The Myth of the Cadillac Turnaround

The myth of a turnaround of the Cadillac division of General Motors Co. (NYSE: GM) becomes more laughable by the month. The luxury nameplate continues to brag that its new ATS will add significantly to its customer base. However, Cadillac stands well behind luxury leaders BWM and Mercedes, and based on their positions in the market, Cadillac is in deepening trouble.

Cadillac’s sales figure for the period from January to October were 117.017, based on numbers supplied by GM. BMW’s were 212,848, up 12% for the 10 months. Mercedes rose 12% to 215,596. Toyota Motor Corp.’s (NYSE: TM) Lexus and Audi continue to pressure Cadillac as well.

Two of the models in the luxury class continue to garner accolades, at the detriment of others. These are Audi and Lexus, which recently ranked high in the J.D. Power APEAL Study. Lexus also did well in the U.S. Vehicle Dependability Study done by the same firm.

Lexus proved its dominance in the new Consumer Reports survey of car tests and evaluations, in which it was joined at the high end of the list by Audi, Infiniti and BMW.

Cadillac also trailed behind Lexus, and even Lincoln, in the American Customer Satisfaction Index research.

Perhaps the greatest strike against Cadillac, and its future prospects, are the age of its buyers. A recent Polk survey showed that Cadillac buyers, between 2007 and 2011, on average were 57 years of age. In the same survey, Audi owners were 49, Infinit and BMW owners were 50 and Mercedes owns were 52.

Cadillac has been out of the top tier in luxury car sales for years. Now, for a number of reasons, it continues to fall further behind. Some say it is Cadillac’s image as a car for older people. Others, its lack of compelling models, and still others, its reputation as a car that cannot match the marketing appeal of luxury cars and light trucks from Japan and Europe. Maybe it is a combination of these. For whatever reason, Cadillac has been overwhelmed by the top brands in the industry. And, that will not change.

Douglas A. McIntyre