General Motors Zombie Watch 11: Cadillac Must Die
General Motors has left bankruptcy behind. The MSM is greeting GM’s graduation with guarded not to say advertiser-sponsored optimism. Meanwhile, the populist backlash has begun. Yesterday, for the first time, I heard a “civilian” refer to GM as “Government Motors.” And then, another. Even if you discount the protest as right wing rhetoric (I was listening to Fox Talk), it’s clear that General Motors is becoming a lightning rod for anti-government sentiment. With tax hikes looming and the federal deficit ballooning, the public is starting to see the “new” General Motors as a symbol of federal impudence, intransigence and impotence. In fact, GM could be President Obama’s Iraq: the Gordian knot that strangles his political fortunes. To fully understand the futility of this financial folly, consider Cadillac.
Cadillac is supposed to be the ne plus ultra of automotive brands: the “standard of the world.” Since its pre-War heyday, Cadillac’s brand management has rivaled Neville Chamberlain’s foreign policy for craven expediency. Cadillac has been a deeply damaged division for decades. In 2007, TTAC’s Paul Niedermeyer charted Cadillac’s decline and fall in gory detail. Since then, the brand’s rep has retreated even further into its last redoubt: the consumer’s imagination.
“We all use the expression ‘the Cadillac of toasters’ or ‘the Cadillac of something else,'” deposed Car and Driver Editor Csaba Csere reassures the Detroit News. “It still means ‘the best of’ to a lot of people.” News flash: my thirty-something appliance guy calls KitchenAid the “Lexus of dishwashers,” without apparent irony. Cadillac’s brand expectations have been unrealized for so long that even the idea of Cadillac as the ultimate object of desire is rapidly disappearing.
This transition reflects reality. At best, Cadillac’s current cars are competitive (CTS, Escalade). At worst, they’re pathetic (STS, DTS, BLS). Somewhere in between, they’re inappropriate (SRX, EXT, forthcoming CTS SportsWagon and Converj plug-in hybrid). None of these Cadillac models are class-leading—never mind world-beating.
Cadillac’s mid-year sales stats tell the tale. At 33,043 units, they’re neck and neck with Acura (32,637), trailing Lexus (44,942) and getting crushed by Mercedes and BMW (65,160 and 75,443 respectively). Meanwhile, Audi’s in hot pursuit (28,347).
Equally disheartening for fans of the Cadillac brand, the automaker’s margins are nowhere near those of its competitors. Cadillac is discounting heavily to move the metal—sending exactly the wrong message about the brand’s inherent “value,” eroding Caddy’s cachet to ever-lower levels. Not to put too fine a point on it, they’re in a death spiral.
There’s only way for Cadillac to recapture faded glory. Cut the crap and build the best. The best no-holds-barred luxury cars. Stylish, no excuses vehicles, meticulously engineered, rock solid. And then they have to create a dealer network that kisses customers’ asses like none before.
Never. Gonna. Happen.
Even if we assume Cadillac’s rebirth could happen—that GM could find the courage to cull Caddy’s cancerous cars and trucks, that it could summon the creative and financial resources needed to be the best of the best—the U.S. government can’t let it happen. It’s the wrong image.
America is not as class-bound as, say, any other country on Earth. But using tax money to cater to high society’s personal transportation needs is about politically palatable as a tax cut for the top two percent of income earners. And that’s before we talk about the product-related demands of the Democratic party’s environmental oath of allegiance. Simply put, you don’t put “the people’s money” into a company that builds leather-lined luxury land yachts sold at ritzy palaces of automotive art.
So why not just let Caddy go? Surrender the top of the market to the Axis of Axles, retreat into the mass and mid-market (with some upscale Chevys badged Buicks) and call it good? Other than the inevitable Cadillac dealer backlash, there’s one main reason the company can’t eliminate Cadillac from their rancid roster: corporate psychology.
Old GM was once the standard of the world: the world’s largest car manufacturer and the planet’s most profitable company. Cadillac represents Old GM’s zenith, its ability to put the world to shame. Like the U.K., GM is not ready to face Empire’s end. Even if Cadillac’s become hopelessly tarnished, even if its crown has been stolen by foreign usurpers, you can’t sell the Crown Jewels! For GM, losing Caddy would be tantamount to admitting defeat.
Sadly, facing reality is the one thing that GM—Old or New—cannot do. All of which means that New GM is not about reinvention. It’s about revisionism. We made a few mistakes, got a bit big for our britches, got battered and bruised by the slings and arrows of outrageous fortune. But we’re good. And soon we’ll be better, better than we ever were. Cadillac will rise again!
Cadillac’s survival, its planned model expansion and move down market, highlights the fact that GM still suffers from the worst kind of hubris: taxpayer-funded hubris.
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