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Luxury car brands scrambling to avoid a blue Christmas

DETROIT — When financial markets surge to new records, sales of luxury cars usually rise, too. Instead, October U.S. auto sales reports on Wednesday showed that a collapse in sales of luxury sedans is accelerating. Consumers have gradually shifted over to luxury sport utility vehicles from sedans in the past decade, but the trend — which has occurred in both the non-luxury and luxury sedan segments of the auto market — was particularly pronounced in October. Sales of Daimler AG's Mercedes-Benz S-Class, long a global benchmark for large, premium sedans, plunged 49 percent in October, and are down 24.8 percent for the year to date. General Motors' Cadillac brand said it sold just 779 of its CTS sedans in October. Demand for that car, designed to compete with German luxury sedans, is down nearly 33 percent for the year. "There's still a significant portion of the market that wants a car, but I'm sure there were people who preferred a horse to a car at one point." Cadillac's best-selling model this year is the XT5 compact SUV, which has more than doubled sales from a year ago. The shift within the luxury vehicle market away from sedans toward SUVs of all sizes is forcing some of the most prestigious brands to scramble to add SUV models to their lineups or boost SUV production to meet demand. "In the short term, there will be pressure to add (consumer) incentives, cut production or both," said Cox Automotive analyst Michelle Krebs. "And we just don't see an end in sight to this trend." The Dow Jones Industrial Average has been trading at all-time highs, usually a good sign for luxury sedans, but as major automakers reported new U.S. vehicle sales for October on Wednesday, sales for passenger cars continued their slide while luxury SUV and crossover sales rose again. According to Kelley Blue Book data, in 2007 luxury sedans made up 7.6 percent of U.S. new vehicle sales, while luxury SUVs made up 4.2 percent. Through September this year, luxury SUVs made up just over 7 percent of the market, compared with 4.9 percent for luxury sedans. In the short term, luxury brands could use holiday season sales promotions to clear slow-selling sedans off dealer lots, analysts said. Toyota's Lexus brand said on Wednesday it will launch its "December to Remember" year-end sales promotion for the 18th straight year.

Cadillac moving to NY as separate business unit

Cadillac is under new leadership, and the automaker is committed to turning itself (back) into a global luxury powerhouse. It's got a strong product offensive (of products currently in showrooms, and much more on the way), and now it will have a new location to call home.
Following earlier speculation, GM has confirmed that it is moving Cadillac's base of operations from Detroit to New York. Lest you think it might rent offices in the Chrysler Building (which is, after all, one of the tallest in the city), the new Cadillac global headquarters will be located in the Soho area with a "multipurpose brand and event space in conjunction with modern loft offices." The company is still evaluating which staff will move along with it to Manhattan, and which will remain in Michigan where technical operations will still be based.
The move from Detroit to New York is the first major change being instituted by new Cadillac chief Johan de Nysschen, who previously undertook a similar shift in moving Infiniti away from Nissan headquarters to its own facility in Hong Kong. Ford had attempted a similar move in relocating its luxury portfolio under the Premier Automotive Group (which then included Lincoln, Mercury, Land Rover, Jaguar, Aston Martin and Volvo) from Dearborn to Irvine, CA, but ended up moving Lincoln (the last one still under the Ford umbrella) back to Michigan. Other luxury automakers like Audi (Volkswagen) and Maserati (Fiat) are headquartered away from their parent companies as well, but have a longer history of independent operation.

Cadillac's de Nysschen takes aim at Porsche 911, Cayenne

Johan de Nysschen has big plans for Cadillac. He's moved the brand from Detroit to New York, revamped its model nomenclature, and planning a raft of new models for the near future – including a $250,000 luxury sedan to take on the likes of Rolls-Royce and Bentley. But the veteran executive of luxury automakers has some more performance-oriented machinery in mind, too. Speaking with Car and Driver at the Los Angeles Auto Show last week, de Nysschen suggested Cadillac could be ready to launch a flagship sports car sometime in the next decade. The halo model would take aim at the Porsche 911 and do for Cadillac what Audi did with the R8, Mercedes is doing with the AMG GT and Acura once did (and is aiming to do again) with the NSX. Just what form it would take remains a big unknown, but de Nysschen indicated that the brand would need to be built up further before the sports car would be launched, lest it emerge too detached from Cadillac's image. The last time Cadillac delved into that territory was with the Corvette-based XLR, of which it sold only 15,000 or so examples – far below initial targets. The 911 rival isn't the only performance model de Nysschen has in mind, however. He plans to further expand the V series into a more substantial sub-brand to include a crossover to take on the likes of the Porsche Cayenne Turbo, BMW X5 M and all those many AMG-tuned Mercedes utilities. The idea of an entry-level model to slot in below the ATS was mooted as well. A range of diesel engines are slated to help Cadillac break into overseas markets in similar fashion to how Maserati has expanded its market reach with oil-burning versions of the Ghibli and Quattroporte. And we wouldn't be surprised to see Cadillac get in on a new flagship SUV being launched by Opel in Europe, either.