Cadillac’s Bigger CTS Fighting BMW 5 Series Tests Boss
Early in his tenure as the head of General Motors Co. (GM)’s Cadillac division, Bob Ferguson faced one of those issues that was neither black nor white.
Ferguson, the former head lobbyist who had joined GM in 2010 after a career in the telecom industry, sat in a briefing by Cadillac designers who wanted him to help persuade Chinese colleagues to pick a specific interior color scheme for the redesigned mid-size CTS sedan. The staff didn’t know Ferguson is colorblind.
After they finished their presentation and left, Ferguson overturned the swatches to write numbers on the back so he’d know which one to point to later in China, he recalled during an interview this month about his first year on the job and the sedan GM needs to win customers from German competitors.
As he approaches that anniversary in October, Ferguson has had to rely on his wits and his team of experienced auto executives to elevate Cadillac to be competitive against Bayerische Motoren Werke AG (BMW)’s BMW, Daimler AG (DAI)’s Mercedes-Benz and Volkswagen AG (VOW)’s Audi.
Ferguson, 54, has been riding the sales increase following the introduction of a new compact sedan that reached showrooms the month before he took over. His own first big test as boss arrives in U.S. dealerships next month as the company introduces the redesigned CTS, a lower, longer, sleeker sedan that’s supposed to move the model upmarket to better compete with the BMW 5 Series.
“It is clear that the product is fabulous -- all of the reviews say so; now the launch will be critical and how they market it,” Michelle Krebs, a senior analyst with Edmunds.com, a website that tracks auto sales, said yesterday in a telephone interview. Ferguson’s challenge, she said, is “to really start doing some serious conquesting,” or Detroit-speak for taking sales away from competitors.
Ferguson has reorganized with outside hires, broken ground on a factory in China, replaced the brand’s ad agency and revealed a concept of what a new Cadillac logo might look like.
The first CTS, in 2002, with its sharp angles that took design cues from the Stealth fighter jet, marked a change in styling for Cadillac. It also bolstered the idea that GM could revive the brand. The new CTS needs to help take Cadillac to the next level, and Ferguson said his team’s hard work has him feeling confident.
“We’re going to have one of the most successful launches not only for Cadillac, but for General Motors,” Ferguson said.
With the new lineup, GM matches up more comparably with BMW. The previous CTS had been too big to go head-to-head with the compact 3 Series and too small to oppose the 5 Series. Only 2.7 percent of BMW 5 Series shoppers also looked at the CTS, according to Edmunds.
Now Cadillac has a true compact with the ATS while the CTS moves up to mid-size. GM also offers a larger sedan, the XTS.
The 2014 CTS, starting at $45,100 excluding destination charges, will be about 15 percent more expensive than the 2013 model while still about 10 percent less than the 5 Series.
“The CTS will, of course, decline from previous peak volume when it straddled the market segments,” Alan Baum, an industry consultant at Baum & Associates in West Bloomfield, Michigan, said in an e-mail. “The XTS is somewhat different as it is the product designed to appeal to ‘traditional’ Cadillac buyers, while the ATS and CTS are designed to attract new buyers.”
He estimates that sales of the CTS will decline to 40,000 in the U.S. during the first full year of production, down from a peak of about 60,000 in 2005. Last year, GM sold 46,979 CTS models, according to researcher Autodata Corp.
Early evaluations of the new model are positive.
“The CTS is a rock-solid, focused sports sedan that’s stylish, enjoyable, and laden with the latest techno-gadgets,” Consumer Reports wrote Sept. 16 after its first drive. “But the real story is that historically stodgy Cadillac is now the more fun-to-drive and the less conservative alternative to Lexus and the German brands in this bourgeois segment.”
That kind of praise echoes comments heaped on the compact ATS after it was introduced last year. It went on to win North American Car of the Year at the Detroit auto show in January.
The BMW 3 Series fighter has helped boost Cadillac brand sales 32 percent this year through August, making it the fastest-growing brand in the industry, and excited a dealer network that hasn’t had a new compact sedan in a quarter of a century.
The aim is to entice younger customers and convert them into lifelong Cadillac buyers who graduate to more expensive versions over time.
That effort is off to a good start, said Dan Frost, a Cadillac dealer in suburban Detroit. About 30 percent of his buyers for the ATS are between the ages of 28 and 35, he said. They’re attracted to the sporty styling and performance.
“The ATS is one of the most spectacular revolutions in a car company that I’ve ever seen,” he said. “Cadillac needs two new models,” if not more, he said.
GM has said it’s considering a sedan larger than the XTS and an SUV smaller than the SRX.
“Think about what we don’t have versus our competition,” Mark Reuss, president of GM North America, said during an interview yesterday at Bloomberg headquarters in New York. “We’re looking at all of those holes in the portfolio for Cadillac.”
While Reuss and Ferguson declined to comment on specific future products, the Cadillac chief said he knows there’s interest in more models. GM in 2012 promised 10 new or revamped Cadillac vehicles to increase U.S. sales to about 300,000 within two years from less than half that in 2012. Those new vehicles include the Escalade that will be revealed in October.
“I spend a part of every week of the road with dealers and the health of the brand is noticeably stronger,” Ferguson said. Dealers “want a broader array of vehicles for their showroom, and we do, too.”
To contact the reporter on this story: Tim Higgins in New York at email@example.com
To contact the editor responsible for this story: Jamie Butters at firstname.lastname@example.org