Editorial: General Motors Death Watch 249: Cadillac Descending

It doesn’t seem that long ago that General Motors was pouring billions of dollars into Cadillac in a bid to create a line of world-class luxury cars. American enthusiasts rejoiced. Now, with GM on the verge of bankruptcy, all signs point to a full-scale retreat. Assuming GM pulls through, within the next five years it will kill Buick outside China–or at least kill its Lexian aspirations—and shift Cadillac downmarket into a “near luxury” position.

Cadillac’s bid for a return to greatness met with an early success. The 2003 CTS’ angular styling might have polarized opinions, but it made a strong statement and grabbed everyone’s attention. The car’s performance suggested that GM was capable of developing a first-rate rear-wheel-drive sport sedan.

The Escalade sold well, but its pushrod powerplant and antiquated chassis did not fit Cadillac’s new mission. A DOHC-powered, independently suspended crossover would be much more fitting. Problem was, in the late 1990s it was hard to tell what would make for a successful crossover. Should the proportions be those of an SUV, or more like those of a station wagon? Cadillac opted for the latter, while the market opted for the former. Combine wagonesque proportions with a BMW-like price, and the 2004 SRX flopped.

The 2004 XLR roadster was sharply styled, but insufficiently luxurious and (like the SRX) over-priced. Perhaps emboldened by the CTS’ success, Cadillac convinced itself that it could give subsequent models Teutonic prices from the start—a bad move. Both Toyota with the original LS 400 and Hyundai with the Genesis recognized that new entries must start low. If they sell, then you can raise the price. So the XLR became strike two.

The CTS had carved out a spot vis-a-vis the BMW 3-Series. Could a rear-wheel-drive Seville replacement do the same against the 5-Series? First, newly hired car czar Bob Lutz delayed the STS. Not a fan of Cadillac’s new look, he ordered that the STS’ greenhouse be redone to add tumblehome—even though such a major change late in the process cost tens of millions of dollars.

Though perhaps an improvement, the revised design both failed to be beautiful and failed to make a strong statement. The interior, though more luxurious than that of the CTS, was still not luxurious enough for the STS’ richer target market, and its styling was boringly conventional. The market yawned, and stuck with the imports. Strike three.

Hyper-expensive supercharged STS-V and XLR-V variants were little more than a distraction. If the basic product isn’t a winner, adding power isn’t going to make it one.

Lutz’ desire to offer a production version of the gargantuan 13.6-liter Sixteen? To those thinking with their heads, the Sixteen seemed overly ambitious and a poor use of corporate resources. Before it could realistically attempt a statement like the Sixteen, Cadillac first needed to succeed not only with the STS but with a never approved S-Class competitor. In retrospect, this embodiment of the Detroit executive ego seems downright ridiculous.

Back in the real world, Cadillac’s upmarket adventure was dealt a fatal blow when the STS failed to carve out a beachhead north of $50,000. In the aftermath, Cadillac couldn’t decide what to do next. Plans to replace both the STS and DTS with a large rear-wheel-drive luxury sedan wandered this way and that, then died. The V8 that would have powered this car met the same fate. Hyundai could field a competitive DOHC V8. Detroit would not.

Yes, the redesigned 2008 CTS has been a hit and deservedly so. But you can’t base a luxury brand on one $35,000 model.

At the same time, Cadillac can’t simply return to where it used to be. The DTS has solidered on, but sales have slowed to a trickle. With the Zeta-based replacement canceled, and no new large front-wheel-drive platform in the pipeline, Cadillac could simply abandon the large luxury sedan segment. With the collapse of the conventional SUV market, the Escalade also seems unlikely to live on in its current form.

So, whither Cadillac? With the foray into Teutonic territory one for four, and no funds for another round, Cadillac’s target must shift from the Germans to entry-level Lexus. For 2010, the SRX switches to an Equinox-related front-wheel-drive platform. Next up: a LaCrosse-based sedan. After that: perhaps a Lambda-based Escalade.

In short, Cadillac’s new focus will be Buick’s current focus: front-wheel-drive-based, comfort-biased vehicles with transaction prices in the thirties to low forties. If the two aren’t to overlap, Buick will either have to shimmy closer to Chevy or become China-only. Among the many casualties of GM’s meltdown, this forced acceptance of Cadillac’s second-tier status could be the saddest. Even Lincoln, which beat a similar retreat post-Nasser, could emerge with a stronger product line.

Want to remember Cadillac at its final zenith? Buy a 2009 CTS-V.