As you read this, Johan de Nysschen, Cadillac’s new president, is setting up his offices at GM’s Renaissance Center. He’ll likely engage in a more detailed version of the conversation we had with Cadillac executives this weekend in Pebble Beach. They discussed the state of the brand, what challenges lay ahead, and what new cars we’ll soon to see wearing the sleek new, wreathless crest.
Sticking to rear-wheel driveThe biggest assets Cadillac has are its brilliant-to-drive sport sedans, the ATS and CTS. Cadillac chief engineer Dave Leone calls them the “heart of the brand.” But neither car has performed to expectations in the U.S. market this year. Cadillac is having trouble explaining to owners of the last-gen CTS why they can no longer afford a new one. The ATS carries more incentives than Cadillac would like and faces pressure from the Mercedes-Benz CLA.
Indeed, Cadillac officials are impressed by, and perhaps a bit aghast at the success of the CLA, which transacts for not much less than an ATS despite having a lower base price and costing less to engineer. Mark Reuss, GM’s global product chief, recently confirmed Cadillac is looking at an entry-level competitor, while Leone, who also heads up development of rear-wheel-drive cars at GM, is categorical in saying the brand does not want a front-wheel-drive car at the base of its lineup. That leaves the possibility of doing something smaller and cheaper off of the same Alpha platform as the ATS and CTS. Doing this within an entry-level budget would be difficult—there’s a reason BMW, Audi, and Mercedes are using FWD for these models—but not impossible. GM initially planned on offering a cheaper ATS-size Pontiac entry on the Alpha platform, and Chevrolet has surely cut plenty of cost out of the platform for the next Camaro.
If Cadillac does introduce the new model (and perhaps even if it doesn’t) the next-generation ATS is likely to grow larger. Leone says the next ATS will also have better interior packaging—his team figured out how to move the large structural element that currently presses on the back of your legs when you sit in the back seat.
Over the coming months, we can expect to see the new ATS-V break cover, followed by the large rear-wheel drive sedan codenamed “LTS.” It’s likely to be renamed before it goes on-sale in late 2015. Leone also hints that Cadillac is working on a convertible. It could be a drop-top ATS, planned from the beginning but put on hold. Or it could be a successor to the Cadillac XLR, a car Leone still owns.
But the LTS is the make-or-break car. It hopes to earn credibility for Cadillac the same way Lexus got it in the early 1990s—by challenging the almighty Mercedes S-Class. Leone, who says he’s spent plenty of time in a Mercedes-Benz S550, promises the LTS will be one of the lightest and best-driving vehicles in the segment. It will employ a mix of materials--think aluminum, high-strength steel, and magnesium. Leone makes clear the car will offer a V-8, but is staying quiet on what kind of V-8 that will be. There had been some whispers months back that GM had revived development of a Northstar successor, but it seems unlikely to us that the company would, at this stage, invest in a new family of V-8 engines. Rather, we expect a version of GM’s small block along with the twin-turbo V-6 offered in the CTS Vsport. We also wouldn’t be surprised to see a 2.0-turbo offered as a base engine, at least in China. The LTS will also serve as Cadillac’s first foray into autonomous driving technology.
No El Miraj, for nowLast year Cadillac made a huge splash at Pebble Beach with the El Miraj concept (above). There was plenty of enthusiasm for it within GM. Cadillac marketing chief Uwe Ellinghaus called it “a no brainer…from a marketing point of view” when we interviewed him at this year’s Detroit auto show. Yet the big coupe is currently on hold. Given the extremely low sales such a car would generate, it could only have been justified as a brand-building exercise. And there are only so many brand-building exercises Cadillac can afford to do, Leone says. There’s also the sense that perhaps the brand needs to grow and build momentum a step at a time rather than shoot for the moon.
All that makes sense to us. However, we worry that the excitement the El Miraj generated could haunt Cadillac if it goes unfulfilled. We’ve gotten only the tiniest glimpse of the LTS, but brand officials admit it isn’t quite the dramatic statement that we saw in the El Miraj—how could it be without those massive 24-inch wheels and that low-slung roofline?
From ELR to EscaladeCadillac is getting very little return on investment from its most recent attempt at a line-topper, the ELR. Former CEO Dan Akerson had pitched the car as GM’s answer to Tesla, but fewer than 600 of the plug-in electric coupes have left dealer lots through July of this year. Cadillac has not been involved in development of the next Chevrolet Volt, meaning the first-generation ELR is likely the last.
On the broader subject of green cars, Leone suggests more hybrid variants are in Cadillac’s long term plan, but also states very clearly that being the most fuel efficient luxury brand is not a priority. This plays to one of Cadillac’s big advantages over its European competitors when it comes to meeting Corporate Average Fuel Economy standards. Mercedes-Benz and BMW must meet CAFE on their own—or pay fines—because they sell relatively few volume cars to balance out the relatively thirsty luxury models. Even Audi carries a heavy load given that it accounts for more than 25 percent of Volkswagen Group’s sales in the United States. Cadillac, on the other hand, is but a speck compared to GM’s overall volume and thus is a very small component of its sales-weighted fuel economy average. Finding a few more mpg for the Chevrolet Silverado will do more for GM than any electric Cadillac. That also helps explain the decision to keep the 2015 Cadillac Escalade a body-on-frame truck, rather than turn it into a more efficient crossover. The new truck is doing quite well, by the way, and continues to haul in five-figure profit margins.