Flashy commercials, trendy hashtags and big events in the world of fashion and the arts are just a few of the ways that Cadillac attempted to woo new buyers in the nearly five years that former U.S. Audi boss Johan de Nysschen ran the shop. Yet while these efforts look good in the glossy pages of a men’s magazine or as a subway station ad, they never really translated to sales, and aggressive campaigning couldn’t hide what the brand lacks: a quality, competitive product that can speak for itself.
Yesterday, news broke that Cadillac’s CEO Johan de Nysschen would depart the company. He had served as Cadillac’s head for just under five years. Though de de Nysschen’s apparent slowness for catching onto the SUV-craze sweeping the market certainly didn’t earn him any favors from upper General Motors management, there was a bigger issue at work behind Cadillac’s floundering sales under his leadership: the value placed in branding and price strategies in lieu of improving the actual cars Cadillac was supposed to be selling, and having a lineup that met current demands.
To examine this more closely, let’s wind the clock back to July of 2014, when de Nysschen first took the reins of Cadillac. He had come from Audi and then Infiniti, and BMW before both. Together, ostensibly, he and then-Cadillac chief marketing officer, Uwe Ellinghaus—another GM outsider—would work to revamp Cadillac’s wandering image coming out of the 2000s and hopefully grow vehicle sales.
It could be argued that in the years after GM’s post-bankruptcy resurrection, Cadillac needed the most help. Once, it was the top tier of luxury cars in America, the ultimate sign that you had “made it.” But that hadn’t been the case since the early 1970s, and possibly even sooner, due to decades of poor products and increased competition from Germany and, eventually, Japan. Even though Cadillac saw some signs of life with the first-generation CTS in the 2000s, it was still largely seen as an old person’s car company, and certainly not something that could compete with BMW, Audi or Lexus.
De Nysschen’s approach focused on restoring some of Cadillac’s luster, not just by selling cars, but by fixing up its image. Shortly after he started, Cadillac signed the lease for new headquarters in SoHo, the obnoxiously trendy lower Manhattan neighborhood. The move was, in a word, huge; both in location and in significance. Moving it from its historic home in Detroit to New York City definitely ruffled more than a few feathers in the Motor City and in the auto industry’s Midwestern heart.
But no matter. Cadillac under de Nysschen was chasing an image. A departure from the GM way of doing things was necessary for a company that wanted desperately for some fresh public perception, divorced from its old and stodgy Middle America parent company.
In a 2014 Facebook rant against the dissenting voices, de Nysschen backed up his belief that New York City was the place to be to “set up an iconic global luxury brand” and wrote:
It has everything to do with creating an awesome car company. We must develop corporate processes, policies, mindsets, behaviors, attitudes, which are right sized for Cadillac and which are immersed in focusing on and responding to what it takes to win in the premium segment. No distractions. No side shows. No cross- brand corporate considerations. No homogenized lowest common denominator approach. Just pure, unadulterated, CLASS.
He believed that the move to New York would galvanize a break with Old Cadillac and usher in New Cadillac. Again in the New York Times, he said:
“It allows our team to share experiences with premium-brand consumers and develop attitudes in common with our audience.”
The new Manhattan headquarters, set to open next year in SoHo, will house the “majority of functions with oversight and responsibility for both global and US” Cadillac operations, GM said in a statement.
The desire was very clear: The automaker wanted young, cool, hip and successful people to buy its cars. Cadillac’s director of brand marketing, Melody Lee (who is now the global director of Cadillac’s Book vehicle subscription program), shed some light about Cadillac’s new strategy to Fortune in 2014:
“We want to be a global luxury brand that happens to sell cars. We don’t want to be an automotive brand. There is nothing that exciting about an ad with a car in it by itself. We need to start injecting more humanity into our brand and into our advertising.”
At 33, Lee was a self-identified millennial and proclaimed to be the type of buyer that Cadillac hoped to attract: “30-somethings on the cusp of success who have the income to drive a Cadillac.”
She continued:
“I don’t buy products, I buy brands. I don’t use Apple computers because they are the best computers, I use them because Apple is cool. We need to show drivers what the Cadillac lifestyle is all about.”
It was a statement roundly derided by the industry people who were unable to recognize this “new,” buzzy, New York City Cadillac. And Melody Lee isn’t wrong here—people do buy into brands. But the fundamental mistake was that Cadillac, like any product, doesn’t exist in a vacuum. And the value proposition just wasn’t there compared to competitors. You have to have the product to back up all that talk, and even as it went through this growth phase, Cadillac didn’t, on a lot of fronts.
For instance, the interior quality of the top-trim CT6, Cadillac top-model, pales in comparison to a comparable Mercedes E-Class. Any buyer could sit in a CT6 for five minutes, walk across the road and hop into a Volvo at a competing dealership and pick up on the differences in an instant.
And for years Cadillac’s infotainment system, CUE, was the subject of much derision and scorn, with its confusing layouts and clunky touchscreen response times. (Cadillac finally introduced an improved version last year.)
It was unfortunate, because Cadillac’s performance models had excellent engines and great gearboxes. They were just dragged down by details like shoddy interiors and bad infotainment systems. And the ATS was far too cramped a sedan for American buyers.
The following winter, Cadillac launched its splashy “Dare Greatly” ad campaign, which included buying up undoubtedly pricey Oscar commercial spots (Variety reported they cost about $2.6 million for a 30-second slot in 2018) and becoming a sponsor for the first-ever New York fashion week for men. The targeted appeal was clear.
Of the campaign, Ellinghaus, according to the Wall Street Journal, said, “Luxury brands don’t sell products, they sell dreams. People need to find Cadillac inspiring and having a spirit and attitude, a clear point of view.”
A big part of this was vehicle pricing, too. One imagines a strategy where the “new,” reborn Cadillac would undercut its German competitors for a while, and then creep into the more expensive range as it grew its loyal fanbase and won repeat buyers. But de Nysschen didn’t see it that way. For Cadillac to be a premium brand, it had to be priced as such, which made it even harder to compete with the players who took Cadillac’s top spot by turning out the 3 Series when it was making the Cimarron.
So what exactly was Cadillac doing about, you know, selling actual cars that people wanted to buy? A 2015 piece in the New York Times painted a picture of Cadillac earnestly spinning its wheels but not really going anywhere. GM said that it would invest $12 billion by 2020 for the development of eight new Cadillacs, which would include crossovers and SUVs, a segment that Cadillac was already behind in.
“How is it possible that we have so few crossovers from this iconic American luxury brand?” De Nysschen asked the paper rhetorically. “The Germans have more than I can count on two hands.”
He posited two potential reasons:
One answer, he suggests, is that Cadillac has often been overshadowed in G.M.’s Midwest empire. Cadillac design and engineering will remain in the Eero Saarinen-designed G.M. Technical Center in suburban Detroit, itself the recipient of a $1 billion investment and up to 2,600 new jobs. But Mr. de Nysschen insists that the relocation isn’t window dressing.
The less-provincial outlook includes another bid to make Cadillac an international player by tailoring cars to buyers in China and Europe. To become a true “challenger brand,” Mr. de Nysschen said, it must also beat the Germans at the global luxury game they dominate.
That disconnect between Cadillac’s critical standing and its lagging reputation and sales helped drive the change of perspective for its sales and marketing teams. One goal, Mr. de Nysschen said, is to draw on luxury experts beyond the auto industry and to “see and live the lifestyle of actual luxury customers.”
Unfortunately, though, Cadillac was still slow to jump on the SUV/crossover bandwagon, which wound up hurting it in sales. In a time when BMW, Audi and the rest were printing money with a huge suite of SUV options for buyers—to say nothing of so-called non-premium brands, like Subaru—Cadillac was getting killed.
And even if de Nysschen as president wasn’t in total control of the kinds of products GM chose to build, he was still ultimately responsible for his division, and one imagines that if he had figured out the coming SUV boom as some industry leaders did, Cadillac wouldn’t have been caught so off guard.
But there was more. In addition to meandering sales, de Nysschen also targeted Cadillac dealerships. His Cadillac overhaul vision included upping the quality of the dealership experience so that potential buyers wouldn’t feel like they were stepping onto less-terrible Chevrolet lots. After all, a huge reason Lexus does so well is that the dealership experience—sales and service—is pretty much the best in the industry. De Nysschen aimed to weed out those dealers who couldn’t cut it. This plan was called Project Pinnacle and for $800 million, all it really seemed to do was sour dealer relationships.
And all the while that this was happening, Cadillac’s sales still couldn’t touch those of its German and Japanese competitors. In the U.S. and between the years of 2015 to 2017 (complete years with de Nysschen at the helm), BMW sold 964,882 cars, Mercedes-Benz sold 1.1 million, Lexus sold 977,961 and Cadillac sold only 501,713 (all numbers according to Good Car Bad Car).
This stark contrast is not a matter of people not buying cars in general, as competitor sales figures plainly speak to the contrary. Rather, this is glaring evidence that, while people, in fact, are buying cars (and with much gusto), people are just not buying Cadillac’s cars.
The fact of the matter is that the quality of a Cadillac never improved to match the amount of noise it was making about its rebranding efforts. In our various reviews of Cadillac cars, we’ve loved how they perform and drive. The ATS, CTS and CT6 especially are perennial Jalopnik staff favorites—particularly in V and V-Sport form, as they apply here—but not without the same shortcomings over and over again. We’ve always felt they lagged behind other luxury brands in terms of interior styling and quality. That’s really all a buyer needs to hightail it in the opposite direction. And even if a car is a hit with critics, if it’s not selling, what’s the point?
An argument could be made that de Nysschen had his hands tied because a cloud of Detroit and GM beauracracy hung over his head, but at some point, as a CEO, you have to put your foot down and just make a great car. Hashtags can come after.
In contrast, Volvo, another once-troubled automaker also backed by a company with very deep pockets, quietly went about and diligently built fantastic, quality vehicles that you can sense as soon as you climb into one. You do not get that feeling with a Cadillac.
And now that de Nysschen is out, it appears that the efforts that he put in merely building the brand and not the product had finally caught up to him, reports Bloomberg:
One of the issues that contributed to de Nysschen’s exit, said people familiar with the matter, was that Cadillac spent a lot of its marketing efforts developing content to build the overall brand and didn’t do enough to sell individual models. Under de Nysschen and former Chief Marketing Officer Uwe Ellinghaus, Cadillac focused on a “Dare Greatly” campaign that attempted to build Cadillac’s image with less of a focus on sales and the cars.
One of de Nysschen’s strategies was to raise prices on Cadillac models to maintain a more high-end clientele. That tactic contributed to lower volumes that dealers complained about early in his tenure. He held the line to rebuild the brand’s cachet, but sales volume suffered.
Ellinghaus left Cadillac in December. De Nysschen will be replaced by Steve Carlisle, a GM veteran of 36 years. He’s the polar opposite of de Nysschen, as much an insider as the other was an outsider.
It’s unclear what his vision for Cadillac will be. Will the automaker stay in Manhattan, or call it quits and return to its birthplace in Detroit? Will the dealer initiatives and marketing work continue? How will Carlisle help Cadillac break free of the slump that it’s in, if at all?
Yet, more than anything, Cadillac is a case study in how selling cars is more complicated than just good or bad branding. You have to really consider your competition and how a customer could benefit from buying your product over somebody else’s. In the end, it really felt like Cadillac was too busy chasing after a hypothetical customer that it didn’t stop to think about an actual one.