Howes: Under pressure to perform, Cadillac bolts Big Apple for home
This coastal thing ain’t working out for two of Detroit’s automakers.
Twenty years after Ford Motor Co.’s Lincoln division decamped to California in search of sun and customers it didn’t have, rival Cadillac is mostly abandoning its outpost in trendy SoHo — to the extent New Yorkers even knew it was there.
Lincoln lasted four years on the Left Coast. And now Cadillac is ending its Manhattan gambit after, well, nearly four years. It's citing communication, an aggressive product roll out schedule over the next couple of years and, ya' gotta' believe, a high-level reappraisal concluding the incremental expense is not justified by the brand's top or bottom lines.
There’s a lesson here: no matter where the marketing people sit, no matter what clubs they frequent, no matter how many weekends they spend in the Hamptons, none of it means more rich coastal types predisposed to Autobahn machines or Tesla vanity plays will buy Detroit's metal.
Not when you don’t have the requisite SUV lineup needed to compete with Germany’s Big Three, Lexus, even a resurgent Jaguar. Not when you’ve spent the past five years cycling through two iterations of leadership, bulking up in China and falling behind back home — where the real money's made, especially in SUVs.
Since 2014, when GM said it would establish Cadillac's headquarters in New York, the brand's U.S. sales are down 12 percent, according to Edmunds. And its share of the luxury market dropped to 7.7 percent from 9.3 percent, evidence of a brand in reverse.
It's still all about the product. Cadillac's move back home says as much, implicitly conceding a hard-learned lesson: a luxury automaker can't baffle would-be customers with BS, can't be something it's not, and can't grow sales if its newest entries on showroom floors occupy segments customers are abandoning.
No, Cadillac's return to Warren — Warren, not even the increasingly hip downtown Detroit! — amounts to a corporate flag of surrender. And it comes just months after ranking executives insisted the luxury brand would stay planted in New York.
Things change when conditions, and leaders, change. Former Cadillac President Johan de Nysschen is credited (or blamed) for moving the brand to Manhattan as a term of his employment. He'd run Nissan Motor Co.'s Infiniti brand, and is credited with firmly rooting Volkswagen AG's Audi in the German luxury car firmament.
But the Cadillac-to-New York move was in play before he arrived, according to ranking sources familiar with the details, meaning top management and GM directors own this detour in the brand's long and occasionally glorious past.
The trials of Cadillac and Lincoln, Detroit's two surviving luxury brands, continue. Instead of settling on a brand identity, funding the product development long term and sticking with it through economic cycles (you know, like Audi, BMW, Lexus and Mercedes-Benz), they demonstrate little patience.
They change model nomenclature, spinning from names to alphanumerics and now, at Lincoln, back to names. They move headquarters faster than the product cycle of a new car. They change design "language." They claim globally competitive product, even testing on Germany's famed Nürburgring, but decline to compete in Europe because it's too hard, too expensive and offers too little return on investment.
Welcome to the big leagues. The global luxury car business is a club, and its charter members are called Audi, BMW, Mercedes and Porsche. They set the rules; they decide who can be admitted; and they can be stingy about it — just ask Britain's Jaguar or Italy's Alfa Romeo. Cadillac and Lincoln? Nein!
If Detroit's luxury-brand odyssey is confusing for the analysts and media hacks who cover the companies and their brands, imagine the confusion it sows with customers, loyal ones and those who might be? BMW — whose "Ultimate Driving Machine" tagline dates to the 1970s? Not so much.
The continually shifting priorities of Cadillac and Lincoln are manifestations of their history, their exalted places in mainstream American automakers where the competition for resources favors volume and profit margins tied to legacy brands. In today's market, that means SUVs and pickups favored by consumers.
Now that Cadillac and Lincoln have each scratched the coastal itch and proven its limited utility, these brands have no more excuses. Cadillac is further along in a remake begun around 2000 or so, but Lincoln is more honest about its ambitions — focusing its lineup on American and Chinese consumers and leaving Europe to the Germans.
That's more a recognition of reality than it is surrender. Cadillac's coming home because the people making the decisions know the best chance for building a brand depends on getting the product right and, preferably, first.
All the rest is noise.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.