Why Cadillac Needs a $350,000 Halo Car

The name Cadillac used to be synonymous with “the best.” In fact, the General Motors flagship brand adopted the tagline, “The Standard Of The World.” That’s because there was a time when Cadillac was considered the finest luxury car you could buy. And it was, until it lost it sometime in the 1970s, and never got it back.

Now, Cadillac is pinning its resurgence on the Celestiq, a hand-built luxury sedan that will be made in extremely low volume. If Cadillac truly wants to be considered as the Standard of the World again, it needs to charge at least $350,000 for this car, maybe more. Here’s why.

Cadillac was founded in 1902 by Henry Leland, who later sold it to GM. Leland also started the Lincoln Motor Company, which he later sold to Ford. That’s right: The same guy who started Cadillac also started Lincoln.

Leland was a stickler for precision machining, and he wanted to show the world the superiority of Cadillac’s quality and engineering. In 1908 the Royal Automobile Club of Great Britain announced that the Dewar Trophy that year would go to the automaker that could achieve the perfect interchangeability of parts.

In Europe at the time, this was unheard of. Every part that went into a car had to be hand-finished and finessed. Literally every car was different. Nothing was interchangeable. And only one automaker had the confidence to enter the competition: Cadillac. Leland provided the judges with three cars, which they completely disassembled, jumbled up all the parts and reassembled. Not only did all the pieces fit together perfectly, the judges also were able to drive each car for 500 miles (805 km) without any problems.

In 1912 Cadillac won the Dewar Trophy again, this time for offering the first car with an electric self-starter. That started the company on a path where it would excel in technological leadership. In 1914 it was the first to make a mass-production V-8 engine.

Winning the Dewar Trophies and coming out with that V-8 really put Cadillac on the map. But all that did was earn it the reputation as one of the finest-engineered cars you could buy, not necessarily the best luxury car. That honor went to Packard; owning a Packard was considered being at the top of social prestige.

In 1920 GM underwent a thorough reorganization, and Cadillac was given the task of overtaking and surpassing Packard. But it wasn’t easy. For example, when Cadillac came out with its V-8, Packard countered with a V-12.

So, in 1930 Cadillac came out with a V-16 (pictured, below). Even though there were other engines with more power, in the eyes of the public having a V-16 meant you had the ultimate, something that no one else had. You could only get it from Cadillac. And that created a halo effect for the rest of the brand.

Cadillac v16-sport-phaeton-fleetwood-1930 (RM Sotheby's)

Throughout the ’20’s and ’30’s Cadillac went on a product onslaught. A V-12 was added, as were more models, more body styles, longer wheelbases, even custom bodies from Fleetwood. It took 20 years, from roughly 1920 until 1940, but Cadillac finally surpassed Packard as the top luxury brand. And it stayed there until the 1970s. But that should give you an idea of how hard it is to get the public to believe your car is the best; it took 20 years of unrelenting effort.

What killed Cadillac’s image is that it got greedy. Instead of maintaining its air of exclusivity, it went for sales volume. Cadillac’s general manager during most of the 1970’s was Bob Lund, who had come from Chevrolet and brought a Chevrolet marketing mentality with him. By 1979 Cadillac sales were nearly 45% higher than they were in 1970. And while everyone at GM was patting themselves on the back for selling more than 345,000 Cadillacs, no one seemed to realize they had wrecked the brand’s image. Cadillacs were everywhere. They were no longer exclusive.

Meanwhile, around 1970, Mercedes-Benz became the first luxury brand to come out with a car that cracked the $10,000 price barrier. Mercedes-Benz’s dealers thought the company was nuts. They thought no one was going to pay ten grand for a car. Except that they did.

You see, among the very wealthy, buying the best is very important. Why do you think Mercedes uses the tagline, “The Best or Nothing?” It’s because they know rich people want the best.

And when Mercedes priced its top car at ten grand it instantly seared in everyone’s mind that the best car you could buy was a Mercedes. And Cadillac made it easy for Mercedes. It came out with a slew of models that decidedly were not The Standard Of The World. Like the downsized, front-wheel-drive Cadillacs of the early 1980s. A downsized Cadillac? That’s an oxymoron. Then came the Cimarron (pictured, below), a cheap, front-wheel-drive compact that was a badge-engineered version of the Chevrolet Cavalier. Those cars further damaged Cadillac’s image.

Cadillac_Cimarron 1982

Later, Cadillac made several runs at trying to regain its former glory. The Science and Art strategy it launched about two decades ago boosted sales.  And the more recent V-Series performance cars, which are absolutely world class, have helped rehabilitate the brand’s image. But it hasn’t been enough. In the court of public opinion, Cadillac is still not at the level of Mercedes, BMW or Audi.

And that’s why it’s doing the Celestiq. First off, it recognizes that the move to electric cars presents it with a real opportunity, and maybe its last chance to climb to the top of the luxury class.

The Celestiq is a big sedan, pure electric. Cadillac hasn’t released any specs, but I’ve seen a design studio mockup of the car, and to my eye it looks to be about as long as a Cadillac Escalade. And it’s not a squared-off ‘Slade with a big blingy grille. Instead, it’s got a clean, long look that slopes down to a fastback and a boattail rear end. When you see it on the street it’s going to make a statement. In fact, that’s how I hear GM referred to this car internally, as The Statement.

More importantly, the Celestiq will be hand-built. GM is picking their best UAW workers with the highest skills and abilities to make these cars. And Cadillac has released some pictures of details of the car that show exquisite attention to detail and design. My favorite is the door hinge, which looks like a piece of finely machined equipment you could proudly display in your living room.

Since the top-of-the-line Escalade V-Series costs $150,000, I thought at first that Cadillac would charge at least $200,000 for the Celestiq, maybe even $250,000. But then I learned they’re only going to build 400 of them a year – for the global market.

That’s when I realized this car is going to be far more exclusive than anything Mercedes offers. Even more exclusive than anything from Rolls-Royce. Four hundred a year is nothing. GM probably could sell that many in China alone. And when you build something in very low volume, you have to charge a lot more to cover all your costs.

Since the least-expensive Rolls-Royce costs about $330,000 Cadillac has to charge at least that, and probably more. That’s why I believe the Celestiq will cost over $350,000. In fact, I hear Cadillac is going to offer a bespoke version where customers can order just about anything they want on the car. Those versions likely will go for over $400,000.

The rich not only want to buy the best, they also want everyone to know they’re driving the best, and that they spent a lot of money on it. They’re not shopping for bargains or discounts.

But they also want to know that they spent their money wisely. That they got something incredibly exclusive, with lots of fantastic features, and which will broadcast to the world that they have impeccable taste and are somebody truly special. You give them that, and they’ll buy it.

McElroy SQUARE_7

And that shows the Celestiq program is not about generating profits or sales; it’s about creating an image of exclusivity. The kind of image that will create a halo for the rest of the models in the lineup.

And that’s the kind of effort it’s going to take for Cadillac to get back to being The Standard Of The World.    

John McElroy (pictured above, left) is editorial director of Blue Sky Productions and producer of “Autoline Detroit” for WTVS-Channel 56, Detroit.