GM to double new Cadillac models to surpass Lexus

Written by Bloomberg | Updated: Mar 1 2012, 01:00am hrs
General Motors (GM), having regained global sales leadership from Toyota Motor, is planning new Cadillac models to more than double sales and surpass the Japanese automakers Lexus brand as the No. 4 luxury line.

CEO Dan Akerson is pushing the Detroit-based automaker to turn Cadillac into a global player with the scale to better compete with German leaders Bayerische Motoren Werkes BMW, Volkswagens Audi and Daimlers Mercedes-Benz. Within 10 years, GM wants to be solidly in the fourth spot currently held by Lexus.

Cadillac, which peaked more than three decades ago, must choose the right new models to meet Akersons goal, said the person, who asked not to be identified because the plans are private. The US brand must find a way to reach younger buyers than Mitt Romneys wife, who drives two SRX sport-utility vehicles. The median Cadillac customer last year was 63 years old, according to JD Power and Associates.

We are working on more new Cadillacs than at any point in the brands history, Don Butler, GM vice-president for Cadillac marketing, said earlier this month. Were constantly talking about whats the best way to become this global player.

The automaker is weighing whether several vehicle options for Cadillac, Mark Reuss, president of GM North America, said in an interview last month. Executives are considering a sedan larger than the XTS, a sport-utility vehicle smaller than the SRX and a new Escalade on the same vehicle architecture as the popular Buick Enclave, Reuss said.

Its a question of what products theyre offering, said Alan Baum, an independent auto industry analyst based in West Bloomfield, Michigan. When they were offering the Escalades, they were unique products, certainly, but they were also products that had relatively modest demand.

GM spokesman David Caldwell declined to comment on Cadillacs sales goals. GM sold 199,000 Cadillac cars and SUVs last year, including 152,000 in the US, the company said. IHS Automotive estimated that Cadillac finished 2011 as the sixth or seventh best-selling luxury brand in the world behind Volvo and possibly Land Rover.

The world leader is BMW followed by Audi, which overtook Daimler last year, when each brand sold more than 1 million. Lexus finished with an estimated 408,000 sales, more than double Cadillacs 2011 sales, IHS said. Cadillacs best year was 1978, when it sold 350,000 cars.

That peak preceded the birth of Eli Manning, the pro football quarterback who received a Cadillac Escalade hybrid as a prize for being the most valuable player in the 2008 Super Bowl championship game. Manning received a Chevrolet Corvette this month when he won the award again.

Akerson met with his senior leadership team at GMs design dome in Warren, Michigan, in the middle of last year about the future of Cadillac and thats when the 10-year vision for the brand was outlined, a person familiar with the meeting said.

The CTS sedan and SRX have helped improve Cadillac sales and image in recent years. GM will begin selling a large sedan, the XTS, and a small sedan, the ATS, this year to help broaden its lineup. The ATS will be sold in the competitive segment that includes the BMW 3-Series and Mercedes C-Class.

The automaker has also said it will make a plug-in hybrid Cadillac called the ELR, using technology similar to the Chevrolet Volt. The company hasnt said when it will go on sale.

While considering a broader lineup, GMs Reuss said the company needs to make wise choices and doesnt want to add too many models to the brand.

Part of the debate has involved changing the Escalade, which has been designed as a body-on-frame vehicle like a pickup, into a crossover model with a unibody structure to improve the mileage, Reuss said. GMs Lambda platform is the basis of the Buick Enclave, which gets about 19% better mileage than an Escalade, and could be used for the Cadillac model. US fuel-economy requirements for those SUVs and other light trucks start increasing in 2016.

If we were to do that, it would be something not like a Lambda today, but rather something that makes a different statement, Reuss said. It could look bigger than that.

The debate also involves whether Cadillac should make a smaller SUV to compete against BMWs X3, which helped drive the German-brands 13% sales increase in the US to overtake Lexus as the nations top-selling luxury brand last year.