Nearly everyone in the country knows that GM has recalled more cars than it makes in a year, so far in 2014. The count has moved above 26 million. Some of the recalls will cost GM as much as hundreds of millions of dollars in liability suit claims and repairs. The Cadillac recall does not rise to the level of those challenges, but it will be one more bullet to the way the car buying public views GM.
More specially, Cadillac is in the midst of a major push to catch Toyota Motor Corp.’s (NYSE: TM) Lexus brand, Audi, BMW and Mercedes at the top of the luxury car ladder. The four have tenaciously held their lead most years since Lexus was introduced in 1989. Among many drivers, Cadillac is still considered a car for older buyers. A recent study by IHS reported that Cadillac buyers were among the oldest buyers of all luxury cars.
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Whatever the cause, Cadillac sales have stumbled, despite the introduction of new models like the ATS. In August, Cadillac sales fell 18% compared to the same month a year ago. Year to date, sales were down 5%. Except for sales of its Escalade SUV, sales of all its other models dropped in August.
Cadillac hopes it can restart sales with new models. It will launch a “top of the line” model soon. However, the top four luxury manufacturers release new and upgraded models every year, which likely negates any advantage new Cadillacs will have.
GM recently named Johan de Nysschen as head of Cadillac. The choice was odd to the extent that his former job was as head of Nissan’s troubled Infiniti luxury division. But, if he can turn around Cadillac, he will become a darling in the auto industry.
Recalls may seem benign when no one has been injured. However, Cadillac cannot suffer new blows to its image, no matter how modest they are
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