General Motor Corp. launches the new-for-’10 Cadillac CTS Sport Wagon and SRX cross/utility vehicle this summer, a pair of products the brand’s leadership calls “right-timed” despite the auto maker’s looming bankruptcy and continued tight credit markets.
John Howell, product director at Cadillac, admits reading stories about consumers shying away from an auto maker in bankruptcy but says reports of steady sales at Chrysler LLC during its first 30 days under Chapter 11 protection appear to torpedo the theory.
“Maybe what the government has been able to do in terms of giving guarantees is, in fact, holding sales,” Howell tells Ward’s during a live webcast launching the CTS Sport Wagon and SRX.
Both vehicles arrive at Cadillac dealers this summer, when GM likely will be in bankruptcy restructuring. The auto maker widely is expected to file for Chapter 11 on June 1, deadline imposed by the federal government, which has provided the company with $19.4 billion in taxpayer loans since January.
Chrysler, which began its Chapter 11 proceedings in New York April 30, says so far sales have not fallen off a cliff. The industry reports May U.S. sales results June 2.
Experts say President Barack Obama’s pledge to back Chrysler’s warranties and service contracts has helped.
Steve Shannon, Cadillac executive director-product and marketing, says GM research shows car buyers want precise answers to their questions. “People told us, ‘Tell us in a very straightforward way what you have for me today,’” he says.
“We think launching two new products that are very competitive on price, features, content and performance, and with dramatic styling, is ultimately the best way to separate a little bit from GM and just talk about Cadillac and what Cadillac can offer today.”
But the luxury vehicles also come to market at a time of sharply reduced leasing activity, a phenomenon felt by auto makers across the industry but particularly at GM given the struggles of GMAC LLC, its captive finance arm.
Cadillac officials told Ward’s earlier this month the brand’s lease penetration has plummeted to between 6% and 8%, a fraction of what it and other luxury brands typically use to lure buyers with more modest incomes into their vehicles.
Cadillac executives admit the ongoing credit crunch has limited what they are able to do with leasing, but the brand still is maintaining market share by combining attractive interest rates with cash incentives.
“And we’ve been pretty active in working with dealers when leasing was slightly less available from GMAC,” Shannon says. “There has been a lot of networking to find what other banks are leasing. So we’ve been able to patch those things together.”
Howell says pricing ultimately will make the biggest difference. The 5-passenger SRX, for example, carries a base sticker of $34,155, and a popular-option model with advanced all-wheel drive will be priced at about $40,230. The SRX’s key competitor in the middle luxury CUV segment, the redesigned-for-’10 Lexus RX 350, starts at $36,800.
“A very attractive (price),” Howell says of the new Cadillac models. “And that’s a great way to sell products. You don’t necessarily have to put a high price on it and lots of incentives and leasing support. Give people a fair price on the product to begin with, and that will help a lot.”
Standard price and equipment for the CTS Sport Wagon, although not officially released, will be “slightly higher” than the $37,585 base price of the sedan, Shannon says, noting Cadillac’s two new vehicles are the right product for today’s record-weak market.
Although the industry’s first-quarter light-vehicle sales were off 37.5%, according to Ward’s data, deliveries in the middle luxury CUV segment were down a more moderate 22.4%.
“In a tough market, new products are more important than they’ve ever been,” Howell says. “They’re the right cars at the right time.”
Shannon says the new Cadillac vehicles feature more “versatility and utility, with a major focus on functionality and the downsized, efficient direct-injection engines” car buyers desire today. But the new models also deliver on the Cadillac promise of “sophisticated technology, great driving characteristics and signature Cadillac design.”
The CTS Sport Wagon, for instance, features 54 cu.-ft. (1,529 L) of rear cargo area, twice the carrying capacity of the CTS sedan, as well as an optional roof rack for attaching an overhead unit or bike rack.
The SRX comes in either a front-wheel-drive configuration or an optional AWD system from Swedish supplier Haldex AB using torque vectoring, which allows traditional torque distribution between the front and rear wheels but also between the two rear wheels.
Both models carry forward the dramatic exterior styling of the CTS sedan, as well as many of its interior appointments and infotainment options.
The standard engine on the CTS Sport Wagon is an all-new 3.0L V-6, which GM downsized from the 3.6L direct-injection mill that serves as its up-level choice and was a repeat winner in this year’s Ward’s Best 10 Engines competition.
The SRX receives the same 3.0L V-6 as standard equipment but also offers an optional 2.8L turbocharged V-6 with sequential fuel injection.
While the CTS Sport Wagon leverages the Sigma architecture underpinning the CTS and STS sedans and will be built alongside the models at GM’s Lansing (Grand River), MI, assembly plant, the SRX shares very few components with the auto maker’s other similar-sized CUVs.
“The assembly plant is one of the few things (the SRX) shares,” Shannon says of the vehicle’s Ramos Arizpe, Mexico, manufacturing location, also the site of Saturn Vue production. “This Cadillac SRX has a dramatic amount of unique content, which is exactly what it needs to be competitive against the likes of the RX 350.”
Shannon uses an analogy from the film industry to convey GM’s expectations for the SXR and CTS Sport Wagon, with the latter representing Cadillac’s first-ever wagon in North America.
“These are two very different vehicles appealing to two very different sensibilities and very different target audiences,” Shannon says. “The Sport Wagon is the independent film for unique aficionados that can be a surprise hit, but the SRX is the major studio release – the blockbuster intended for large audiences.”
Cadillac executives say they expect the division ultimately will benefit from GM’s downsizing to four core brands from eight, by garnering more attention from design, engineering and higher corporate leaders.
Plans for the Cadillac CTS Coupe remain on track for next year, a timetable GM delayed earlier this year as part of its restructuring.
“It’s alive and well,” Shannon says of the car, which as a near-production concept won a top design award at the 2008 North American International Auto Show in Detroit.
