General Motors Co. announced yesterday that it will establish Cadillac as a “separate business entity” and move its headquarters to a building in lower Manhattan. This follows the July appointment of Johan De Nysschen as Cadillac’s new president, having poached De Nysschen from Infiniti. De Nysschen’s plans for the brand begin with the relocation and include renaming all the models into a uniform alphanumeric style (CT4, CT6, CT8, and so on) and launching a new flagship model (already in the works) next year. All this is part of a bold new strategy to put the past behind Cadillac and become a top-tier brand once again.
But what works for one brand may not work for another, and what sounds good on paper might not produce traction on the road.
The goal of the move, which will see about 50 of Cadillac’s marketers and execs move to a space in SoHo – arguably the least car-friendly area in all of New York State and possibly the entire United States – is to inject new ideas and creative thinking into the brand. SoHo was once a haven for artists and writers and still has that reputation, but is now primarily home to the densest group of high-end luxury shops in America – a win/win for a brand looking to reestablish its luxury bonafides.
Although there is little “car thinking” going on down there, there is plenty of premium brand activity, and both De Nysschen and GM’s Chief Executive Mary Barra agreed that this environment might teach valuable lessons about what high-end luxury consumers are really looking for.
Cadillac is, however, inextricably linked to Detroit. It’s a 112-year-old company named after Detroit’s founder and formerly the symbol of the best Detroit had to offer from the 1920s to the 1970s. The mission is an important one – to help reinvent Cadillac into something a 2014 buyer wants instead of a BMW or a Lexus and not just be a brand that makes people think of the 20th century. After a long period of trying to do this in Michigan, perhaps the move will imbue the marketing team with a new view into the customer’s world, but the move itself will not separate the brand entirely from its history.
Michelle Krebs, senior analyst at AutoTrader.com, summed it up: “This is not going to have any immediate impact on sales and I think it’s questionable whether it will make any impact on brand perception.”
One of the most controversial ideas in the new plan is renaming the cars using the prefix “CT.”
Most of De Nysschen’s decisions at Infiniti focused on making the brand more like Audi, and it appears the same treatment is in store for Cadillac.
Audi, it will be remembered, was seriously damaged as a brand by accusations of “unintended acceleration” on Audi 5000s in a 1986 60 Minutes piece. Though ultimately exonerated from these charges the brand – until then expanding rapidly in America – was brought to its knees and nearly withdrawn from the U.S. market. It took a decade for Audi to reinvent itself for U.S. consumers, beginning with the A4 – the first of the renamed models – in 1994, and another decade for it to become a popular luxury brand again. It eclipsed its 1985 sales total for the first time in 2000 and has grown consistently since then. The re-imagining of the cars and names worked for Audi.
De Nysschen became president of Audi of America in late 2004. Although not directly involved in the reestablishment of the brand in the U.S. in the 1990s, he helped ensure that Audi was taken as seriously as BMW and Mercedes at the highest end of the luxury market by stressing the A8, Q7, and other high-end models like the R8 supercar. Audi’s U.S. presence grew significantly during his tenure, from 77,917 cars sold in the U.S. in 2004 to 117,561 during his last full year at Audi in 2011. Moreover, aside from 2009, where sales declined slightly, sales continued to grow at a considerable pace during the worst years of the recession. His marketing strategies emphasized what Audi did differently – its focus on lightweight materials, new technologies, a clean and taut design aesthetic, and promotion of diesel engines.
De Nysschen left Audi for Infiniti in the summer of 2012 – but his time at Infiniti was controversial and the results mixed.
In an effort to make Infiniti more Audi-like, the traditional names of Infiniti’s models – G for small mid-size, M for large mid-size, Q for flagship, were all standardized to models starting with Q (SUVs became QXs). This confusing approach has left buyers not sure what car they are talking about when they tell people what they have bought, and not sure what car they are looking at when they research new purchases. It also had the effect of disestablishing pre-existing models that people knew well, even if they lacked distinctive names. The full fruits of the rebranding strategy have yet to be seen.
Two other premium brands can testify to how this strategy – renaming with alphanumerics – might not work so well.
Acura’s Legend and Integra are still well remembered by former owners and customers – but the brand suffered a major identity crisis after it dropped those names in favor of alphanumerics. The Acura Legend has better brand recognition than the Acura RLX, despite having been out of circulation since 1995.
Cadillac’s close rival, Lincoln, decided to rename all of its vehicles (except the Navigator SUV) with the designation “MK” – ditching names like Aviator, Town Car, and Zephyr – in 2008. “MK” used to stand for “mark” – the famous examples being the 1956-1957 Lincoln Mk II and the popular Lincoln Mk V of 1977-1979. But now you can buy very different vehicles as the MKS, MKZ, MKX, and MKT. The name change hasn’t helped Lincoln, where sales have declined from about 110,000 U.S. sales in 2008 to about 81,000 in 2014.
Cadillac sales took a sharp hit during the GM bankruptcy and the early part of the recession, plunging more than 50% from 2007 to 2009 – but have been growing every year since. The actual vehicles, critics agree, are some of the best the division has ever produced and certainly its best modern efforts. But Cadillac is still not seen as being on par with BMW, Mercedes, Audi, and Lexus by many premium customers.
With the cars, in most cases, nearing class parity (which could not be said for the Cadillacs of the 1990s or early 2000s), the key to the rebrand strategy will be figuring out how to market them effectively and emphasizing what Cadillac does differently (and better) than BMW, Mercedes, Audi, and Lexus.
The upcoming flagship, which will likely be based on the stunning 2013 El Miraj concept car, will be aimed at the Mercedes S-class and aims to be the most agile and performance-oriented car in this big-car class. The design language that Cadillac has been using since the 2002 CTS is softened and stretched here, with long flowing rooflines and sharp edges that echo the past without being subsumed in it. The El Miraj was presented at auto shows throughout North America in 2014 with a display of past Cadillac logos and elegant depictions of interior materials and exterior views.
The El Miraj looks and feels distinctly American but also bespoke – something many premium brands like to emphasize. Great attention was paid to detail – the kind of attention you can devote to a one-off car – and the result felt intricate and unique. But it’s a concept car. What De Nysschen’s team has to sell may not be quite the same. And where “El Miraj” might make a customer think of Las Vegas or the desert, it’s not clear what “CT6” will make them think.
Cadillac hopes we’ll know more when we see them parked next to Mercedes S600s under Manhattan’s High Line park.