Recently, in a major industry announcement, it was learned that one of the automotive industry’s rock stars has left his lead Infiniti post to join Cadillac. Johan de Nysschen, who formerly earned his stripes at the red-hot Audi brand, takes the helm as Cadillac is now well-into the second phase of a brand renaissance. Our take is that this is a strong hire for Cadillac and if de Nysschen is truly given the time, resources and wide-ranging authority that GM President Dan Ammann has promised, Cadillac can continue its rise to challenge the luxury leaders.
But first, de Nysschen will need to steer Cadillac into some calmer waters as Cadillac has hit some rough seas during the past year. Despite great buzz around the highly anticipated ATS launch, sales have been faltering and as of July 1, Automotive News reports that Cadillac is sitting on a 113 day supply of inventory; one of the highest in the U.S. industry. And the launch of the highly anticipated ELR, the brand’s flagship electric coupe has been a major disappointment having sold just 400 examples of the $76,000 vehicle since February while being packed with over $10,000 in incentives.
So here’s our look at what’s in store for Cadillac as Johan takes the big chair at Cadillac:
Setting Expectations: Cadillac spent nearly 4 decades eroding brand value with a litany of product and image setbacks. Now going on the second generation of its brand and product renaissance, it’s only recently that Cadillac has made significant headway in its turnaround. Indeed, it has taken ten years, and easily more than $10 Billion to get the brand back on the rails and moving in the right direction. But despite these investments, most industry analysts still see Cadillac as a solid tier 2 luxury brand and suggest the brand will need another renewed commitment and investment for long-term success. Cadillac is building competitive products but the premium segment trades heavily on exclusivity, leading technology and cachet; areas where Cadillac needs to raise its game again after many years of neglect. De Nysschen needs to get everyone on-board with how long the next phase of the turnaround will take and what it will truly cost. Again, he has the perspective of the Audi brand comeback from the brink during the “unintended acceleration” drama in the mid-80’s to where it now competes toe-to-toe with BMW and Mercedes—a thirty year march of persistent focus, investment and delivery. So everyone needs to buy in from the GM Board, to GM President Dan Ammann and CEO Mary Barra to let him do his thing the right way.
Culture & Governance: One of Cadillac’s core challenges is that it competes for resources against GM’s “other mouths to feed” across the portfolio. For instance, Cadillac has long-needed a premium flagship but other brands in the GM stable have had equal, if not more critical needs and wants as well. So the ongoing challenge is who gets fed first? That needs to change. Premium brands bring huge margins but also require a relentless focus and continual investment without cutting corners. At premium focused BMW and Mercedes, these aren’t the same everyday challenges. And at mass and premium brand house VW AG, where de Nysschen has extensive experience, there is a proven balance of feeding the workhorses (VW, SEAT and Skoda) and simultaneously the race horses (Bentley, Bugatti, Lamborghini, Porsche Ducati and Audi) with equal care. No doubt, de Nysschen, the former Audi executive that made a business case for Audi resources while at VW AG will have useful experience, insights and outsider perspective in this role at GM. But GM’s stakeholders also need to let Cadillac stand as GM’s “tip of the spear” without bureaucratic interference. They need to hold de Nysschen accountable for P&L and brand metrics on a realistic timetable, but they also need to give him what he needs to succeed. And, de Nyschen, with GM’s support, needs to craft an esprit d’ corp across the Cadillac enterprise. Maybe consider making Cadillac the destination Division at GM and staff it with the best and brightest as was the case in the brands’ halcyon days. Bring back Cadillac’s gold flag that flew over the headquarters building and maybe even create a physical location for the Cadillac Motor Car Company.
Product: de Nysschen is said to have a critical say in Cadillac product planning and we bet one of his first initiatives will be filling-in the low-end of Cadillac’s line-up as was his intent more recently at Infiniti. The Milennials are starting to play an important role in the luxury market and they are seeking a different luxury expression than their parents. This cohort will represent a huge opportunity for Cadillac to start anew and the affordable Mercedes CLA and Audi A3 have proven big hits with younger buyers. Cadillac needs smaller & affordable yet premium products like these mach schnell. At the upper end, Cadillac will finally get a worthy flagship with the 2016 LTS and while it will feature some of the cues from the gorgeous El Miraj concept, we are hearing comments from observers that, although evolved, its’ Art & Science design language is starting to look dated after more than a 10 year-run.
Cadillac’s bold and polarizing design strategy has definitely cut a clear path for the brand but it’s also in sharp contrast to the more simplistic Bauhaus cues of BMW Audi and Mercedes that many luxury buyers prefer. As such, it may need a fresh look and de Nysschen should have an important say in what that is. What’s more, de Nyschen will bring a much needed eye for “magische handwerkskunst”, what Germans refer to as “magical” craftsmanship”. If he can further elevate Cadillac materials and interiors and fix Cadillac’s CUE system to emulate Audi’s industry-leading Audi Connect, Cadillac will clearly benefit.
Pricing: GM leaders were hopeful that the new series of Cadillac products could command competitive premium pricing at par with luxury leaders; as such Cadillac priced directly at competing import brands. But the ATS launch has shown Cadillac is still struggling with their parity strategy. Presently, according to dealers, Cadillac products can’t command pricing in line with the top echelon brands. Pricing is especially viewed as a key challenge for the ATS and inventory has been building up, but instead of dialing down production to meet demand, Cadillac has hit the incentive button and residual values have suffered which are key to the luxury leasing business and long-term brand health. Johan will have a delicate balancing act with pricing until Cadillac earns its premium value stripes to price at par with its competitive targets.
Place: Despite years of trying, Cadillac has struggled taking Cadillac global. Cadillac has also been late to the booming China market; however, the brand is finally starting to get some traction with sales up 67% to 50,000 vehicles in 2013 with hopes to double its China sales within a few years. To that end, GM has also spent big on a new Chinese plant to spur that rapid growth. Closer to home and on the dealer front, Cadillac dealers will need some love with all the recent leadership changes but early signs are that they are impressed by the Johan hire.
Brand Image: Cadillac’s brand baggage ultimately manifests in its inability to draw more import buyers to the brand. But the problem isn’t awareness but rather a lack of relevancy and credibility to a generation of car buyers that have been fed on the performance, technology and cachet of German luxury. In a gesture that Cadillac recognizes a need to change, Cadillac’s logo has been refreshed to present a less dated look. And Cadillac’s driving dynamics, as exhibited in the ATS have raised eyebrows for beating its BMW 3 series rival. Similarly, accolades like the CTS pick as Motor Trend’s Car of the Year, are helping to further burnish the brands’ carmaking credentials.
Promotion: Cadillac still needs to find a voice and “brand glue”. Former GM CMO Joel Ewanick took a bold leap with resurrecting the famous “Standard of the World” tagline but that’s been abandoned in yet another churn of Cadillac taglines, marketing manager jobs and agencies-of-record. Indeed, it’s hard to keep count of the brand managers and agencies that have worked on the business from Modernista! to BBH to Fallon to Rogue over a stretch of just a few years. What’s more, it seems that Cadillac often ascribes to a “launch and abandon strategy” with limited advertising support of nameplates after vehicle launch cycles. By contrast, de Nysschen’s Audi has one of the most consistent strategies in the luxury game under the global platform “Vorsprung durch Technik” (global) and “Truth in Engineering” (U.S.). This is the kind of internal/external brand platform that Cadillac needs and Johan will be looking to new CMO Uwe Ellinghaus, who brings experience from BMW, to help re-invigorate Cadillac marketing globally.
Without question, Cadillac’s new leader has a long “To-Do” list. But at the same time, Cadillac has made headway on the journey and has strengths it can build on. Given a continued focus, investment, patience and non-interference from GM leaders, Cadillac’s best days can surely be ahead of it with a seasoned leader like de Nysschen at the controls.
–authored by: Kevin Smith, Principal/brandmachine
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