Sunday, June 1, 2003


Cadillac revival at crossroad

Division aggressively takes on benchmarks in quality, styling: BMW, Mercedes, Lexus

By Ed Garsten / The Detroit News


PHOENIX -- Entering a hairpin turn at 50 miles an hour near the red rocks of Sedona, Ariz., General Motors Corp. product czar Bob Lutz encouraged the driver to do "what's comfortable."

Lutz, who once authored an autobiography titled "Guts," urged the driver to resist braking in favor of downshifting using a clutchless manual shift.

It's one of the unique features on the 2004 Cadillac SRX luxury utility vehicle that goes on sale this fall.

"It won't let you downshift into first at 115 miles an hour," Lutz urged. "It has a safety override."

But his real aim is clear: demonstrate Cadillac's latest attempt to shed its reputation of luxurious, but slothy road yachts, and acquire a reputation as a sporty luxury marque.

"Cadillac was on a road to nowhere," Lutz said. "Sales were down, the image was down, and it was saddled with dated styling and poor handling -- even poor reliability."

Cadillac is ready to take the next step in its assault on the brands U.S. automakers and buyers have long benchmarked for quality and styling: BMW, Mercedes-Benz and Lexus.

The SRX and the sleek XLR two-seat roadster will give Cadillac crucial entries in two of the luxury market's most profitable segments. Moreover, they are aimed at drawing younger, more affluent and better educated buyers to Cadillac.

"We will continue to enhance our image by attacking niches which add value and image to Cadillac," said Mark LaNeve, general manager of Cadillac.

But are consumers willing to pay more for a Cadillac when they can spend the same money for European and Japanese brands that have already enjoy burnished reputations for quality, style and status?

"It's a good starting point, but I don't necessarily see folks giving up Mercedes, Lexus or BMW for Cadillac," said Joe Barker, an analyst with automotive consultant CSM Worldwide.

"To do that, Cadillac must build an entire portfolio of new cars and trucks that are of world class refinement, styling and performance."

A formidable test of Cadillac's strategy will be the success of the XLR. The two-seat convertible will be built in low volumes -- 5,000 to 7,000 units a year -- at the same assembly plant in Bowling Green, Ky., that produces the Chevrolet Corvette. Priced starting at $76,200, the XLR is being positioned as a new "halo car" for GM's flagship brand.

Cadillac has been down this path before with the ill-fated Allante. Produced between 1987 and 1993, the Allante was eventually dogged by quality and high manufacturing costs.

The XLR is built on its own dedicated platform based on the Evoq concept car. It is stuffed with a cadre of advanced features such as a magnetically controlled suspension, adaptive cruise control, satellite radio, electronic navigation, retractable hard top and next generation Northstar 4.6 liter, V-8 engine.

A high-performance V-Series version of the XLR is already in the works, according to Lutz.

Investing $5 billion

Cadillac's renaissance -- carrying a price tag of $5 billion for new products and plants -- began two years ago with the giant Escalade sport utility vehicle, which has been widely embraced by celebrities and younger, more affluent buyers. The CTS sedan, introduced in early 2002, has also been a success in the entry level market and enjoyed the best launch in Cadillac's history.

"CTS helped them tap into a younger buyer base while the Escalade has allowed them to bring in buyers in their late 40's and early 50's," Barker said.

A Platinum version of the Escalade ESV will be introduced in the fourth quarter.

"I'll be satisfied when we beat or exceed BMW or Mercedes demographics," Lutz said. "It's possible because I see them coming down in price and size and we're not going to do that."

The median age of a Cadillac buyer is now 61, according to a study by the market research firm AutoPacific.

The SRX is aimed at the same buyers who have made the BMW X5 and Lexus RX330 popular.

Pricing for the SRX equipped with a V-6 engine starts at $37,995 and at $46,300 for a V-8 model. That's above the RX330 and base models of the X5, but below high-end models of the X5 that can reach $66,000.

The CTS, SRX and the next generation STS will all have one thing in common: GM's new "Sigma" platform. It is being hailed as "a great catalyst for change for Cadillac," giving it the flexibility to more closely match production with market demand.

Cadillac also is planning to update the Deville, its top-selling model that accounts for 36 percent of all Cadillac sales, to draw younger buyers.

The aging Seville model line -- representing 12 percent of Cadillac sales -- will be replaced with the STS.

The public is starting to embrace Cadillac's latest evolution. Sales are up 17.2 percent though April compared with the first four months of 2002.

Still undecided is how to leverage the huge popularity of the Cadillac Sixteen, a 16-cylinder concept vehicle that wowed crowds at this year's auto show circuit.

Lutz is eager to build the vehicle and says GM could produce versions equipped with a base 8-cylinder, 12-cylinder and ultimately 16-cylinder engines to justify the cost of the project.

"We might be able to make a pretty good business proposition out of it if you do a lot of component sharing," Lutz said. "We just hit on a formula: extremely luxurious, internationally acceptable but 100 percent American."

Lutz said styling cues from the Cadillac Sixteen could provide a new design direction for the next generation of Cadillacs.

On the quality front, Cadillac made a quantum leap in the 2003 J.D. Power and Associates initial quality study released last month.

The brand vaulted from eighth to second overall behind perennial leader Lexus, Toyota Motor Co.'s luxury brand.

Cadillac placed eighth in last year's J.D. Power vehicle dependability index which measures durability after several years of ownership. This year's study will be released July 8.

It takes about five years to turn around a brand, says Lutz, but he believes Cadillac is headed in the right direction.

"These cars are going to fulfill the promise," he said.

You can reach Ed Garsten at (313)223-3217 or egarsten@detnews.com