Bright Lights, Big Autos
Last year, General Motors' Cadillac announced that it would relocate from Detroit to New York. This week, the struggling premium brand and its former cross-town rival Lincoln are introducing brand-new flagship sedans at the New York International Auto Show. Though New York is clearly a more vibrant center of American culture and industry than Motown, it's more than a little odd that U.S. luxury automakers are so fixated on a city where fewer than half of all households own automobiles.
The shift in focus to the bright lights of New York is partly a reflection of the declining status of the industrial Midwest. Having loyally sustained the sales and profits of U.S. automakers for generations, the Midwest's longstanding influence over U.S. car culture has bled away along with the steady loss of manufacturing jobs. With foreign-based automakers dominating the coastal markets and manufacturing in non-union Southern states, Detroit automakers' dependence on "flyover country" has become a stumbling block over the past few decades. Though the auto bailout may have briefly stemmed this tide, Cadillac and Lincoln's pivot toward cities like New York proves that the fundamental trend remains in place.
The major question hanging over Detroit's assault on coastal urban markets is whether brands like Cadillac and Lincoln can overcome decades of provincialism and declining prestige. Two new sedans, Lincoln's Continental and Cadillac's CT6, are being unleashed at the New York show this week in hopes of convincing upscale consumers that the U.S. luxury brands can indeed go toe-to-toe with German and Japanese offerings. And though the two cars are clearly improvements over the uninspired land barges that have long dominated both brands, it's not easy to argue that they will be enough to reverse their fortunes.
Technology has made it nearly impossible for any vehicle -- especially in the premium space -- to stand out. Both cars are packed with the latest hardware: turbocharged engines, all-wheel drive, high-tech headlights and, in the case of the CT6, a new mixed-metal architecture. But so too are the latest premium sedans from Mercedes, BMW, Audi, Lexus, Infiniti and numerous other better-established brands. And even if the Continental and CT6 can eke out marginal improvements in horsepower, efficiency or refinement, these metrics are already so well-served that such upgrades are unlikely to be market movers. Certainly none of them is enough to overcome the prestige deficit suffered by brands that have been culturally irrelevant for a good 40 years.
Such an inability to come from behind on the merits explains why Cadillac and Lincoln are so eager to swath themselves in New York's glamour and cachet. But this strategy also ignores the opportunity staring them in the face. With traditional technology already at the point of diminishing returns, the lesson that big cities hold for automobiles is that luxury cars should make a radical departure from traditional values. Rather than making luxury cars that are simply bigger, faster, plusher versions of everyday automobiles, brands such as Lincoln and Cadillac need to embrace the idea that new non-automotive technologies can create new experiences that actually fit the lifestyles and values of New Yorkers.
The first step is admitting that the benefits of owning a car in places like New York are typically outweighed by the downsides of parking and traffic. Any premium brand that wants to succeed in an urban environment has to recognize that offering access to mobility without the struggles of car ownership is the way forward. Imagine if, rather than buying a new CT6 or Continental, New Yorkers could be offered a subscription service to the brand they most favor, which would allow them to drive any vehicle made by that brand. Want a sedan to transport business clients on a weekday? Order it on an app. Want a sports convertible to take up the coast with a special someone on the weekend? A touch of the smartphone should be all it takes.
Not only would this approach woo increasingly well-off but car-averse city dwellers, but it would also show that these brands can truly remake themselves for a new era. More important, it would prepare these brands for the ultimate revolution in the automotive experience: autonomous drive technology. If Lincoln and Cadillac can get out in front of the radical democratization of chauffeurs, they will have successfully exploited the last remaining opportunity to set their brands apart.
That's what the king of the premium brands, Mercedes-Benz, is doing with its radical vision of a driverless luxury pod: the F 015 Luxury in Motion concept. More lounge than car, the concept shows that at least one major premium brand has accepted that the traditional automotive paradigm is stuck in the past. In contrast, Lincoln and Cadillac's attractive but deeply conservative new sedans show that they remain deeply stuck in the past. Complemented with such cars as the Buick Enclave Tuscan Edition, a vehicle apparently intended for anyone who has always wanted to drive an Olive Garden, these new luxury sedans manage only to make GM and Ford look like Midwestern tourists in town for the car show.
Of course, this battle is about more than just New York: Both the CT6 and the Continental are likely to sell far better in China than in the U.S. But as the entire world urbanizes, New York's challenge to carmakers will only become more relevant. As the song goes, if you can make it there, you can make it anywhere.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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