Cadillac CTS Continues Hot Sales Pace

LAS VEGAS – The redesigned ’08 CTS luxury sports sedan continues to be a strong seller roughly six months into its launch, Cadillac General Manager Jim Taylor says.

“It’s the best launch I’ve been a part of in my career,” he tells Ward’s during an interview prior to the Consumer Electronics Show here, where General Motors Corp. introduced the Cadillac Provoq, a hydrogen fuel-cell concept car.

GM sold 6,777 CTS units in December and 18,949 for the model year, according to Ward’s data. Of December’s CTS deliveries, 6,250 were retail units, Taylor says.

Related document: U.S. Light Vehicle Sales - December 2007

“December is always a good month for everyone in the luxury segment,” he says. “And January is usually the worst, so we’ll see later this month if (the sales pace) can continue.”

Inventories remain tight, with about a 16-day supply, he says. For example, Sewell Cadillac in Dallas sold 220 units in December, which gave the dealership the CTS sales title in the U.S. for the month. But as of Jan. 6, the dealer had just four on his lot, and they weren’t likely to see the end of the week, Taylor says.

“Our dealers are a little mad about the inventory situation, but they’re happy it’s turning so quickly,” he says.

Cadillac determines which dealers get the vehicle through what Taylor calls an “earns system.” In short, the more a dealer sells, the more they receive. Sewell ranks as Cadillac’s No.3 dealer in the U.S. in terms of overall volume.

About 35% of buyers choose all-wheel drive on redesigned CTS.

Customers are paying more, too, Taylor says. The CTS starts at $32,990, or roughly $540 more than the previous-generation model launched in 2002. The average price paid, however, is up by $5,000 per vehicle, “a way richer mix,” Taylor notes.

About 54% of buyers choose a CTS equipped with the auto maker’s new 3.6L 6-cyl. engine with direct injection and variable valve timing. The engine produces 304 hp and, unlike many of its competitors in the segment, runs on regular unleaded gasoline.

GM also makes available a more traditional 3.6L 6-cyl. engine, carried over from the previous-generation CTS, that produces 263 hp.

But when buyers add the direct injection, the CTS sells at an average of about $45,000, Taylor says.

“People aren’t afraid to pay a little extra for the direct injection,” he says. “It’s very competitive against the (BMW) 5-Series.”

GM targeted the BMW 3- and 5-Series, as well as the Mercedes-Benz C-Class, during its redesign of the CTS. Taylor says such lofty performance goals are paying off on the showroom floor, as an impressive 28% of buyers choose the FE3 suspension setup, which represents the stiffest of three levels GM offers on the vehicle.

“That’s good, because someone looking at FE3 is pretty serious about performance,” he says.

About 35% of buyers choose all-wheel drive, a new option on the redesigned CTS.

Additionally, Taylor says the number of people building a CTS online has “skyrocketed” in recent weeks.

“Why would you bother to configure if you’re not in a shopping mode?” he says.

Meanwhile, Cadillac has kept its foot on the advertising pedal since this summer. GM declines to say how much it will spend on advertising for the CTS launch, but some reports estimate it at more than $50 million.

A Cadillac spokesman tells Ward’s the division conducted an all-out CTS blitz during the recent college football championships, an effort that will be built on during the professional football playoffs and culminate in its annual Super Bowl presence.

However, Cadillac will not run a commercial during the Super Bowl, a first for the division in several years. But it again will serve as the sponsor of the game’s Most Valuable Player award and host numerous events onsite during the week.

Cadillac says feedback from current TV commercials has been positive. The spots feature one of three actors behind the wheel of a CTS, including former “Grey’s Anatomy” star Kate Walsh. Critics have applauded the spots for effectively mixing double entendre with the performance and design aspects of the sedan.

But that doesn’t mean Cadillac isn’t fighting to get more consumers behind the wheel. While the redesigned CTS has received excellent reviews, won numerous awards and increased its relevancy among young people, a reputation tarnished during the 1980s and 1990s continues to prove challenging as the division tries to win over more mature individuals.

“We always say in the luxury business we need to get people in the cars, but its particularly true for us,” Taylor says. “Young people hear Cadillac and think Escalade and CTS, that’s all. They don’t think Seville, DeVille. But older buyers – the guys in the BMWs – that’s what they see.”

To target those consumers, Cadillac places the CTS at upscale resorts and industry conferences that attract business executives. Taylor says several cars are in service at private airlines for executives to use between the airport and meetings.

“Whatever it takes to get these guys into the car,” he says. “They’re not liable to wander into a dealership on a Saturday.”

About 500 units are available in airport fleets, where commercial fliers can rent the sedan.

“The rental business is good for us,” Taylor says. “People are renting the CTS and getting a big surprise.”

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