Editorial: Cadillac Is Abandoning Large Crossovers At The Wrong Time

A report by Ward’s Auto claims that Cadillac is scrapping plans to build a large, three-row crossover, similar to the Buick Enclave or GMC Acadia. Fear of competing with the two Lambda stablemates is being cited as a possible motive, along with a saturation in the large crossover market. They should do it anyways.

Even though they are held up as a symbol of everything that is against the state religion of automotive enthusiasm, crossovers are a global growth segment, especially small ones. And this is also one reason why Cadillac is apparently not going ahead with a large crossover. They want something smaller than the SRX, to help them compete with small luxury crossovers both at home, and in important markets like China and Europe.

This is an easy rationale to understand. Development dollars are finite, small crossovers are growing, and there’s lots of upside potential for something below the SRX. But that doesn’t mean Cadillac should abandon a larger crossover either. Think about the Acura MDX, the Audi Q7 and the Mercedes-Benz GL. These are all big, three-row crossovers that are globally successful (yes, even the MDX, which does sell in markets like Russia), and in the case of the MDX in Q7, they are a way to successfully leverage an existing architecture into something that can be sold at obscene mark-ups.

Cadillac would be foolish not to do this, if for no other reason than to leverage the profit potential at a tarted-up Lambda crossover. In the U.S, there is likely a price ceiling that they could charge for it, but you can bet that legions of affluent buyers would be clamoring for the chance to buy a more car-like big CUV from Cadillac. Given that the SRX is the sole Cadillac vehicle that doesn’t have over 100 day’s worth of inventory, it seems logical that another crossover would be a big seller. Why not kill off the Impala-based XTS entirely and replace it with a three-row CUV that can be sold to older customers and livery car services, as well as people who want something like an Escalade, but without the typical attributes of a BOF SUV (like reduced fuel economy and a more truck-like feel)? With the large car market tanking each passing year, getting out of a dying segment and into one that will be, at worst, stable in the next decade, makes a lot of sense.

And what about world markets? Take that price ceiling, multiply it 2-3x and that’s what you can charge for what is essentially a fancy Chevrolet Traverse. In China, a Buick Enclave sells for $81,000 USD – you can imagine what Cadillac would be able to charge for this kind of vehicle in the Chinese market, to say nothing of Russia, Brazil, Latin America and even India.

Assuming the marginal cost of turning a Lambda CUV into a Cadillac is low, the exercise seems like a slam dunk for GM. But we can’t always make these assumptions. Each individual business case is always a discrete entity, and trying to approach it with a “one-size-fits-all” mentality is a common fallacy in the world of automotive opinion writing. Even so, the case for a big Cadillac CUV seems to make sense – and GM’s track record of mis-managing Cadillac only furthers the thinking that cancelling this project is a mistake.