No. 770,
October 29, 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


Monday
Sep292014

Cadillac swings for the fences, and...

By Peter M. De Lorenzo

Detroit. Editor-in-Chief's Note: It's clear that the news of the moment will continue to swirl around Cadillac for the foreseeable future. Last week I responded to the news of Cadillac embarking on a new - and misguided - nomenclature strategy with a special column, which we've decided to leave up again this week because it's a point that has to be pounded in again... and again. I have been writing for several years now that in order for GM's luxury division to succeed going forward, Cadillac must learn to be Cadillac again, that it's okay for GM's luxury division not to mimic or fall into lockstep with everyone else. The division has gotten part of the way there by alighting on a distinctive design point of view, which is absolutely crucial as a product differentiator in this, the most competitive market in automotive history. But it has taken at least five steps back with this absurd new naming strategy, which does nothing for the brand but park it into MeTooVille, while allowing its fiercest competitor - BMW  - to dictate Cadillac's naming cadence, and that is patently absurd.

If China is going to be the dominant market for decades to come, then fine, hang different names on the cars aimed for the Asia-Pacific market. I get global architecture strategies and economies of scale in manufacturing, but it doesn't always translate with marketing issues, or what's desirable when it comes to the naming of vehicles. Saddling the Cadillacs sold here in this market with that colorless naming strategy is counterproductive at best. Think about what GM Design captured with the Elmiraj concept for a moment. It's an emotionally compelling design statement that reminded everyone of what Cadillac could and should be. I can't tell you how many times I heard hardened and jaded auto journo types muttering out loud, "Now that's a Cadillac" when standing around the Elmiraj in the flesh.

And what does that say? It says to me that Cadillac needs more. No, Cadillac deserves more. Calling a design that will be heavily influenced by the Elmiraj concept the CT6 is a cop-out. Even worse, it suggests to me that the powers that be at Cadillac have so much on their plates that they figured they could fall in lockstep with BMW's historic naming regimen and be done, so that they could move on to more pressing issues. And what are those pressing issues? Well, 132 days of car inventory as of September 1st, two and in some cases three times more than what their direct competitors have. And a dealer body that is used to churning out cars with deep discounts, because they know of no other way to do it.

Johan de Nysschen is out to change the Cadillac mindset from top to bottom, and one of his biggest challenges will be moving Cadillac dealers off of their volume mentality, which has been in place since the 1970s. The "fewer cars available = higher grosses" formula has worked well for Audi, BMW and Mercedes for decades (although they're threatening to blow it now), and de Nysschen is out to slash inventories rather than put more cash on the hood. (Cadillac is spending double on incentives for each car sold as compared to Audi, BMW and Mercedes-Benz in this market. Think about that.) But this strategy is anathema to Cadillac dealers, in fact it doesn't even compute. They want to keep things rolling the way they've always done it, but their life is about to change, and there is going to be a lot of short-term pain before a more "sustainable" strategy, as de Nysschen rightly puts it, can be put in place for the long-term success of the brand.

Automotive News
reported that Mary Barra and Dan Ammann were at the Cadillac dealer meeting in Las Vegas with de Nysschen last week, which suggests that there is no other more pressing issue in the company at this very moment than righting Cadillac. de Nysschen has their full support and he is definitely going to need it. The next two years are going to be painful for Cadillac dealers, and the division as a whole has a very narrow window of opportunity to fortify itself for the long run.

But I can't stress enough that Cadillac must be allowed to be Cadillac. It is one of the great luxury brands in the world, but one in desperate need of nurturing and polishing. That means it needs to go its own way in design, engineering and how it goes about its business.
Yes, having a design point of view is an accomplishment for Cadillac, one that has been hard fought and well-executed. But surrendering to one of its chief competitors when it comes to naming its vehicles is a rote reaction that's just plain nonsensical and stupid. It also means that a complete and intensive reeavaluation/overhaul of the marketing function has to be undertaken. Cadillac marketing has stumbled around in fits and starts for years. For every well-executed TV spot that surfaces, there are three that land like a thud. And advertising a lease deal as your default setting in the market has never been a value-added activity, but Cadillac has been addicted to it and that has to stop too. It might appease the dealers in the short term, but it is long-term brand suicide.

I'm sure I will have plenty more to say about Cadillac in the coming months. Needless to say, the clock is ticking... - PMD

 

The table is set for something special for the movers and shakers charged with the future of Cadillac. They’ve established a compelling design language for the brand all its own, which is no mean feat in this business, especially in this era of “me-too” car design. They’ve introduced one of the most provocative show cars in recent memory, the stunning Elmiraj concept, which is still turning heads and being talked about one year after it was first unveiled to the press in Pebble Beach. And to top it all off, GM has gone out and hired Johan de Nysschen to run the Cadillac division, who for my money, is one of the savviest executives working in this business today.

And then on September 24th, well, things got weird.

Cadillac announced that its new, large, rear-wheel-drive luxury sedan that’s coming at the end of 2015 as a 2016 model, the car that will employ Elmiraj design overtones to make an emphatic statement for the brand so it can compete toe-to-toe in the market with such German road stars as the Audi A8, BMW 7 Series and Mercedes-Benz S-Class, will be called – ta-dah! – the CT6. Not only that, this shift in nomenclature is a foreshadowing of a completely new car naming strategy for Cadillac, which will be rolled out over time with the introduction of each new passenger car model it introduces to the market in the coming years.

To be charitable, the initial reaction to Cadillac’s announcement was tepid. No, let me change that. The initial reaction to the announcement was a mix of puzzlement, outrage and a collective WTF? But after the initial Internet inferno spread by the legions of auto fan boys cooled, at least somewhat, what are we really talking about here?

Let’s review, shall we? Back in ancient times, when a new vision of automobile luxury as writ large by BMW and Mercedes-Benz first started to take hold in this country, knowledgeable consumers flocked to these new German “luxury performance” cars for any number of reasons. They were smaller - almost lithe in comparison to the “luxury” barges offered by the then “Big Three” - they had elegantly simple designs, taut suspensions, driver-oriented cockpits, a responsiveness and composure over the road unlike anything experienced before, and they had a level of fit and finish that shamed what passed for “luxury” in American cars.

And they turned the American automotive luxury segment, as we knew it, upside down overnight. In short order, “longer, lower, wider” gave way to “taut, firm and responsive.” Compared to the American luxury idiom of the day, which projected a cocoon of “country club” luxury from a bygone era complete with white walls, vinyl roofs and pillowed seats, these new German road stars were exotic in stature and presence, and proudly flaunted a completely different point of view.

It was “The Ultimate Driving Machine” for BMW and “Engineered Like No Other Car in the World” for Mercedes-Benz and not surprisingly, consumers took to these automobiles in droves. And it’s a lovefest that continues to this day.

And the resulting reality? Cadillac and Lincoln, the two standard-bearers of American luxury, have never recovered.

Moving on to Cadillac specifically, by the late 90s GM’s luxury standard-bearer was on a downward spiral. Still lost in a fog of Vogue whitewalls and padded vinyl roofs at the dealer level, some of the smartest people in the company at the time realized that things had to change – and in a hurry – or Cadillac would cease to exist.

It was out of that thinking that the “Art and Science” design direction emerged and fast-forwarding to today - after about $6 billion spent over the last sixteen years (give or take a billion) - Cadillac has managed to reinvent itself at least to a point, at least enough to be included in the discussion.

But make no mistake, the division is now at a crossroads. Being in the discussion is one thing, being a serious player with true global reach is another discussion entirely.

Which is where Mary Barra, Dan Ammann, Mark Reuss and now Johan de Nysschen come in. GM’s upper management finds themselves facing the fact that despite billions spent on Cadillac in the modern era (from 1998 forward), Cadillac is still taking two steps forward and three back in everything they do.

Example? Bring out a scintillating CTS and even hotter CTS-V Coupe and follow that up with the excellent ATS. Then blow the whole thing to smithereens by embarking on a ridiculous, nightmarish pricing strategy that has the ATS bumping up against the CTS in the market. Or even worse, keep upgrading the product portfolio to a heightened level of overall excellence, but then shoot yourself in the head with too many piss-poor dealers who still think it’s the 80s. I could go on.

So here we are today. Cadillac has a savvy new leader in de Nysschen who has been given carte blanche to do whatever it takes to make Cadillac the real deal and a global player. The division has a burgeoning product portfolio with an outstanding design point of view that actually threatens to establish a modicum of momentum in the market, providing it gets the proper guidance from here on out, of course. In short it has an opportunity to finally, finally get it goin’ on, without the excuses.

And what does Cadillac do to set the tone for this new era going forward? It announces that its upcoming big sedan will be called – inelegantly, I might add - the CT6. Not only that, this is the first step in an all-new naming strategy for its cars meaning, without too much of a stretch in thought, that the CTS will become the CT5 and the ATS will become the CT3, etc., etc. (And now there’s even renewed hints of an even larger super-luxury Cadillac sedan, which presumably would be called the CT7.)

What does it all mean? First of all, it means that the legacy of Detroit automakers feeling inadequate next to their German luxury competitors (and others who have followed the German luxury car naming cadence) when it comes to nomenclature is alive and well. Cadillac and Lincoln both abandoned storied, evocative, even legendary car names years ago in favor of alphanumeric nomenclature to be more like their German counterparts, figuring that would do the trick with the American consumer while forgetting, of course, that the key ingredient was genuinely excellent product, not a “me-too” naming strategy.

It was wrong-headed thinking then, it is wrong-headed thinking today.

But I bet if you were to go behind the scenes and do a deep-dive with the Cadillac brain trust that you would find that the logic surrounding this new nomenclature would be vigorously defended. Why? One word: China. Cadillac is hell-bent on becoming a global luxury player in order to gain a place at the big boy table, and the only way to do that is to become a rip-roaring success in what is now and forever will be the largest automotive market in the world.

Several years ago I wrote a column about the fact that this industry would be inexorably changed with the emergence of the Chinese automobile market, and in ways we couldn’t even envision yet. Well, guess what? It doesn’t stop at cars and crossovers being designed with more rear seat legroom to cater to Chinese drivers who like to ride or be driven. And it doesn’t stop with Chinese consumer proclivities designed and engineered right into new auto manufacturer platforms from the get-go. It means Cadillac, a car company with a worthy heritage and rich legacy of great names is now pandering to an entirely new audience, one that will be 50 percent larger annually than the U.S. market in no time. And even bigger than that, eventually. We’re supposed to get used to it, but that doesn’t make it any easier to swallow, that’s for sure.

So then, understanding all of that you have to wonder, why would Cadillac deign to put an evocative name on the gorgeous Elmiraj concept – which, by the way, was an homage to the classic Eldorados of yore – when it knowingly was crafting this pathetic homage to nomenclature mediocrity all along? Excellent question, but I don't think anyone at Cadillac would want to answer that.

CTWhatever isn’t a naming strategy, it’s unmitigated bullshit masquerading as a solution, one that conveys a complete lack of vision and is evocative of nothing. To me it suggests that Cadillac operatives are being lazy and taking the path of least resistance. In other words, why bother fighting the good fight when they can generate some generic names that will come off as benign to the Chinese consumer?

Why bother, indeed.

Here we are in the midst of what is allegedly the tipping point for GM’s luxury division, when all the bullshit and the endless fits and starts are supposed to stop, with Cadillac finally ready to launch itself to new heights in the global luxury market, and this is it?

Cadillac is supposed to be swinging for the fences… and all they can do is crush a dribbler down the third baseline?

Unbelievable.

And that’s a special edition of the High-Octane Truth for this week.

(Image courtesy of Cadillac/GM Design)

The Cadillac Elmiraj concept.