What Cadillac's New Ads Are All About
General Motors' (GM) 112-year-old luxury brand is in the midst of a reinvention that aims to put it on par with -- or perhaps even above -- the German brands that dominate global luxury-car sales nowadays.
Anyone who knows cars knows that will take a lot of work, and a lot of time. So far, a lot of the work to transform Cadillac has happened away from the spotlight. But these new ads aim to change that, in a big way.
Why Cadillac Wants to Be a Brand for Those Who 'Dare Greatly'
That new tagline comes from a famous speech given by Theodore Roosevelt -- and the first of the new Cadillac ads features a female narrator reading excerpts from the speech over a series of street scenes shot in New York City.
"It's not the critic who counts," the voice tells us, "the credit belongs to the man in the ring." The message behind the mystery is this: Cadillac is aiming itself at entrepreneurs, at successful nonconformists -- not at the mainstream.
That's a great dare indeed for an old brand like Cadillac. But it's what new marketing chief Uwe Ellinghaus sees as the best way forward for Cadillac: to present itself as a stylish alternative to the German luxury brands.
Ellinghaus is a BMW veteran, and as he sees it, the success of BMW (and Mercedes-Benz and Audi) gives Cadillac an opportunity: If all of your neighbors drive German cars and you want something that's distinctive, that's different -- then Cadillac might be the brand for you.
It's a good strategy. But it has to be: Boosting Cadillac is a very big priority for General Motors.
There's a Lot More Than a New Ad Campaign Going On Here
The transformation of Cadillac is a major initiative for General Motors, as it seeks to reduce its dependence on the trucks and SUVs that have generated the bulk of its profits for years.
A successful global luxury brand can bring huge profits to an automaker. Just ask Volkswagen: Through the first three quarters of 2014, the Porsche and Audi brands represented just 16.9 percent of VW's total global passenger car sales -- but contributed 72 percent of its automotive division's pre-tax profits.
GM CEO Mary Barra isn't expecting that kind of result from Cadillac anytime soon. But she would love to see the old brand make a (much) bigger contribution to GM's global bottom line. That's why, over the last few years, the company has made big investments in upgraded products for Cadillac -- and why it recently committed to spending another $12 billion on the brand over the next five years.
But here's the problem. The efforts have paid off with critical acclaim for new models such as the ATS and CTS sedans, but the sales haven't come. In fact, Cadillac's U.S. sales fell 6 percent last year.
Part of the problem is that GM is charging much higher prices for the new Cadillacs. Cadillac's new pricing is in line with what companies such as BMW and Mercedes-Benz charge for similar models. That seems fair, given that the new Cadillacs match or beat the Germans in most comparison tests, but it's more than Cadillac's longtime customers are accustomed to paying.
That would be a fine strategy if BMW and Mercedes customers were switching to Cadillacs. So far, though, the evidence suggests that they aren't.
That's what this new ad campaign is trying to change.
GM Knows That This Won't Work Overnight
Ellinghaus and his boss, Cadillac President Johan de Nysschen, have made it very clear that this is a long-term project. No one ad, or ad campaign, is going to magically transform Cadillac into the world's gotta-have luxury-car brand.
But this new ad campaign does a good job of showing us where Cadillac wants to go -- and, not coincidentally, describing how GM sees its bold effort with Cadillac: Daring greatly.
Motley Fool contributor John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check outour free report.