Daniel Howes: GM, Ford luxury do-over
Attention car buyers: Detroit is getting serious about the luxury business — again.
The latest sign of intent comes from Ford Motor Co., whose new CEO used an investor conference Monday to "assure you that we are putting the resources" behind yet another plan to vault its balky Lincoln brand back to respectability. The cornerstones: buyers in the United States and China, a vow to triple sales volume by the end of the decade and $2.5 billion to back it up.
"We're in the very early stages of our transformation," Mark Fields told investors, sidestepping the unspoken irony. Namely, Ford used pretty much the same sentiment to rationalize its decision 15 years ago (yes, you read that right) to herald Lincoln's transformation by moving its brass to southern California.
Didn't last. Yet its cross-town rival, General Motors Co.'s Cadillac, last week confirmed it is borrowing from ol' Jac Nasser's discarded playbook, figuring a headquarters move to New York City's Soho will persuade tony buyers from Boston to Berkeley to choose a Cadillac ATS over a BMW 3-Series. And here I thought it was "all about the product."
Only partly, judging by the logic driving Cadillac's impending move to the Big Apple from the provincial Midwest backwater that will continue to produce most of its volume and develop its new models. Presumably, those facts will not be highlighted in trendy campaigns to be conceived in lower Manhattan to get GM's premium brand out of reverse.
Cadillac is sucking the fumes of its competitors despite producing some of the finest metal of its modern era, an implicit indictment of former CEO Dan Akerson's decision to appoint a Washington lobbyist head of Cadillac. Courtesy of CEO Mary Barra, Bob Ferguson once again is heading GM's government relations, replaced by Audi veteran Johan de Nysschen. But the legacy of Akerson's call lives:
Overall brand sales through August are off nearly 5 percent. Cadillac's redesigned CTS, aimed squarely at BMW, Audi and Mercedes-Benz, lags nearly 6 percent. Sales of its ATS, touted as a 3-Series killer, are off 20 percent. Only the Escalade full-size SUV, a quintessentially American-style product, is selling reasonably well.
The inconvenient truth is that Detroit continues to stumble in the global luxury game defined by the Germany's Big Three and emulated more effectively by the Japanese, chiefly Toyota Motor Corp.'s Lexus division. Detroit? Not so much, thanks to a record of shifting management priorities, impatient capital, recurring business crises and an allergy to long-term commitment.
How it'll be different this time, if at all, is not yet clear. The recent influx of global luxury outsiders at Cadillac, its solid line-up and Ford's demonstrated record of product execution under superstar CEO Alan Mulally portend better prospects for Cadillac and Lincoln, respectively. But there are no guarantees, as the chronic underperformance of both brands demonstrates.
There's also no denying that Detroit's luxury pretensions carry a long legacy of overpromising, underdelivering and taking short cuts (see Cadillac's racing stint at Le Mans more than a decade ago or Ford's aborted Premier Automotive Group) because the right way is hard, expensive and a cultural challenge to organizations historically driven more by volume and scale.
We've heard it all before. Heard it at the Cadillac STS debut at the '97 Frankfurt International Auto Show, or in more recent years when Cadillac bragged that its models were tested on Germany's Nürburgring. Heard it in '99, when Lincoln-Mercury decamped for California. Heard it in the 2000s, when the Dearborn automaker continued to push Lincolns that were nothing more than rebadged Fords, fooling no one.
"We are going to grow Lincoln," the brand's new boss, Kumar Galhotra, told investors. "There's great opportunity in the United States. Great opportunity in China. We are going to triple our volume by the end of the decade" to 300,000 vehicles worldwide.
Without, apparently, any help from Europe, epicenter of the global luxury business created by the Germans, policed by the Germans and credentialed by the Germans. Instead of attempt to beat them on their home turf, Lincoln for one is pegging its growth plan to the less entrenched (and much larger) Chinese market.
All of which raises an important question: if a global automaker cannot be global unless it builds and sells in Europe, can a luxury brand become a global luxury brand on a par with Germany's Big Three if it doesn't at least try to penetrate the continent with vehicles it plans to tout elsewhere as credible alternatives to BMW, Audi and Mercedes?
The question, at least in the medium term, answers itself. In a big splash for investors, Ford didn't mention Europe once in its Lincoln presentation. More than 15 years after Cadillac tried to buy credibility with a dodgy race car at Le Mans, the brand remains a bit player on the home turf of its European rivals.
There are no short cuts. Ulrich Bez, a former Porsche engineer who headed Aston Martin for 13 years, put it this way in a discussion we had years ago: great brands and the products that define them are built over decades, not single product cycles — and Detroit's experience with Cadillac and Lincoln is proving him right.
Daniel Howes' column runs Tuesdays, Thursdays and Fridays.