough to actually go check one out. And when consumers actually made the effort to go to a Cadillac dealership, they were too often disappointed if not flat-out appalled by the less-than-luxury buying experience they encountered.

And the fact that Cadillac hadn't established the kind of bulletproof residual values that BMW had been able to do over time meant that Cadillacs just didn't lease all that well when compared to the German road stars, which made matters even worse. Which is why, at this very point in time, the Cadillac ATS and CTS are floundering on dealer lots, waiting for more cash to be put on their hoods to get sales moving.

So this is what Johan de Nysschen is walking in to.

To add to all of this, Cadillac has been operating in limbo over the last couple of years because Dan Akerson crippled GM's luxury division with the disastrous appointment of "Amway Bob" Ferguson, GM's chief lobbyist, as the Cadillac brand leader. With no credentials other than the fact that Captain Queeg thought Ferguson was a smart guy and wasn't part of GM's "old school" establishment, it proved to be a disastrous move.

But with the onset of the ignition interlock recall mess, Ferguson has been rightly doing his thing back in Washington - which is what he's eminently qualified to do - since the beginning of the year, and that has left Cadillac plainly rudderless in the interim.

So the move to get Johan de Nysschen to make some sense of the Cadillac situation is a master stroke, and making him an Executive Vice President of the company and the definitive brand leader for GM's luxury division underscores how serious the situation is, and how serious the GM power structure is serious about finally fixing Cadillac. de Nysschen's successful work at Audi has been well-documented, in his product decisions to be sure, but most impressively in the way he molded the Audi dealers into a force to be reckoned with. de Nysschen is another one of those right leaders, at the right time, at the right car company.

But. Yes, there's a "but" attached to this entire plot, because if you've been following along with this column for awhile there's always a "but" that comes into play with any big decision in the automobile business. Especially when it comes to people and the egos attached to them.

I have no doubt that Johan de Nysschen is an inspired pick to lead Cadillac, but, it's the executive he will be reporting to that will make or break this whole deal. Dan Ammann, GM's President and a financial type who has now burnished his car credentials - at least in his mind - by becoming a certified driver at GM's renowned Milford Road Course at the GM Proving Grounds, thinks he knows everything there is to know about this business, and he's hungry to be GM's next Chairman to boot.

That's all well and good, but GM has a history of financial types who have assumed instant gravitas about the business even though the only thing they have a gut feeling for are the numbers, and little else. As a matter of fact GM history is littered with financial types who did deep damage to the company because they thought they had it goin' on and all figured out.

Dan Ammann insists he isn't one of those but he has given no indication that he isn't, other than the fact he gets to pound around the MRC when he feels like it and wears that on his sleeve as proof of his official "car guy" credentials. The problem in all of this is that Johan de Nysschen has forgotten more about this business than Dan Ammann will ever know. So you can see where all of this is going.

If GM management is bringing de Nysschen in for all of the right reasons - which they insist is the case - and giving him the wherewithal to do his thing, they will get exactly what they bargained for and then some.

If, on the other hand, Dan Ammann and Co. start weighing in with their "suggestions" or directives and start clashing with de Nysschen's vision for Cadillac, then we'll be right back here having this same discussion about three years from now.

Needless to say, it's the latest in a long line of "we'll see(s)" in this business that will play out in real time right before our eyes.

And that's the High-Octane Truth for this week.