Cadillac Struggles To Gain Traction With V-Series Performance

By Paul Lienert, Contributor, Edmunds.com
Date posted: 11-28-2007


Cadillac boss Jim Taylor is getting ready to watch his cars, the Team Cadillac CTS-Vs. We're at Road Atlanta for a round in the SCCA Speed World Challenge GT. As is often the case with the peripatetic Taylor, he's working a mobile phone and no surprise chatting animatedly about the V-Series production cars and their impact on the Cadillac brand.

"Cadillac has had an enormous hill to climb in terms of perception," he says. "But the V-Series is doing its job. Our initial focus was on young males. That has mushroomed, mostly by word of mouth. Like this weekend at Road Atlanta we're building the buzz, one track at a time."

In fact, the buzz already has been mounting about the 2009 Cadillac CTS-V, which breaks cover in January at the Detroit auto show. The '09 V-Series CTS hits the street next fall with a supercharged version of the Corvette's LS3 6.2-liter V8 under the hood. Expect output to top 500 horsepower and torque to climb to nearly 500 pound-feet.

Sounds great, except the Cadillac V-Series concept has been a flop so far.

Credibility, Maybe; Volume, No
The V-Series cars have garnered mixed reviews since Cadillac introduced the original CTS-V in 2004. The V-Series idea began with the Cadillac Northstar LMP racing sports car that went to the 24 Hours of Le Mans in 2000 - 2002, and then found its expression in the CTS-V that entered the SCCA's Speed GT racing championship in 2004 and then won the championship in 2005-'07. Yet for every person who wanted the V-Series to be a racing car, another suggested that a luxury car in the style of a Mercedes-Benz AMG might be a better answer.

And despite being supported by a lavish advertising and promotion budget, the cars haven't been selling, and Cadillac isn't really sure why. While the division has sold an average 230,000 vehicles a year since 2004, annual sales of the V-Series have dwindled to around 3,000 units, including fewer than 1,000 STS-Vs and fewer than 500 XLR-Vs. In comparison, the pricey BMW M5 alone outsells the entire Cadillac V-Series range.

"To be honest, when you're only selling 3,000 cars a year out of a total volume of 200,000-plus, the actual impact is limited," says Taylor. "But I like to use the camera reference. If you want to buy a good camera, you go ask someone who's really into cameras what they'd recommend.

"Same thing in the car business. You get into this luxury space, and a lot is done by word of mouth. People want a reference point, and the go-to guys are the enthusiasts. They cast a huge shadow on regular customers and influence their purchase decisions."

Outgunning the Competition?
What the enthusiasts have said, in print and cyberspace, is that the V-Series cars generally stack up well against the competition. The CTS-V has outgunned its German rivals, the BMW M3 and the Mercedes-Benz C55 AMG, in terms of engine size, horsepower, torque, acceleration and top speed.

On the downside, Cadillac's hot rod last year carried a suggested retail price of $52,170, well above the M3's $48,900 sticker and nearly as steep as the C55 AMG's $54,450 price tag. What may have given prospective buyers even greater pause might have been the $21,500 premium the CTS-V carried over the base '07 CTS, which listed for $30,670. The '08 STS-V and XLR-V carry similarly stiff price premiums of $24,745 and $19,100 respectively over the standard versions of these cars.

Simply put, Cadillac has demonstrated that it doesn't have the cachet with enthusiasts to pull off that sort of price premium on its high-end models.

Cadillac certainly hasn't achieved the success of BMW, which has had its M Division engineering high-performance parts and vehicles for three decades. The mystique of BMW M is daunting. Jack Pitney, marketing vice president at BMW North America, observes, "Great driving dynamics have always been a cornerstone of BMW. The purest expression of that is our M brand.... It's the epitome of BMW."

But this mystique hasn't stopped General Motors Vice Chairman Bob Lutz, a former BMW sales executive, from tossing down the gauntlet. The redesigned '09 Cadillac CTS-V, Lutz proclaims, will not only dust the M3, it will also "put the M5 on the trailer."

What's Next?
We think big questions loom regarding the future of the Cadillac STS-V and XLR-V, although Taylor says that prospective successors for one or both models are "on the radar."

He also suggests the division could expand the V-Series sub-brand to one or more future products that will broaden Cadillac's portfolio after 2010. "A series can't be a series with only one model in it," says Taylor. "So we fully intend to extend the V-Series brand to other models. But they have to be credible and perform like a V, otherwise they won't make the team."

Candidates for the V-Series treatment include an ultra-luxury XLS flagship sedan to square off against the BMW 7 Series and Mercedes-Benz S-Class that might be built on the same updated GM Zeta platform as the Pontiac G8. There might also be a rear-drive compact sedan based on the upcoming Alpha platform that would slot below the CTS in the Cadillac lineup.

Meanwhile, Taylor describes the forthcoming 2009 Cadillac CTS V-Series as "a CTS on steroids [with] a power-to-weight ratio that will give it phenomenal performance. We're preparing to raise the bar significantly. It will be much more spectacular and it should help us build even more credibility."

Taylor also reveals that the 2009 CTS V-Series will offer a choice of six-speed manual and automatic gearboxes a move that could double CTS-V sales from the meager 2,000-plus V-Series units that Cadillac sold in 2006.

Can This Child Be Saved?
Given the generally positive response from enthusiasts, but only modest success on the retail side, is the V-Series concept still valid for Cadillac?

"Look what's happened to the perception of the brand," observes Jim Hall, vice president of industry analysis for California-based consulting firm AutoPacific, Inc. "Cadillac's consideration among younger buyers is way up from just three years ago. And the median age of buyers continues to come down."

Heritage and brand-building over the long haul are issues, too. It has taken BMW 30 years to establish its M series at the top of the performance heap. Says Hall, "The true payoff for Cadillac won't come quickly. You have to look at the potential return over maybe a decade."

The final frontier for Cadillac may involve better communications with prospective customers.

Says Taylor: "The original mission for the V-Series hasn't really changed. But we realize we're still only reaching a relatively small portion of the general luxury population. So part of our marketing challenge is to let more people know that we have a V-Series. We need to broaden that message beyond the alpha-male gearhead crowd."