Cadillac Rolling Globally, Seeks Traction in U.S.

LITCHFIELD, CT – Despite flat sales in the U.S. and impediments to growing globally, Cadillac is forging new sales records in markets ranging from the Middle East to China, says Uwe Ellinghaus, chief marketing officer.

Cadillac's global deliveries were up 14% in the year’s first half, he says, predicting sales will continue growing in the second half.

Paced by demand for the new Escalade large SUV, Cadillac sales in the Middle East were up 10% over first-half 2013, Ellinghaus says, adding, “CTS is also doing great there.”

The former head of BMW marketing says winter weather earlier this year impacted Cadillac more than the competition. That's because the German luxury brands and Toyota’s Lexus perform better in warmer climes than the top-of-the-line GM models.

Besides the Escalade, another utility vehicle, the SRX, is driving sales. But there are supply constraints on those vehicles, Ellinghaus says. He concedes Cadillac hasn't been helped by the massive GM recalls this year and that ATS results have been disappointing.

Cadillac sales jumped 30% worldwide in 2013, but have faltered in the U.S. Deliveries last year were up 22.1% to 180,571 units from 147,848 in 2012, according to WardsAuto data. For the first half of this year, however, Cadillac’s U.S. sales slipped 1.0% to 82,068 against an industry that was ahead 4.0% and a luxury market up 7.0%. The brand’s share of the U.S. luxury segment at the end of June stood at 8.4% compared with 9.1% year-ago.

To reduce bulging inventories of the ATS and Cadillac’s larger CTS, production of the two cars at GM’s Lansing Grand River plant will be idled from next week through the week of Sept. 8.

WardsAuto data shows the ATS had a 152 days’ supply at the end of July, down from 164 in June. CTS days’ supply stood at a whopping 215 days at the end of last month, the second highest days’ supply among cars in late July and up from a 195 days’ supply prior-month.

Ellinghaus says Cadillac’s recent struggles are perplexing, especially because showroom visits are up. “But our competition isn’t sleeping,” he says, noting the new Mercedes-Benz CLA costs $3,000 less than an ATS sedan.

Conquest sales nevertheless comprise more than 75% of ATS volume, Ellinghaus says. The conquests mostly involve owners of non-luxury models such as the Toyota Camry, Honda Accord and fellow GM brand Chevrolet.

“We're not getting conquests from direct competitors” in what is a highly aggressive luxury market, he acknowledges.

Cadillac has not tried to lead the pack in incentives to boost volume, however. As reported by Power Information Network, Cadillac's incentives are the third-highest in the luxury segment, falling within $500 of those offered by BMW and Mercedes-Benz. But Ellinghaus says the Escalade has sold briskly without any incentives at all.

What's more, Cadillac's average per-unit transaction price has climbed $4,500 a unit over the past year, to $49,800 in the first half.

A Lincoln spokesman says the Ford luxury marque does not track 6-month average transaction price data, but the figure for July was $41,984. Audi's average was $52,309. Lexus' average transaction prices ranged from $34,607 for the CT 200h to $121,396 for LS 600h.

WardsAuto was unable to obtain average transaction-price data from the other German luxury brands and Nissan’s Infiniti marque.

China is leading sales growth for Cadillac outside the U.S. Sales there topped 30,000 units in 2012, exceeded 50,000 in 2013 and likely will surpass 70,000 this year, says Jim Vurpillat, global director-Cadillac marketing. The SRX is the brand’s top seller globally and in China as well, and the locally produced XTS also is a big seller, he says.

“We have a deliberate approach to growing our brand in China,” Vurpillat says, noting a stretched ATS will roll out there soon.

Europe has been a disappointing market for Cadillac in recent years. Fewer than 800 units were sold there in 2013 and deliveries could top 1,000 this year. “For us any significant volume in Europe is four to five years away,” when the brand has created a strong retail-sales network, Vurpillat says.

The U.K. is where Vurpillat believes Cadillac must become established in order to sell well in Europe, but the brand does not offer right-hand-drive or diesel-powered models. Cadillac also is not sold in Africa, South America or Australia, but Vurpillat hopes to parlay brand recognition into growth in those markets.

Ellinghaus says Cadillac doesn't plan to widen its product portfolio to match the complexity of offerings by rivals such as BMW. “We need a proper cadence of model introductions,” he says. “We won't go back to the past.” He predicts Cadillac's unique design will help growth, along with the brand differing somewhat from the German offerings in the luxury segment.

“They want something unique.”