Cadillac and Lincoln have the cash to reclaim some of their greatness and continue the development of great premium cars and trucks. Both brands can seriously say they have begun a long road back to top tier in their home market. Much more is required globally.
We are right in the middle of an economic growth cycle that is moving at the pace of molasses in winter.
Despite this, sales of Premium Vehicles continue strong, up 11% over last year. It is highly likely that segment sales will get close to the record established in 2007, coming in just shy of 1.6 million units. Premium customers appear to be taking their stock market profits and buying cars.
Fullsize Pickups, emerging markets and China expansion seem to be the most frequently touted rationale for profit improvement. Premium deserves more recognition as a profit producer. Yet, all manufacturers have not produced at the same profit or share pace.
The trend over the past two decades is quite clear. European and Asian premium marques have pushed Cadillac and Lincoln into the back seat when it comes to buying consideration, and they have decimated the Detroit Two’s market share.
Based on lost profit potential, the Detroit Two decline is even more significant than the fall in mainstream share. An in-depth autopsy would reveal marketing failures that would be worthy of pushing Edsel off the case study list.
Back in February 1984, I wrote a piece in Ward’s Auto World magazine projecting European (and Asian) Premium sales growth in the coming decade.
My loosely woven hypothesis was based on customer preferences for purchasing foreign stuff. How could affluent households be fixated on buying imported Droste chocolates, Bally shoes, Bang & Olufsen turntables and Patek Philippe watches suddenly have an appetite for domestic luxury cars?
They wouldn’t. Americans liked pricy imported stuff back in the day; they still do.
In 1984, the Detroit Two (Cadillac and Lincoln) held a significant Premium position, capturing 66% of the segment and 3.3% of the total Light Vehicle Market. Premium sales in this pre-SUV era were dominated by DeVille/Fleetwood, Eldorado, Town Car and. Cadillac, with the tag line “Standard of the World,” was twice the size of Lincoln. Individually, Mercedes, Audi and sold half of Lincoln’s volume.
New premium products launched in that decade were expected to maintain a dominant position for the Detroit 2. However, a series of product and quality failures foiled their optimistic plans.
Some of the Detroit Two share decline was unavoidable. Competitive proliferation alone, and the desire for imports, would have taken away at least half their share.
The balance of the decline was management’s responsibility, and the errors were numerous. Significant slipups: The 1986 front-wheel-drive Eldorado and Seville program, a model change disaster that severely damaged the reputation of Cadillac. (Sales of both models dropped to 42% of 1984 volume); Cimarron, Allante and the FWD Fleetwood piled on and contributed to the deterioration of Cadillac’s stature.
Lincoln’s decision to maintain a rear-wheel-drive premium presence, with a downsized Town Car and, was a significant factor in maintaining some semblance of share for the Detroit Two (Lincoln actually outsold Cadillac in 2000).
For both companies, quality of mainstream models deteriorated and the negative perception bled over to their premium models. Fortunately,’s stumble with the 3-Series 4-door model kept the Detroit Two in the game for the rest of the decade.
In essence, Cadillac and Lincoln downsized their models without upsizing quality, and introduced models that demonstrated a complete disregard for the product, quality and service requirements of the customer.
During that era, I witnessedprogram management leaders who did not acknowledge the impact of additional competitive entries—especially Japanese premium makes. Bottom line: Reputation damaged, and by their own actions reinforced the perception that premium was the purview of foreign makes.
Fast forward 25 years later: Segment volume doubled, three new Asian brands were firmly established as players and the Europeans offered a substantially broader array of offerings. Looks like the Europeans took the advice of Ray Kroc, the founder of McDonalds, when he said, “If I saw a competitor drowning, I’d put a live fire hose in his mouth.”
The blast of new products from all Europeans jumped their combined share to 50%, and drove Detroit Two share to a troublesome 15.4% of the segment.
GM Chairman CEO Rick Wagoner and Vice Chairman Bob Lutz ultimately reversed the negative momentum by improving the product significantly (and made Cadillac a little more global by introducing Cadillac in China, and to a far lesser extent in Europe).
Current Lincoln management,CEO Alan Mulally included, has continued its positive mojo. Detroit Two’s premium sales performance last year appears to have confirmed some of their product development efforts.
Cadillac’s SRX and CTS made the top premium sales list last year. The new Cadillac ATS, XTS and Lincoln MKZ, which finally got its legs, are very good cars—inside and out – and are starting to generate respectable volume. Through April, Detroit Two’s combined segment share is up to 16.3%.
Will either Cadillac or Lincoln reclaim the top mantle in the United States? Doubt it. The competition is just too intense.
As an example, BMW’s 3-Series has made Car & Driver’s 10 Best list for 22 years in a row. It was also the best seller last year. That is a pretty serious track record.
Yet, both Cadillac and Lincoln have the cash to reclaim some of their greatness and continue the development of great premium cars and trucks. Both brands can seriously say they have begun a long road back to top tier in their home market. Much more is required globally.
What’s required to get to a global top tier? Three words: Product, Proliferation and Persistence. Products for younger buyers across the globe – think Germany, Russia and Brazil; Proliferation with more coupes and convertibles (don’t bring back the old names), a midsize SUV, technology innovation and diesel engines. Persistence: This is a mission that will take at least a decade.
Is there a first and second shift working at the Renaissance Center and the Glass House every day to grasp these opportunities? There should be.
Why? Unlike the Europeans, Japanese premium brands have not yet hit their global stride. Further, the Europeans have a leg up on diesel engines and a true global sales footprint.
In North America, the foreign mystique also will not go away overnight. Additionally, the new kids on the block, the Chinese and Indians, are developing a North American knowledge base with Volvo and Jaguar.
The clock is ticking and the competition will keep on coming. (Whoops! Did I mention?) To counterpunch, Detroit says it is bringing more premium models. Please step up the pace.
Warren P. Browne is president of WP Browne Consulting and has extensive experience in the global automobile industry. During the last 20 years, he has held senior executive positions at, including in Brazil, Poland and Russia. He currently serves as an adjunct professor of Economics at Lawrence Technological University and assists WardsAuto forecast partner AutomotiveCompass in developing new business.