Bloom_Oct_08

Bloomberg Businessweek

October 8, 2018

PHOTO ILLUSTRATION BY

731; SOURCE: BLOOMBERG

○ With a new chief and a lower-

priced SUV, the once-dominant

luxe brand reorganizes—again

For much of its 116-year history, Cadillac enjoyed

an aura of luxury that made it the preferred car of

celebrities from Clark Gable to Liberace to Elvis

Presley and a real money spinner for parent General

Motors Co. But in recent decades, as German and

Japanese prestige brands have lourished, Cadillac’s

market share and reputation have faltered. That

led GM this year—for at least the eighth time in two

decades—to install a new brand chief vowing to revi-

talize the once-vaunted

luxury name.

This time, GM says it’s devoting $12 billion to

develop a parade of new models. Perhaps most

signiicant of those is the XT4, a smaller, cheaper

sport-utility vehicle aimed at millennials that turns

on its head everything Cadillac has historically

stood for. To some GM watchers, the latest initiative

is a now-or-never moment, perhaps the last win-

dow for venerable Cadillac to revive its marquee

name before the very idea of auto brands starts

to fade away in the ride-sharing era. That strikes

Steve Carlisle, the new division president, as overly

dramatic. But he’s well aware that GM shareholders

have seen this song-and-dance before. “We lost our

mojo for a long period of time,” Carlisle says. “This

time it’s diferent, and we will show you.”

For GM, Cadillac’s comeback efort represents

more than just the resurrection of a famous brand.

Globally, luxury cars make up about 10 percent of

the 100 million cars bought every year but produce

close to 50 percent of the proits. Cadillac’s share of

the U.S. premium-car market has dropped to less

than 8 percent, from 10 percent in 2014. It remains

a moneymaker for its parent, however, even though

the brand’s proits have fallen below those of many

of its luxe competitors—something Carlisle intends

to rectify. In China, despite weakening sales of GM’s

Chevrolet and Buick lines, Cadillac is making big

gains: The brand sold more vehicles there—almost

180,000—than in the U.S. for the irst time last year.

Cadillac’s problems are both numerous and

familiar. Premium buyers have locked to SUVs, but

the brand has only three, including the behemoth

Escalade, which starts at $75,000. Most of its mod-

els are sedans, a style now out of favor with many

consumers. Older people continue to be Cadillac’s

mainstay customers.

The brand’s sleepy “Dare Greatly” advertising

theme has hardly helped, according to Bob Lutz,

Edited by

James E. Ellis and

David Rocks