Interview: Cadillac President Johan de Nysschen
Cadillac will get an all-new V-8 about the end of this decade from a modular engine family that will entail four- and six-cylinder engines as well. If Cadillac's new president, Johan de Nysschen, has anything to say about it, the V-8 will power a halo or two beyond the large, rear-wheel-drive 2016 Mercedes S-Class competitor coming in late 2015. Maybe even a sports car or two.
In this interview, de Nysschen revealed that Cadillac will file separate financial results within General Motors to help make such new products possible. The South African native enjoyed this kind of luxury at Audi AG, where he most recently served as its chief for the North American market. As a separate AG under the Volkswagen Group umbrella, Audi doesn't have to mix in its financials with thin-margin VW's.
Most of de Nysschen's career was spent at Audi, until he left about two years ago to head up Nissan's Infiniti premium brand globally out of Hong Kong. He returned to metro Detroit, where his wife is from, in August and spoke with us after just one month with Cadillac.
He also talked about the need for more Cadillac crossovers, including a model between the SRX and Escalade in size, which sounds like a three-row model off the Lambda (Buick Enclave) platform. He confirmed the luxury brand will follow up the ELR plug-in hybrid with a similar model. His discussion about the need to share platforms and powertrains sounds like good news for the long-rumored rear-wheel-drive Buick halo off the new, large Omega platform.
Is there a future for ELR?
I am fascinated by the technology and completely convinced of the longer term potential. I read (a news story) recently claiming there will be no ELR successor. I can tell you that's complete nonsense. Whether the successor to ELR is exactly a compact two-door coupe is still under evaluation.
Why did GM hire you away from Infiniti?
I would like to think that they recognize that I've had 23 years of premium brand experience, which gave me the opportunity to learn from very smart people. I would like to bring the benefit of what I've learned and experienced to the table at General Motors … The only thing I've done is premium. I have a clear set of principles that I think have stood me in good stead at Audi and also at Infiniti. The principles remain the same. It represents, personally, a wonderful career opportunity to be at the head of an iconic brand such as Cadillac, which has access to the technical and financial resources of an industry titan. I think those two really do need to go hand in hand.
And to be quite candid with you, I probably have 10, 15 years left of my career. And so I am in a hurry. I have a great deal I want to achieve, and I think my starting point at Cadillac is an excellent one. Great brands always take a long time to develop and evolve.
Cadillac still has a perception problem, though.
We need to get the brand restored as a pre-eminent global premium brand. And in such a way that it resonates with and is relevant to the young-minded premium consumer, because the millennials are going to be, by the end of this decade, responsible for buying 50 percent of cars in the premium sector. Part of the job that the team and I have is not so much elevating the brand, but of repositioning it to that point where it enters the consideration set of these young buyers. The brand needs to be rejuvenated, so to speak. And that is part of what success will look like.
The CTS and ATS have exceptional dynamics, and yet Cadillac's still an American luxury brand. Where do you take that in the future?
I think it would be a complete mistake to imagine, when it comes to premium brands, that the world simply prefers European tastes just because the Germans have been so successful. If we tried to emulate the Germans' recipe, I doubt we could be more German than the Germans. But what we could do extremely well is also be true to our roots and present modern, contemporary, progressive American luxury. The design language of Art and Science probably needs to evolve further. This is the dialogue I'm having with the (design) team. We have the opportunity at Cadillac with the obvious gaps that I want to discuss with the team. As we define vehicle concepts that have to fill those gaps in our lineup, this gives you the opportunity, as you enter new segments, to refine the design language.
We only have two sport/utilities. It's a sad day when the Germans have more crossovers than we. There's clearly some room for us to do something between SRX and Escalade; I think there's an opportunity even to do something sub-SRX. We want to grow the Cadillac line as a business, but we also want to improve the quality of the business, to create cars of the product substance [that lends] credibility to the brand. The vehicle dynamics and the craftsmanship and build quality that give us great power in the premium segment costs money. If you raise the product substance from where Cadillac might have been 10 years ago, the entry point into the Cadillac brand in terms of price has got to go up. Otherwise, you go out of business, right? So, I have to improve the quality of the business by higher price points but, at the same time, we want to maintain volume growth of the car line and generate incremental volume by entering new market segments where the brand is not present.
We first need to look for geographic growth, and most of that's going to come from China … so we can seek to get growth for the existing car lines with the current investment level from those markets, while, in the U.S., we flatline the growth and seek to improve the quality of the business. Overall revenues increase even though sales volumes don't increase. This is the only way that you can justify the investments into the new product.
But that is not enough. In order to give our dealers in the U.S. volume growth … the dealers have to step up to the plate now and support this evolution of the brand; those investments in facilities and people and processes and so on need to be financed. The way [to satisfy them with volume growth] is by entering these new market segments, which gives them incremental volume opportunity.
Can Cadillac be credible in Western Europe?
Consumers of premium goods, whether they are watches or high-end pens or handbags or automobiles, they tend to be internationally mobile. It's important that they experience the brand consistently around the world. Louis Vuitton in Tokyo and Paris and New York are the same. It also holds true for automobiles. Not only do you need to position and portray the brand consistently around the world, you also need to be seen to be present. And Europe, in a way, one could argue, is like the spiritual home of the whole concept of premium automobiles. On the other hand [those brands are not going to say,] "Cadillac, come in and take our customers away." We need to get our portfolio sorted; we need to get our powertrain strategy sorted. Having such a strong focus on China helps us to prepare for what must come, which is an attack on Europe. And I use that word a little bit provocatively, but we must attack Europe from a position of strength.
Beyond the 2016 large sedan, is there room for Cadillac to do a halo car?
There are probably two cars beyond that at least, maybe more. I don't think [the large sedan] will ultimately represent the pinnacle of Cadillac's entry into the real top end of aspirational cars. We have room for a car above that, and then these would be very prestigious, very high-performance but luxury cars. I think one also needs some spice in the meal. I'm a performance enthusiast myself. We should also look at one or two sports cars that you buy for emotional reasons, not for practicality, but because they are so sexy and so fun to drive.
How important is it for Cadillac to have V-8 power going forward?
We will have a new engine family that is very highly modular and can be structured for four, six or eight cylinders, not only with performance in mind but it must perform better and be more efficient than the old engines.
How soon will we see this engine family in Cadillac's lineup?
First we will do smaller capacity engines with the priority on China, and so the eight-cylinder engines will come toward the latter part of this decade, which will give you a hint also for where we are taking the discussion on the expansion of our future product line.
I would guess the V-8 version would be exclusive to Cadillac.
I would want to work very hard to keep the architecture unique for Cadillac. On the other hand, I must also consider that there might be some other important markets and market segments where, if I chose to enter them with a unique Cadillac platform, the cost of entry must be so high that I can't make it pencil. So then I have a choice -- I either don't participate, or I see what other assets exist within the General Motors portfolio. And I've learned this playbook from the Volkswagen Group. There will be some models that will be absolutely standalone, pure, thoroughbred Cadillac. And then there are some where we must make sure those cars capture the Cadillac values but where it might be OK to share componentry. I don't want to use a brand name. But if another brand in the stable decides they want to use a Cadillac asset and they are willing to accept the higher cost that's associated with the asset, that helps us amortize the cost.
We are going to start tracking the financial performance of Cadillac separately from the rest of General Motors. We might do it internally first, but I want to track our business and be accountable for the financial result. When you're a mainstream brand, then you've got to have very stringent criteria for the financial performance of each individual product. In the high-volume business, margins are razor-thin. If you don't manage your project before the process of conception, you'll lose your pants. For Cadillac, some cars have to make volume for us, some cars have to make money, and some cars have to make image. And sometimes you are fortunate enough that one car does all of those. But if you were to apply these very stringent financial criteria to individual projects you'll probably never do the halo cars. The way to measure it properly is to say, "Well, how did they help the pricing power on the rest of the cars?"—that's their contribution.
Will you chase niches the German luxury brands are establishing?
You run the risk of presenting one customer with the choice of three cars. That's not a good plan because you've incurred development costs for three cars. And Cadillac will definitely not be going down that road.