Moving to New York Won't Help Cadillac

Cars and Drivers

Published: September 24, 2014 6:47 am

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General Motors Co.’s (GM) Cadillac unit will move its headquarters to New York City. The relocation will do nothing to help the brand’s faltering sales. It has too much competition from the Big Four luxury brands: BMW, Mercedes, Lexus and Audi.

Ford Motor Co. (NYSE: F) broke off its Lincoln division, which is now called the Lincoln Motor Company. It is another example of how separating a division into what appears to be an independent unit cannot resurrect a dying brand.

America’s number one car company announced:

As part of the continued expansion of Cadillac, General Motors today announced a strategic realignment that will establish the flagship brand as a separate business unit. In addition, the new Cadillac organization will expand to New York with a new global headquarters opening in 2015.

The realignment affirms Cadillac’s importance to GM’s strategy. Creating a new Cadillac business unit enables it to pursue growing opportunities in the luxury automotive market with more focus and clarity.

ALSO READ: Why Is Ford Discounting the F-Series?

One of Cadillac’s problems is that it has too few models that go head-to-head with the luxury leaders. It has made a vague announcement about releasing a high-end car. Presumably, this car will compete with the BMW 7 Series, Mercedes S-Class, Audi A8 and the Lexus LS. The popularity of those cars will block Cadillac out of the top end of the market.

In August, Mercedes sold 28,958 vehicles, up 10.7% year-over-year. BMW sold 27,214, or up 11%, and Audi sold 17,101, up 22.1%. Cadillac sold 16,650, down 17.8%. Sales of its very modest selling Escalade SUV rose, but overall sales of all its car models fell.

Cadillac can move to New York City, but the decision will not alter its results. Only new models and a major change of heart among luxury car buyers can do that.

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