A list of GM's woes would undoubtedly include the European market, but right now GM is also struggling in the U.S. Through the first six months of 2012, the company's U.S. market share is down almost two percentage points to just 18.1%. The GM brand suffering the greatest decline, in both market share (-25%) and sales (-18%), is Cadillac.
Yet, even though this is not good news for GM's flagship brand, it is not a surprise. During GM's restructuring in 2009, product programs were delayed or even cancelled, and we are now seeing the ramifications of those changes. Cadillac's current product portfolio does not measure up to that of any of its major luxury competitors, including BMW, Lexus or Mercedes-Benz. As illustrated in the table below, Cadillac now offers just four models, far below the offerings from Mercedes-Benz (15), BMW (10) or Lexus (9). Further, one of Cadillac's four products, the all-new XTS large sedan, just went on sale this month and another, the Escalade, is relatively low-volume. In June, 77% of Cadillac’s volume was concentrated in just the CTS and SRX. With such a limited product offering, it is little wonder Cadillac is struggling.
This landscape will change in the next few months. XTS volume will increase as availability improves, though the volume potential at the higher end of the luxury space is limited. But this fall, the all-new small ATS sedan arrives, competing in the highest-volume luxury segment, Luxury Compact Car. The ATS is positioned, based on product specifications and price, to compete directly with the segment-leading BMW 3-Series and Mercedes-Benz C-Class (among others), and it will come with an available manual transmission and all-wheel drive to more effectively compete with the Europeans. The addition of both the XTS and ATS to the Cadillac car lineup marks a significant milestone in the evolution of the make: for the first time in many years (maybe forever) Cadillac will simultaneously offer three competitive cars in the three core luxury car categories: compact, midsize and large.
Cadillac's product renaissance continues in the coming years. In 2013, Cadillac dealers will get coupe and wagon versions of the ATS along with a redesigned CTS sedan and a redesigned Escalade. The following year, an ATS cabriolet version and CTS wagon both come to market, followed in 2015 by an all-new SRX and redesigned CTS coupe.
This aggressive product activity will drive Cadillac’s share gains in the next several years. Polk Forecasting sees Cadillac’s share of the U.S. light vehicle market climbing to 1.3% in 2013 and 1.4% by 2015.
Despite these anticipated gains, though, Cadillac for the foreseeable future will still trail its European rivals, due in part to the fact that BMW and Mercedes-Benz will still offer a much broader array of cars and CUVs. Just as important, though, Cadillac's European rivals enjoy - and will continue to enjoy - stronger, richer, and deeper luxury reputations than that of the domestic make. The Europeans' impressive brand equities result from decades of marketing consistency and discipline. BMW has been touting the same tag line – “The Ultimate Driving Machine” for over 30 years. Polk forecasts that BMW will capture 2.4% of the U.S. light vehicle market in 2015, with Mercedes-Benz close behind at 2.1%.
Posted by Tom Libby, Lead Analyst, North American Forecasting, Polk (07.16.2012)