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.
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.
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.
8 Reasons You'll Overpay on Your Next Car
Cadillac's Plan to Reclaim Its Luxury Street Cred Is Accelerating
When you get into that back office and start signing all the paperwork, the topic of extended warranties will come up pretty quickly. Ellie Kay, an author of 15 finance-related books, notes that such warranties are negotiable.
"Before you sign on the dotted line, check out other sources of extended warranty pricing," she says, such as those provided by your bank or insurance company. "Then either use this lower price in the financial and insurance office for negotiation to get them to match the price, or buy it from the other source."
A scenario from Kay during her last car purchase: "The dealer quoted me $4,200 for a three-year extended warranty for my 280SLK Roadster Mercedes that included a $250 deductible. USAA -- my insurance company -- gave me a three-year warranty for $3,200 with zero deductible. I've used the new warranty once already. The bill was $1,100 and I paid nothing because of the zero deductible."
Bottom line: The default extended warranty is almost always the worst deal.
You may have a monthly payment figure in your head when shopping for a new car, but your interests are better served when you focus on the out-the-door price instead.
"A sales rep can often trick you by offering a lower monthly payment, but [one that] will stretch out the terms of the loan," says David Bakke, a car buying expert at MoneyCrashers.com.
You can reduce the overall cost of the car via negotiation and by skipping accessories and add-ons. "Things like navigation systems, rims, floor mats or car audio/entertainment systems can be purchased from a third party vendor, usually for less."
All our experts agree: Don't even mention your preferred or maximum monthly payment price.
If you decide to trade in your current vehicle for another, Kay says to negotiate this apart from the price of the new car and only after you've negotiated everything else. You can learn the full value of your car by going to Edmunds.com or kbb.com. Once you know what the car is worth, don't settle for anything less. Kay also advises you to seriously consider selling your old car yourself, and applying what you get toward the principle of your loan.
It may be tempting to just head to one local dealership, take a test drive or two, and walk out the door with a new car, but you'll save yourself a lot more money by doing a little pre-shopping research.
"Once you have your choices narrowed down to a few makes or models, contact the Internet sales manager of a few dealerships," suggests Bakke. "These folks can often offer better pricing than what you'd find dealing with an on-site sales person. Plus, you save time."
In addition to, or in lieu of, e-shopping, Joshua Duvall of Capital Financial Services says to "find a few vehicles from different manufacturers and pit them against one another." He explains that the car buying market is based on quantity and the fact that dealers want to move cars. "Force them to compete for your business."
"Dealerships often employ hard-sell tactics that can be overwhelming for a first-time buyer, so it is a good idea to go with someone who has been through the process before," explains John Ganotis, founder of CreditCardInsider.com.
Granotis also says that if you're buying a used vehicle, it's wise bring along a friend who knows his or her stuff when it comes to car health. For example, a mechanic who can peek under the hood, or recognize if something subtle is wrong during the test drive, would be especially handy.
You've likely heard it before, but we have to repeat this fact: Buying a used car is almost always a better value compared to buying new. If you like a particular model, buy the same car, but a year or several years older. Unless there have been major body changes, you'll hardly be able to tell the difference.
OK, so sometimes ol' Sally breaks down, and you need to get a new set of wheels, stat. If you don't fall into that category, though, our experts recommend choosing your purchase date strategically, such as during a major sale. Better yet, wait for theend of a promotion.
Dealership salespeople often receive a bonus if they meet their targets during a promotion. Even if they lose money on a vehicle at the end of a promotion, they typically make up for the loss with their promotion target bonus.
Erin Konrad of CouponPal suggests buying near the end of the month. This is when salespeople are trying to meet monthly quotas and are more likely to negotiate.
Be familiar with common strategies employed by dealerships and sellers. For example, MSN Money warns against the "four-square" trick. (I've had this one used on me.) In this trick, the salesperson draws four boxes with a number in each: your old car's trade-in value, the new car's price, the down payment, and your monthly payment. "From there, the salesperson begins crunching numbers -- most likely making it too hard for you to follow," writes MSN. He or she will shift your focus to the monthly payment, which can result in a longer loan and a higher interest rate.
Another common trick is to heighten your sense of urgency, says Business Insider via Gregg Fidan, founder of RealCarTips.com and the author of "Honest Guide to Buying a Car." For example, the dealer may tell you "that color is not available; there's only three left statewide; the price is good only for today; someone else is interested in the car, better decide quickly, etc." In this case, be patient and courteous, but remain level-headed and never rush to buy. Study up on Fidan's list of 112 car-buying scams.
To sum up the list: Don't let yourself get too caught up in the excitement of shiny metal, and remember that in six months that "new car excitement" will have faded, and you'll be due for an oil change.