GM General Motors Company

By Mike Colias 

Cadillac's U.S. comeback has taken another detour.

General Motors Co. has been trying for decades to revive Cadillac in the U.S. luxury car market, where it was once the standard-bearer but now is No. 5 in sales behind BMW, Mercedes-Benz, Lexus and Audi.

Cadillac's latest reboot began a year ago with the installation of a new executive team, which has overhauled marketing and relocated its headquarters from Manhattan's SoHo neighborhood to a Detroit suburb.

But there are few signs that Cadillac's latest fresh start has sparked momentum. The brand's share of the luxury market dropped to 7% in 2018 from 7.5% a year earlier, extending years of declines, according to the Automotive News Data Center.

Vehicle-quality ratings have lagged behind rivals, based on recent ratings from J.D. Power and Consumer Reports. And dealers say they are getting impatient with the sales slide as the value of their Cadillac dealerships has sunk to industry lows, according to recent reports from dealership-advisory firms Haig Partners and Kerrigan Advisors.

Restoring Cadillac's reputation as a luxury player is a goal that so far has eluded GM Chief Executive Mary Barra, who has led the auto maker to record profits during her five-year tenure and positioned it as a leader in advanced technologies like self-driving cars.

Most of the brand's sales growth now comes from China, where it has expanded rapidly in recent years. But GM executives also are counting on Cadillac's renewal in the U.S. to drive future profits and help it diversify beyond its big money-making trucks. GM last year said it wants to double Cadillac's profits over four years through 2021, but didn't disclose a number.

Cadillac in coming months is releasing two new models, part of a long-awaited product blitz to fill out its thin vehicle lineup. The new nameplates include a compact sedan, the CT5, and the large XT6 SUV, which will compete against the Audi Q7, BMW X5 and Lincoln's forthcoming Aviator.

"The patient has a pulse," Cadillac President Steve Carlisle said in an interview. "We're getting increasingly excited about what we have in front of us." He said internal measures show vehicle quality and dealer relations are improving.

Cadillac's previous attempts to close the gap with luxury leaders in the U.S. haven't yielded much success. In the early 2000s, Cadillac introduced better-handling cars with sharper angles and blocky forms, winning some praise from auto reviewers. But it shrank its lineup through the decade and fell further behind foreign rivals after GM's 2009 bankruptcy.

In 2014, GM recruited Johan de Nysschen from Nissan Motor Co.'s Infiniti brand to boost Cadillac's profile. The South Africa native was best-known for leading Audi's surge in the U.S. from 2004 to 2012, and Ms. Barra touted him as the person who would engineer a decade-long rebuilding of Cadillac.

Under Mr. de Nysschen, Cadillac pushed for rapid sales growth in China, looking to generate profits needed to expand its lineup. In the U.S., however, it took the opposite approach, pulling back on steep discounts that had long sullied the brand image, even if it meant sacrificing sales. Pricing improved, but Cadillac lost market share.

The sales declines and clashes between Mr. de Nysschen and Detroit over product decisions led to his ouster, people familiar with the matter have said. Mr. de Nysschen, now a consultant, defended his strategy for Cadillac in the U.S. market and said, "In hindsight, I should have done much more to communicate the strategy and bring senior leadership on board."

With Cadillac's U.S. share of the luxury market in decline for five straight years, some analysts and dealers wonder whether an infusion of new offerings will be enough to put the brand on more luxury buyers' shopping lists.

"The new models are adequate, but they're not smoking-hot products that are going to get the person looking at a BMW to come flying in here and say, 'Oh, I've got to have that,' " said Bill Wallace, a Cadillac dealer in Stuart, Fla.

Mr. Carlisle, a longtime GM executive who replaced Mr. de Nysschen in April 2018, said Cadillac will still market fun-to-drive cars. But it also plans to emphasize in-car comfort and new technologies, such as a partially-automated driving feature on the CT6 flagship sedan called Super Cruise, which enables hands-free driving on U.S. highways.

Cadillac last year hired Deborah Wahl, a former McDonald's Corp. and Lexus executive, as marketing chief. Recent ad campaigns have drawn praise from dealers as being more upbeat and featuring more women, a growing demographic for the brand, Mr. Carlisle said.

Cadillac has drawn a much younger customer base in China, where sales have nearly tripled since 2014 to 205,000 vehicles last year, accounting for 54% of its the brand's global sales.

By contrast, in the U.S., where it has operated for more than a century, Cadillac sold only 154,702 cars last year. Among U.S. buyers, the brand has had trouble shaking its image of big cars favored by older drivers, dealers and analysts say.

"It still seems like what Cadillac really stands for is hard to define or identify," said Karl Brauer, an analyst with research service Kelley Blue Book.

Cadillac's focus on technology worked for John Contrata, who was drawn to the Super Cruise feature. He had never before considered a Cadillac when he wandered into a brand showroom while his Acura was being serviced nearby.

"I grew up in the '80s making fun of Cadillac because they had that image of big, floaty cars with poor reliability," said Mr. Contrata, who ended up buying a $70,000 Cadillac CT6 sedan. "But this car has incredible technology and is sporty and fun. It's a shame they can't get the word out."

Write to Mike Colias at Mike.Colias@wsj.com

(END) Dow Jones Newswires

May 13, 2019 09:28 ET (13:28 GMT)

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