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Why Cadillac should think carefully about their brand before launching a small car

02/11/2010

Cadillac plans to add a new small sedan to it’s lineup. Right now, there’s not too much detail about the car. It’s a bit disconcerting, though. I am not so sure Cadillac needs a small car in their lineup. The reason I think this is when you think of the sort of brand structure GM has with their lineups, it would seem out of place at best and diluting at worst.

The most dangerous part of this small-car idea is that GM has tried to do this before and failed every time. The thing that does them in every time is that budgets come into play. Cost-cutting happens. The car is based on another, cheaper model and quality goes down. The brand gets a black eye and by the sheer token of releasing a cheaper car, they destroy the equity in the higher-end offerings.

When you think of GM, you see three brands: Cadillac, Buick and Chevy. It would seem to me that if you were going to structure these car brands off you’d do break them out into something like the following: Cadillac would be the luxury / luxury-sport brand at the top end of the offerings, meaning it would compete with lines like Lexus and Mercedes. Then you would have the mid-line Buick. This brand would consist of the business-class of vehicles, facing the the Toyota Avalon,   the Volvo S70 and others of that size where they’re designed more for the mid-management business-person. This leaves you with the Chevy line, picking up the entry-level and various sport models (Ideally, I’d discontinue the Chevy line of pick-ups as you already have the similar GMC line).

If this brand structure were to be followed, then Cadillac would be chipping away at the other brand’s markets by introducing a smaller vehicle. Why does that matter? A few reasons: first, GM would start competition between its own brands, stemming from a duplication of models – we’ve all scratched our heads at this through the 80’s up to the melt-down. The most important reason, though, is that it wrecks the brand’s identity, which is probably the most valuable part of the whole experience.

Cadillac spends most of its days (or should be) being America’s premiere luxury auto manufacturer. This is a very tough prospect, as it has to face some severe competition in the likes of BMW, Lexus, Mercedes, and Infinity. To be a luxury brand, it takes a certain amount of ‘aloofness’. It needs to be its own company or at least division on its own so that Cadillac can establish a high grade of product without a large connection to its non-premium cousins. That means it cannot look like any model shares parts with a Cobalt or something. Lexus does this very well – so well that most people don’t even know that they’re a part of Toyota.

Cadillac really needs to focus on their identity. The buyer they are competing for is far different from the buyer for any other model in the GM line, especially if they want to woo the foreign luxury buyer. Although over the last few years, Cadillac has been doing a superb job of creating a world-class brand (for being part of the Big Three), they really need to keep moving it forward. I don’t have the research in front of me, but I would be inclined to believe that Cadillac hasn’t become an option with the Infinity or BMW buyer yet, though they’re starting to get some looks. The reason is that there is a critical something missing from the brand and I think it’s the opposite of ‘affordable luxury’.

Instead of a small car, Cadillac really needs a halo car that they can really hang their hat on. The XLR was a great start. The new stupid-powerful coupe is another great step, but they should really put together a big car (they sell luxury sedans predominantly, right?). One that has the attention to detail, the styling, and the distinction that their wood-be competitors have. A car that people can aspire to get. Something an up-and-coming executive uses as a yardstick to measure if they have made it, much like the S500 or the 700-series. Cadillac needs to have the car that everyone thinks of when they say “Cadillac”. Perception and projection are very powerful when it comes to sales. Cadillac may think they have that already, but they don’t.

For at least one or two models, Cadillac has to stop thinking about being affordable and large production runs. Sometimes exclusivity comes at a loss – file the money under ‘marketing’  if you’d like…  In fact, a small run would be better, as it adds to the exclusivity – which is the piece of the puzzle that the brand is missing. Once they can grasp that identity of exclusivity, then they’ll begin to start seeing a market – and customers –  for a small luxury car.

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One Comment leave one →
  1. 02/11/2010 15:20

    You know, I have to tell you, I really enjoy this blog and the insight from everyone who participates. I find it to be refreshing and very informative. I wish there were more blogs like it. Anyway, I felt it was about time I posted, Ive spent most of my time here just lurking and reading, but today for some reason I just felt compelled to say this.

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