GM Says Escalade Name May Be Used for Other CadillacsTim Higgins
General Motors Co., revealing a redesigned Cadillac Escalade, said it may apply the name to other luxury vehicles within the Cadillac brand.
“There’s a lot of equity in Escalade and I’d like to explore the notion of other vehicles that would carry that brand name,” Bob Ferguson, head of Cadillac, said yesterday in New York following the unveiling of the 2015 version of the large, luxury sport-utility vehicle. It was an evening that included an appearance by Donald Trump.
The Escalade is one of 10 new or redesigned Cadillacs that GM is bringing out in the U.S. by the end of 2015. The product push includes the ATS, a compact sedan, which helped increase Cadillac’s U.S. sales by 29 percent this year through September. U.S. sales of all versions of the Escalade peaked in 2004 at 62,250 and fell to 23,340 last year, according to researcher Autodata Corp.
The Escalade faces twin threats from smaller, car-based SUVs that get better gas mileage and more competition from high-end offerings in coming years. Fiat SpA’s Maserati plans production of the Levante SUV in 2015, while Volkswagen AG’s Bentley has said it will start selling the world’s most expensive SUV at about 180,000 euros ($244,000) in three years. Rolls-Royce Motor Cars Ltd., the ultra-luxury-car maker owned by Bayerische Motoren Werke AG, also has said it’s considering an SUV.
GM fell 2.8 percent to $34.21 at the close in New York. The shares have increased 19 percent this year, outpacing the 16 percent gain of the Standard & Poor’s 500 Index.
The redesigned 2015 Cadillac Escalade includes a sleeker exterior and a wood-trim interior, among the changes Detroit-based GM has made to boost sales of the large SUV and make it more luxurious. The redesigned version should increase U.S. sales at least 10 percent next year, Ferguson said.
“We can increase the volume that we’re doing now,” Ferguson said. “Escalade puts an exclamation point on the end of the brand.”
Ferguson gave no timetable for a decision on spreading the Escalade name to other vehicles, in effect creating a sub-brand within Cadillac.
While the Escalade is built on essentially the same platform as GM’s pickups, the company is studying another Escalade that would use a car-like SUV frame, Ferguson told reporters.
“There are a number of individuals who just love this vehicle, but there are others who would say, ‘I would like something that would give me a different ride and a different experience.’”
The current Escalade starts at $63,745, with a fully loaded version costing about $90,000, according to GM. The price of the 2015 model, which starts production in next year’s second quarter, hasn’t been released.
“If people are spending that much money, they may opt for a more exotic-sounding nameplate,” said Jessica Caldwell, an analyst with Edmunds.com, a website that tracks auto sales. “That’s a big threat.”
The success of the Escalade, first introduced in October 1998, helped keep Cadillac culturally relevant as it attempted to reignite interest in the luxury brand over the past 15 years.
Tony Soprano, the mob boss played by James Gandolfini, drove a Cadillac Escalade in HBO’s “The Sopranos.” Jennifer Lopez crowed about it. Ludacris even included it in his rap song “What’s Your Fantasy?”
“Anybody with power and who wanted to be noticed or make a statement without having to say anything, that’s what they drove,” Dave Sullivan, an analyst at AutoPacific Inc., said in a phone interview. The model “brought people in and got people to buy other Cadillacs even if they couldn’t afford an Escalade.”
The Escalade, last redesigned in 2006, also faces competition from smaller, entry-level luxury SUVs, which are more fuel-efficient, Caldwell said. At Escalade’s 2004 sales peak, gasoline averaged $1.81 a gallon in the U.S., compared with $3.55 last year, according to Edmunds.
“It’s people being honest with themselves and downsizing and not really needing the space that the Escalade has,” Caldwell said. “The Escalade is great for an executive, Town Car-like vehicle. But for a family it is a lot of space and fairly large to maintain and keep around.”
While the large SUV market has fallen, the models remain profitable for the automaker. The SUVs are one of its strengths even as it has pushed to create some of its best sedans in generations, including the Chevrolet Impala, which Consumer Reports ranked best among all sedans.
GM’s margins on the Escalade are probably 20 percent to 30 percent while a mid-size sedan such as the Malibu might be 4 percent to 6 percent, Sullivan said. “It’s like a printing press” for money, he said.
The jumbo-size Escalade ESV’s average transaction price, or what a customer paid after incentives, rose to $76,126 this year through September from $57,117 in 2003, according to Edmunds. The average transaction price in the luxury large SUV segment rose to $80,981 this year, with Land Rover’s Range Rover leading the pack at $105,505.
Escalade shares engineering with Chevrolet and GMC large SUVs, which are all built on the automaker’s truck platform that was redesigned in 2013. GM dominates the large non-luxury SUV segment. The combined segment market share of Chevy and GMC large SUVs in the U.S. rose to 61 percent this year through July, compared with 58 percent in 2004, according to Edmunds. Ford Motor Co.’s large SUV market share fell to 11 percent this year, compared with 18 percent during all of 2004.
The Suburban-size Escalade ESV attracts a richer buyer than the Chevrolet Suburban, according to GM figures. The median household income of an Escalade ESV owner is $259,060, compared with $135,000 for the Suburban. The median income for buyers of the smaller Escalade is $178,222, which is higher than the $120,429 of the Cadillac brand, according to GM.
The regular Escalade is the size of a Chevrolet Tahoe.
The new Escalade’s interior is quieter and has seats engineered to be more comfortable and look more sculpted, GM said. The front seats have more than 1.5 inches (3.8 centimeters) of additional headroom and more than 4 inches of additional legroom than the outgoing model.
As Ferguson talked to reporters, he was interrupted by Trump, the real-estate developer and reality-TV star.
“It’s beautiful,” Trump told reporters. “I want to buy one immediately.”
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