Cadillac's Plan to Reclaim Its Luxury Street Cred Is Accelerating

Auto Show
AP/Paul SancyaCadillac's 2014 Elmiraj concept car is expected to lend much of its style to the brand's new high-end CT6 sedan in 2015.

General Motors' (GM) Cadillac brand has made a lot of news lately. GM is turning its old luxury brand into a standalone division, moving its headquarters to New York, and launching a new naming scheme for its models.

If it seems like a lot of fuss over a brand that has fallen far behind the German luxury-car leaders, it is. But GM isn't just looking to recapture the romance of a bygone era when Cadillac's "Standard of the World" ad tagline really meant something.

As crazy as it might seem, behind the scenes, there are very big moves being made to turn Cadillac into a global luxury-car leader. Here's what GM has in mind.

A New Future That Looks Back to the Best of Cadillac's Past

For starters, forget almost everything you know about Cadillac. Forget the cushy seats and wire wheels and whitewall tires that marked Cadillacs of old, and forget the idea that Cadillacs are cars aimed at retired folks and nobody else.

Forget all of that. But don't forget what Cadillac stood for once upon a time.

Years ago -- like, 50 years ago -- Cadillac offered a uniquely brash, American take on real high-end luxury. Back then, Cadillacs were very expensive, but they were also bold, optimistic, and sophisticated -- the three "values" that Cadillac's marketing chief says the brand will now reclaim and build upon.

%VIRTUAL-WSSCourseInline-947%Cadillac's global chief marketing officer, Uwe Ellinghaus, is a longtime BMW (BAMXF) executive who was hired by GM last year to help take the brand in a new direction. He told the Detroit News this week that the "Cadillac point of view" will become clear in a new ad campaign that will begin early next year -- starting when an all-new range-topping sedan is unveiled in January.

But this isn't about copying the German brands, Ellinghaus says. As he told the Detroit News, "If you buy an Audi, Mercedes or BMW, you show that you fit into the premium luxury norm. This is the foreseeable car, the expected car in your neighborhood. Whereas with a Cadillac, it's more about standing out rather than fitting in." [Emphasis added.]

If that sounds like a big change for Cadillac, that's because it is. But it's driven by sound business reasons: A thriving luxury brand can be a huge source of profits for a global automaker, and GM CEO Mary Barra is pushing hard to increase GM's profit margins.

Getting Cadillac to the point where it is taken seriously by BMW and Audi owners -- not just in the U.S., but also in China and eventually even in Europe -- could take years. But the process is already well underway.

GM Has Given Cadillac's New Boss a Lot of Leeway

Cadillac has a brand-new boss. Audi and Infiniti veteran Johan de Nysschen joined GM in August as Cadillac's president, and he has wasted no time laying out his vision for where Cadillac ought to go.

For a while now, Cadillac has been struggling with an interesting problem. The brand's latest models, the CTS and ATS sedans and the new Escalade, really are competitive with the best in the world. The all-new-for-2014 CTS sedan was Motor Trend's Car of the Year, and it has won numerous comparison tests against Mercedes-Benz's E-Class and BMW's 5-Series.

But sales have been sluggish, and data shows that the new Cadillacs aren't getting consideration from BMW and Mercedes owners.

That highlighted the problem: Having products that were on par with the German luxury leaders was only the first step -- now, Cadillac needs to fix its brand.

That's where de Nysschen comes in. De Nysschen spent two decades at Audi, and he was a key part of that brand's efforts to separate its image from that of its corporate parent, Volkswagen Group (VLKAY), and elevate itself to the level of BMW and Mercedes.

It's no surprise that he's drawing on Audi's playbook at Cadillac. The brand's planned move to New York isn't intended as an affront to Detroit, it's about creating a sense of separation -- so that Cadillac's people can focus intensely on Cadillac, without distraction from the rest of General Motors.
That laser-like focus is what's needed to succeed as a global luxury brand, he has said.

More New Cadillacs Are Headed to Dealers. But Will Buyers Follow?

Cadillac also needs a slew of new products, and they're coming. The next Cadillac, a high-end sedan that will slot above the CTS and XTS, will be revealed in January. It'll be called the CT6 and its styling is likely to draw on that of last year's stunning Cadillac Elmiraj concept car.

Beyond that, there will be new crossover SUVs, new engines and high-tech features that will be exclusive to Cadillac -- and possibly an even bigger and grander sedan, de Nysschen has hinted.

Of course, all of these new Cadillacs aren't just better-built and more luxurious than recent cars from the brand, they're more expensive. That has been a shock for some of Cadillac's longtime customers -- and for its dealers.

Cadillac's dealers will have to adjust to selling fewer cars at higher prices -- and to providing the kind of service that Mercedes and BMW buyers expect. That, like everything else with Cadillac's move, will take time and money and patience.

But de Nysschen's new bosses, Barra and GM president Dan Ammann, have made it clear that Cadillac will be given the time and money it needs to succeed. The rest? That's up to the market.

Motley Fool contributor John Rosevear owns shares of General Motors. The Motley Fool recommends BMW and General Motors. Try any of our Foolish newsletter services free for 30 days. Find out the easy way for investors to ride the new mega-trend in the automotive industry in our free report.