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Cadillac goes (more) upscale

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(Read caption) President of Cadillac Johan de Nysschen speaks to reporters at an auto show in Beijing, China. De Nysschen is set to make significant changes to Cadillac dealerships.

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Cadillac is in the process of reinventing itself--or at least its public face. The question is: what will it become? And perhaps more importantly: where will it fit in today's crowded luxury market? 

Auto market losing steam (again)

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Not so long ago, Planet Earth's major economies had a major meltdown. The Great Recession forced hundreds of companies to close or restructure, cost untold numbers of people their jobs, and generally made things miserable for years. 

Then, slowly, things began to improve--not all at once, and different countries improved at different speeds. But by and large, the markets bounced back. And it was good. 

In fact, it was so good that people who'd been watching every penny suddenly felt empowered to burn through dough (and credit). We've seen that very clearly in the U.S. auto market, where pent-up demand has led to sky-high sales. But now things seem to be cooling off--both in the stock market and in showrooms.

What does the future hold? If the cooling continues, luxury sales may taper off, with tech bajillionaires and hedge fund managers opting for smaller, more sensible cars. There would still be a market for luxury vehicles, of course, but the brands that will survive would be those like Mercedes-Benz, which weathered the Great Recession fairly well thanks to its largely conservative designs. Porsche, Lamborghini, and other flashy rides may not be in such great demand.

And where does that leave Cadillac? 

Makeover

When Johan de Nysschen, left Infiniti (not long after leaving Audi) to take over Cadillac's corner office, he brought with him a host of ideas. His over-arching goal? To update General Motors' flagship luxury brand--not just in terms of vehicle design, but also by changing the way that consumers think about Cadillac.

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He began by moving the company's corporate headquarters to New York, putting it nearer to the world's tastemakers. Then he began angling for a series of high-end digital boutiques (similar to the ones he'd planned for Audi). Like Tesla's galleries, de Nysschen's new centers would be less auto lot, more information center--less about the hard-sell, more about branding and raising consumer awareness.

De Nysschen also wanted to overhaul Cadillac dealerships, which he's now doing via an initiative called "Project Pinnacle". Among that program's key features are a new, tiered classification system for dealers, based on the level of customer service that shops provide and their projected sales. The strongest would be classed as Tier 1 and stand to reap the most benefit from the program, including higher profit margins. The weakest would be classed as Tier 5 and would likely stop carrying Cadillac inventory altogether.

To move to higher tiers, dealers will have to comply with Project Pinnacle's rules, including:

  • Instituting new dress codes for employees.
  • Offering pick-up and drop-off concierge service.
  • Offering roadside assistance to new-car buyers.
  • Heavy reliance on tablets to speed up customer service. 

That won't be cheap. It will mean investing in new personnel, new technology, and sometimes, new facilities. Some dealers are far from sold on the idea.

Then again, the return on investment could pay off--not just because Cadillac will offer greater margins for higher-tier dealers, but also because consumers could be drawn to the "special snowflake" services Cadillac wants to offer. That could translate into better sales across Cadillac's lineup, meaning that models other than the Escalade might see an upswing.

Given Cadillac's sales stats, which are off 4.7 percent worldwide this year and 12 percent in the U.S., any improvement would likely be welcome.

This article first appeared at The Car Connection.