GM Makes Cadillac a Separate Unit, Plans Office in NYCDavid Welch and Madeline O’Leary
General Motors Co. will reorganize Cadillac into a separate unit that will be based in New York starting next year. After losing ground to foreign luxury lines in the U.S., GM said the changes will help its top brand to pursue opportunities with more focus and clarity.
“We need to have the team thinking about Cadillac day in and day out,” Chief Executive Officer Mary Barra said in an interview at the Clinton Global Initiative annual meeting in New York. “New York is where luxury is defined. It’s trend-setting. It’s much broader than the auto industry in terms of setting trends in luxury.”
While industrywide sales rose 5.1 percent in the U.S. through August, Cadillac deliveries slid 4.7 percent. Executives have said the brand will add a flagship sedan, to be built at the Detroit-Hamtramck assembly plant that makes the Chevrolet Volt plug-in hybrid, and that the CTS may add features such as heated seats to lower-level versions next year to attract more buyers.
Top luxury brands have outpaced the market’s growth: Bayerische Motoren Werke AG’s BMW deliveries increased 12 percent, Daimler AG’s Mercedes-Benz gained 8.2 percent, Toyota Motor Corp.’s Lexus is up 16 percent and U.S. sales by Audi, Volkswagen AG’s premium brand, rose 15 percent.
BMW and Mercedes, the leaders in the segment, have U.S. headquarters near New York in north New Jersey. Both had significantly higher market share in those two states than in the rest of the country in the first half of the year, according to Edmunds.com.
“This is an attempt to create separation between Cadillac and other brands within the GM family, and to go after the stronghold that German brands have in the premium market,” said Jeff Schuster, an industry analyst at LMC Automotive in Southfield, Michigan. “If the brand achieves the image it’s looking for, it could be cost effective. But if 10 years from now Cadillac hasn’t achieved a move-up in perception as a premium brand, it’s a waste of money.”
A 2017 Cadillac model will be GM’s first to feature “Super Cruise” technology that takes control of steering, acceleration and braking at highway speeds or in stop-and-go traffic, Barra announced earlier this month.
“If the mood strikes you on the high-speed road from Barstow, California, to Las Vegas, you can take a break from the wheel and pedals and let the car do the work,” she said at the time. “Having it done for you -- that’s true luxury.”
Cadillac will also have the first models with a vehicle-to-vehicle communication system that notifies other cars of traffic hazards to improve safety and traffic flow, she said.
Johan de Nysschen, Cadillac’s chief, had run Audi of America and Nissan Motor Co.’s Infiniti before joining GM last month.
Cadillac management is reviewing which teams will be moved to New York and which will remain in the Detroit area or elsewhere. The majority of Cadillac staff will remain in Michigan, de Nysschen said in a statement.
Ford Motor Co., the No. 2 U.S. automaker, tried a similar experiment, announcing plans in 1998 to move the headquarters of its Lincoln-Mercury division to Irvine, California, from Detroit to give it more independence and to tap into the Golden State’s “trend-setting culture.” It returned to Dearborn, Michigan, in 2003, Mercury was discontinued in 2010, and in 2012 rechristened its remaining luxury brand as The Lincoln Motor Co.
“This move is similar to Lincoln’s failed move to Southern Californiamany years ago,” said Jessica Caldwell, an analyst with Edmunds.com. “Unlike Lincoln who moved to the suburbs 50 miles south of Los Angeles, Cadillac is moving to SoHo, right in heart of New York, so it seems like a better financial gambleifthe intent isto immerse its culture in an international, urban setting.”
GM fell 0.7 percent to $33.22 at the close in New York. The shares have lost 19 percent this year, while the Standard & Poor’s 500 Index has gained 7.3 percent.
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