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Rebound Seen for Cadillac Auto Brand - 2003-02-10

Over the past couple of decades, Cadillac has gone from Number One in sales among luxury cars in the United States to an also-ran behind Germany's BMW and Mercedes-Benz and Japan's Lexus. But 2002 saw the beginnings of a turn-around for General Motors' prestige brand.

The Cadillac division saw U.S. sales rise by 16 percent in 2002 over the previous year. The division's general manager, Mark LaNeve, attributes a sizable portion of that gain to the popular Escalade sport utility vehicle and the CTS sports sedan.

"We sold 38,000 [units of CTS during the year], which was 10,000 above expectations, and gained five points of [market] share of that entry-luxury segment, which is now the biggest piece of the luxury market," he said.

The managing director of the California-based consulting firm, Nextrend, Christopher Cedergren, says a basic reason for the turn-around is that Cadillac is no longer wandering without a direction.

"I think, they have finally found the route," he said. "And I think it finally now has begun to take seed with the new products that they're launching. And, basically, I think the reason Cadillac is beginning to show some signs of a rebound is that they're finally beginning to focus on a genuine identity for the brand."

Mr. Cedergren sees Cadillac management narrowing its focus to three important areas.

"Technology, innovation and style - really some of the brand tenets that made them so successful in the past," he said.

Cadillac launches another sport utility vehicle, the SRX, this year. It will be priced in the $40,000-$50,000 range, and will face tough competition.

"That's a luxury utility that will compete in what we call the medium luxury utility part of the market against competitors such as the X5 from BMW, the Acura MDX, the Lexus RX300," Mr. LaNeve said. "It's the fastest growing part of the luxury market, so that product for us, the SRX, is incredibly important."

We asked Mr. LaNeve about the prospects of Cadillac regaining the top spot in U.S. luxury vehicle sales.

"We think a further enhancement of our image and a continued renaissance of our Cadillac lineup into boldly dramatic-styled products that have great performance is more important than an overall relative level of volume," he said.

Nextrend's Christopher Cedergren agrees that being Number One is no big deal.

"It's really frivolous. It doesn't really mean anything," he said. "I think when you design a strategy that's designed to get you to be Number One, or that's your focus, you're going to fail. I think what Cadillac needs to focus on is really to develop a product line that is consistent with what they want the brand to be."

While Cadillac may not yet be able to boast of being "the standard of the world," as it once did, it is working toward that goal.