Why is Cadillac building sports sedans? It's so pointless. Can they just stick to large luxury cars like they've been building for over a hundred years? The XTS is their best-selling sedan. Clearly customers want large Cadillacs focusing on luxury. The Escalade is another example. Can they just be smarter with their money? I want to see them thrive again.
And here's the real answer on the XTS:
I don't have numbers to back it up, but strongly suspect a lot of XTS sales are to fleets. (Almost all the ones I see here are Ubers or corporate taxis.) Fleet sales are still money in Cadillac's pocket, but they don't do much to focus the whole 'Standard of the World' discussion.
It's good that Cadillac is still planning to have three sedans, even though the money will be in their new crossovers (XT4 and later XT6). It looks like Lincoln may give up on the luxury sedan market, as the MKZ will go away when the Fusion dies, and the Continental, while way better than the MKS was, has still not found a significant market for itself.
As for Cadillac, the ATS has been a decent car, but the interior is very tight. Plus, BMW, Mercedes and Audi have the luxury compact sedan market sewn up. The CTS grew larger with it last redesign, but did not grow the interior space commensurate with its size. Splitting the difference between the two may be just the right move. We'll see.
I am curious to see where this goes. Cadillac tried the tweener approach with the first two CTS generations, offering near 5-series space for 3-series money, but it had neither the luxury of the former nor the nimble handling of the latter. The Stinger now represents the tweener class, so the optics on a CT5 may be Cadillac vs. Kia. I imagine the key here is to finally deliver a luxurious interior without the usual ergonomic, material, and back seat compromises; then skip the silly high MSRP with massive discounts sales approach.
Let me address the first half. I see comparisons like this all the time. I.e. the older CTSs didn't have the luxury of the 5 but also didn't have the nimbleness of the 3 being a little larger. Ok, but the 3-series also doesn't have the luxury of the 5-series and the 5-series doesn't have the nimbleness of the 3. That logic doesn't get anywhere.
I suppose this makes sense. Why build an S-Class fighter, if even BMW or Audi has never build something themselves to top it? Focus smaller and with bigger numbers. It is interesting this CT5 will be sized exactly like the 2nd CTS fron the sounds of it. A car I thought was sized perfectly.
It also means resale value on the 2016 CTS-V will be absolutely nutso. I mean 2009 CTS-Vs under 100k miles are $25k, where 2009 E63's are $15k.
Gee I thought German cars had good resale value.
And I still think a CTS-V2 with under 100k for $25k is actually pretty cheap and a LOT of car for the money. That offers gen 6 Camaro performance in a sedan. Somehow, none of us has driven one yet, either.
That does seem to be the Cadillac way: deliver a product that is competitive but not in the ways that matter most to consumers, resort to massive discounts and fleet sales, then rather than fix what is wrong, completely change courses. All this in an effort to spur short term sales at the expense of brand equity.
Not every car coming out of Germany is a homerun, yet the German brands sustain their desirability with evolutionary design and marketing. Sure an odd 5-series GT or lackluster CLA tarnish a bit, but the core remains. This business of reinventing oneself every few years with wild changes in styling, naming, and sizes can only harm brand equity and positively kill resale values.
It takes generations (there was an article on how many, or how many years) for the perception to catch up to reality, and actually establish that brand equity. Doing as they are seems to set that back. Yet in a way they do not have much of a choice. Or maybe they do - maybe they just needed a 4th gen CTS with a little more rear legroom and a better interior. But I'll go back - the CTS sales numbers are really bad. And people have already passed it up, in droves (perplexingly it seems like a LESS compromised car than the 1st or 2nd gen CTS). A next gen with some updates isn't going to get the attention that a bigger shakeup (CT4, CT5) would bring. So that makes sense, I guess.
Of course, getting someone in the show room is just step 1. If they don't like what they see (product, cost, dealership experience) you still lost the battle.
I have had more than one person raise their eyebrows when I tell them I want to buy a Cadillac CTS Vsport. I think a lot of people don't know what it is or have an outdated impression of the brand. I'm happy to take advantage of depressed values in the used market in the meantime.
The brand needs to be aspirational in a way that it is not. For example, no matter how good or bad the V-sport actually is, someone would have to answer in the affirmative the question of "do you want to own and drive a Cadillac?" For BMW, Mercedes and so on, the answer is usually "yes" and the car itself is secondary to that decision. That is how it is with luxury brands. And for as long as Cadillac is seen as a discount luxury brand, that will probably not change.
Put another way, regular luxury buyers first think "I want a Mercedes." Some time later they decide which actual model they want. They may cross shop equivalent echelon brands but they have to have an attraction to the brand itself before anything else happens. They don't really care about the individual models and specs per se. What the V-sport does is it appeals to the enthusiast buyer but NOT the traditional luxury car buyer. And as we know, enthusiasts love to buy used. So there you go, in a nutshell.
Ok one more thing with the basic attraction to a luxury brand. I think the insignia is important as far as showing your friends, family and neighbors your 3 pointed star or roundell (or new wreathless crest). And you also have to have an interior that impresses. Good enough isn't good enough. I don't really agree with this but these are the rules that consumers set with their wallets. And as baby boomers age and everyone continues to scramble in order to capture that market, the priorities will be in luxury, self-driving and comfort. Fortunately the CT6 tickles those items. And by my own analysis, the CT6 is actually more successful than the CTS is right now, which is why it makes sense that the CT6 stays and the CTS turns into the CT5.
I was going to paste quotes that I was responding to but there are too many.
The 1st gen CTS interior sucked too much to even be considered a luxury car. Even if it was good performance wise, which it wasn't, it was unreliable and had the stench of the older unreliable garbage still associated with the brand. Yes there were a couple models here and there that were outliers, but for the most part, they successfully fell from grace by the 90's.
To discuss the other points of successful luxury brands:
They either cost insane money, sell low numbers, but survive on markup due to decades of pedigree (Ferrari, Lambo, to an extent Porsche (The most affordable in this class, but they have a couple "volume cars" to stay profitable.)
Then you have volume luxury, lower cost, volume sales with some halo expensive cars to maintain the brand image (BMW, Audi, Mercedes, Lexus, Acura, Infinity)
Either way, you need something very high end in the catalog to establish why the brand belongs in the class - S Class, 7 Series, R8, etc. (Acura doesn't really do this and is probably why they are less regarded)
Cadillac doesn't sell anything in the luxury department that luxury people can desire, or be associated with, and this is why their lower cars don't sell in volume. They fail on both requirements. A real halo segment/class, and a volume class, so they don't attract buyers, and they don't make money.
Ferrari sells with enough profitability built into their high prices that they don't need volume, Mercedes has cars that are desired by people with money, and attract people into the dealership. Those people then likely buy a volume car when they realize they can't afford the actual car they want. Either way, Mercedes makes money.
Cadillac is killing it with enthusiast cars, but most enthusiasts either don't have 100K for a CTS-V, or would rather buy a Camaro ZL1 1LE, or Corvette, for less money. Doctors are not saying "wow look at the performance of the CTS-V pushrod V8", they are saying "My doctor friends are going to think I don't make as much as them because they drive the prestige of a Mercedes." At this point, there is zero prestige left in the brand because aside from the CT6, the XTS is their only car like that, and it is a fleet vehicle.
I don't think the CT6 has enough halo to save Cadillac. It isn't enough to draw non-believers into dealerships to potentially buy it of an ATS. Just my opinion. It will have a class leading chassis. That isn't going to get non-believers in the doors. There needs to be something that gets people talking. Something super luxurious that nobody does.
I really believe that if Cadillac had a real halo, they would likely only have to update the interiors of the CTS and ATS, and they would have sales volume. I am not even convinced that they are the problem. I think it is really image now. So getting rid of the actual good cars is probably not the best plan.
There are a few needlessly inflammatory things in there which I feel the need to comment on.
First of all the CTS was in the small or midsize entry level luxury class. As an owner of one of these I will say I think the biggest interior issue is the design of the center stack, which looks less ugly when equipped with nav, which mine is. Still, it doesn't fit the rest of the interior. The rest I think is just fine and is made of good quality materials.
With that out of the way, take a look at CTS sales numbers from beginning to current:
2002 37,976
2003 49,392
2004 57,211
2005 61,512
2006 54,846
2007 57,029
2008 58,774
2009 38,817
2010 45,656
2011 55,042
2012 46,979
2013 32,343
2014 31,115
2015 19,485
2016 15,911
2017 YTD * 10,344
CTS gen 1 and 2 were decent sellers and for some reason took a dump with the 3rd gen, which was, by my account, the best CTS yet. However the market did not agree and I think the problem was they tried to position the CTS at parity with something like the 5-series. The 'tweener approach to the 1st and 2nd gen seemed to serve them better.
So I am going to dismiss your other comments about the CTS because regardless of what it did in the market, the current CTS is better in every measurable way yet is selling much worse. We are talking about why the current CTS isn't selling, which it isn't. I don't know why we are talking about the older ones, which sold much better, other than the fact that the 'tweener approach may be the right thing to go back to.
I think reliability and luxury brands are not as closely tied together as for other classes. The very first LS400 had no track record whatsoever and was a first for Toyota. I am not convinced that, in 1989, the buyer was like "well Toyota is an established super reliable brand, so I'll get this Lexus thing they made.". That is not what happened. That reputation probably DID establish itself years into the brand but the FIRST cars sold on refinement, fit and finish and value. Not reliability. I won't go so far as to say reliability doesn't matter, but it is less important to a luxury car buyer. German cars sell well. Enough said. That must mean they are reliable enough for a new car buyer.
Onto the luxury discussion. You say Cadillac has no halo. Well the CT6 is the best one they've made yet. And get this: it is currently OUTSELLING the CTS. That's right. Yes, the CTS has a sales problem but that is pretty incredible, no? Between the CTS-V, Escalade and CT6, it is nonsense to suggest Cadillac has nothing of desire. They do need a CT7 or 8 mind you, but it's not like they are starting with nothing. The CTS-V and Escalade are pretty well known and they are brands unto themselves (for different reasons, in different markets). The CT6 is new but I think it has promise. They are doing a lot of innovative stuff in the CT6. It's not just a large CTS. It's not even Alpha. It has GM's new Super Cruise, for example.
I agree on the doctor example, unless he selected the M5. Then I would ask him if he at least test drove the CTS-V. But chances are he didn't buy the M5 in which case I agree with your assessment.
On your last point, I think Alpha actually cursed the ATS and CTS. It is a packaging issue. They both have small back seats for the class and I think that matters now. It didn't matter 20 years ago in this segment (when Cadillac had many large cars) but it matters now. They can't catch a break.
The CT6 is packaged better and being between a 5 and 7 has some leeway there. You get in a CTS and then a 5-series and it's like...this car is kind of cramped. Same with the ATS. That is a factor. Plus there is a very strong emphasis on interiors these days, more than ever. I don't get it and never will - I don't want Cadillac to build a high end interior and make the same car $20k more expensive. That does nothing at all for me. On the other hand, I want them to succeed and lead.