MONTICELLO, NY – Staggering sales losses this year atCo.’s Cadillac premium division could be on the cusp of bottoming out with the launch of a pair of new ‘10 models and renewed availability of leasing for customers.
The CTS Sport Wagon and SRX cross/utility vehicle soon will begin appearing in dealer showrooms, while a CTS coupe is slated to enter the marketplace in about six months.
These new models will greatly help expand Cadillac's limited portfolio – especially in comparison with its principal German and Japanese competitors in the luxury segment. Cadillac's leasing business plummeted from a one-time rate of 35%-40% of total sales to the 1%-2% range about a year ago, and GM's luxury division remained without a leasing program until a few weeks ago.
Competing premium brands such as Lexus, Mercedes,and Audi traditionally lease 30%-50% of all vehicles they sell.
Now, Cadillac's leasing rate can rebound thanks to new programs negotiated withAcceptance Corp. and U.S. Bank, the sixth-largest bank in the U.S., says Steve Shannon, executive director-Cadillac marketing.
“We don't need to go back to 35%-40%,” he says. “We would like a leasing rate in the 15%-20% range.”
Cadillac also has been utilizing cash incentives, such as 0% interest for 60 or 72 months, as well as some dealer cash.
Shannon says the average cost of leasing incentives in the segment is in the $4,000-$12,000 range. “You can cut that in half for (cash) purchases.”
The CTS wagon, which goes on sale later this month, is about the same exterior size as the sedan. But it offers nearly double the carrying capacity, with 25 cu.-ft. (720 L) behind the rear seats. Fold the rear seats down and 53.4 cu.-ft. (1,523 L) is available.
Vehicle engineers produced a new level of sound refinement in the sport wagon’s interior. There's also an intuitive navigation and infotainment system that offers real-time weather data.
Two direct-injected V-6 engine options are available, mated to a Hydra-Matic 6-speed automatic transmission: a standard 3.0L that generates 270 hp or optional 3.6L that produces 304 hp.
The mills add $1,500-$2,000 to the price of the wagon, depending on related equipment choices. The 5-seat wagon is available in rear- or all-wheel-drive configurations.
Shannon forecasts the average transaction price for the sport wagon at about $43,000. The standard 3.0L V-6 will account for the majority of sales, with only about 10%-20% of buyers opting for the 3.6L, he says.
AWD is available on all three sport wagon trim levels and adds about $3,000 to the price of the vehicle. Shannon anticipates about half of buyers will opt for AWD, but that figure could jump to more than 70% of sales in some Northern markets.
“We are optimistic about the sport wagon's prospects,” Shannon says. “We think it could be the right car at the right time and it could spark a little bit of a rediscovery of the virtues of luxury wagons.”
Shannon is reluctant to forecast sales volumes “because the marketplace is very unsettled overall and this is a very new idea for Cadillac.” But the executive expresses confidence the wagon will add to the success of the CTS lineup and strongly compete with European luxury station wagons.
The SRX will be offered in three trim levels for the ’10 model year: luxury, performance and premium. The CUV is available with either a 2.8L turbocharged V-6 mated to a 6-speed automaticAW Co. Ltd. transmission or 3.0L V-6 paired with the Hydra-Matic 6-speed automatic.
The 2.8L engine generates 300 hp, while the naturally aspirated 3.0L mill is rated at 265 hp.
Shannon predicts the average transaction price for the SRX will be about $40,000, but more lavishly optioned models could easily soar to $50,000 or more. Overall, the `10 SRX is lower priced than the model it replaces.
Shannon says GM would be delighted if Cadillac’s sales totaled 100,000 units this year. The executive believes there is room in the brand’s portfolio for another CUV, but one that is on par in size with the SRX. “Too much smaller than the SRX is too small,” he says.
Other additions to Cadillac’s portfolio could be a 2-seat roadster, a sedan that is smaller in size than the CTS and a larger sedan that will replace both the STS and DTS models.
Shannon declines to say whether the larger sedan will be front- or rear-wheel-drive. “But we will have both the STS and DTS for a couple of years more,” he says.
Meanwhile, Cadillac's European expansion has imploded with the bankruptcy of Kroymans Corp. BV, a Dutch distributor.
“We're going to take that business over as a GM (enterprise),” Shannon says, noting most of Kroyman's dealers have continued to conduct business. “We haven't given up in Europe, but our European ambitions have moderated.”
The executive says the brand’s short-term global focus is on China, where Cadillac is expected to sell about 10,000 units this year, the bulk of which will be the CTS model.
“But we're shipping SRXs to China as we speak, ” Shannon says. Other important vehicles in China are the Escalade and CTS-V.
Near term, the executive expects most of Cadillac's business (about 85%) will remain in North America. But he believes global sales will grow substantially by 2015, with China and Russia representing the greatest growth potential in the shortest amount of time for the brand.