Cadillac comes out swinging with XT4 in New York
New York — Cadillac is behind the times, and its leadership admits it. But the brand did some catching up this week on its adopted home turf.
The XT4, Cadillac’s millennial-bait compact SUV, debuted among a throng of news media, industry observers and Cadillac employees crammed into the atrium and gallery at Cadillac House on Hudson Street.
Cadillac President Johan de Nysschen wanted to open a new chapter for the General Motors Co. luxury brand when he lobbied in 2014 to move its global headquarters to a posh gallery space in trendy SoHo. The XT4’s reveal there Tuesday was intended to be a tangible payoff of Cadillac’s new East Coast refinement.
Its success, however, will be judged in sales and critical acclaim for a brand that has been working hard to regain its credibility among top-tier luxury marques popular on the floor of this week’s New York International Auto Show. New Manhattan digs are only part of the transformation.
At two press conferences this week — at its New York headquarters and on the floor of the Jacob K. Javits Convention Center — Cadillac showed its best: the XT4 and the CT6 V-Series with a V-8 engine designed exclusively for the brand. De Nysschen was almost jubilant.
“We have been working fastidiously for the last three years, kind of preparing for this moment,” he shouted over revelers at Cadillac House before the XT4 debuted. “A lot of what we have been doing is under the water level, and there’s obviously been a great sense of anticipation to begin to share with you the work that the Cadillac team has been engaged in.”
It was an unconventional setup for a global product reveal. And Kelley Blue Book analyst Rebecca Lindland said the emphasis on Cadillac’s new headquarters stole some of the spotlight from a much-needed product.
“People don’t care about your address,” she said. “You revitalize any brand through product ... and they have the opportunity with XT4 to be appealing to the domestically oriented luxury buyer, who basically doesn’t have a home right now.”
The XT4 is Cadillac’s first-ever compact SUV, and de Nysschen concedes it can’t come too soon. Small SUVs are among the most popular products with millennial buyers, a more active generation that looks for both fashion and function in their vehicles.
GM’s other brands were early to this trend: the automaker’s premium brand Buick with the Encore, joined by Chevrolet and GMC with mainstream entries like Equinox, Trax and Terrain. It’s a move de Nysschen says he understands. It was necessary as the company emerged from bankruptcy and looked for the best places invest its limited financial means.
“It’s now Cadillac’s turn,” he said in an interview with The Detroit News, suggesting annoyance at criticisms of Cadillac’s current lineup. “Some folks suggest we were asleep at the wheel. It wasn’t that people were ignorant to the fact that market developments were going in this direction and we need new entries ... it was just a matter of we couldn’t afford them.”
Instead, GM invested in Cadillac’s sedans after the bankruptcy, developing the Alpha and Omega platforms for the ATS, CTS and CT6 — all critically acclaimed.
“Cadillac sedans are some of the most underrated on the market,” said Karl Brauer, an analyst for Cox Automotive. “But nobody cares — because no one cares about sedans anymore, and Cadillac’s image isn’t where it needs to be.”
The XT4 is designed and engineered to stand out. It’s built on a unique compact SUV architecture, powered by Cadillac’s all-new 2.0-liter 4-cylinder with a twin-scroll turbocharger that delivers 237 horsepower. But it also exists to be an ambassador to a new generation of Cadillac buyers, priced at a more attainable $35,790.
“We’re not entering the (compact SUV) segment to play,” de Nysschen said, “we’re entering it to win.”
And there’s more to come as Cadillac scrambles to arm itself with a more modern product lineup. The brand has at least two more crossovers to introduce in a six-month product cadence that starts with the XT4 and lasts through 2021.
Cadillac is struggling in the U.S. market with a comparatively paltry SUV lineup that only includes the XT5 and the Escalade. The brand saw sales slip 8 percent in 2017, with only the CT6 sedan and XT5 posting an increase in deliveries. And its market share sat just under 1 percent, trailing Audi, BMW and Mercedes, which all field full complements of SUVs to capture around 2 percent of the market.
But Cadillac’s bright spot is China, where GM’s luxury marque focused its efforts in recent years and grew its volume by nearly 51 percent in 2017, driving a record-breaking year for Cadillac’s global sales. Still, Cadillac wants to look beyond what de Nysschen called the “sales scoreboard.”
A former Audi exec credited with leading the German luxury brand to the front of the segment, de Nysschen would rather focus on the fitness of Cadillac, the products and the way they are executed.
Cadillac’s volume for decades depended on slathering incentives on the pricey luxury vehicles, a practice de Nysschen has reined in at the same time the brand radically changes its products.
“It takes courage,” he said. “The problem that that leaves you with is that those products do not appeal to your traditional customer base, but you’re not yet that attractive to your new target audience.”
And de Nysschen says what he achieved at Audi won’t be as easy at Cadillac.
“Both challenges were difficult. The one difference at Audi was that Audi is not a U.S. brand,” he said. “Americans have a far more emotional connection to Cadillac the brand. People here want the brand to succeed. They are fans of the brand, but in that sort of way they’re also the brand’s harshest critics.”