Cadillac ATS won’t chase BMW 3-series, Mercedes C-class into a price war

Article by Anita Panait, on July 29, 2012

General Motors Co. tried to impress reviewers with its new Cadillac ATS, the first compact of the luxury brand in 25 years, by driving it along the Atlanta Motorsports Park racetrack in Georgia. GM hopes that the new Cadillac ATS will further increase Cadillac’s sales in the United States and China, a part of GM chief executive Dan Akerson's grand plan to make the brand more global.

GM, however, could be facing an uphill battle to sell the Cadillac ATS to its target sales volumes, especially if its monthly payment is similar to the ones offered by BMW and Mercedes-Benz, Tom Libby, lead North American analyst for R.L. Polk & Co. told Bloomberg. BMW and Mercedes-Benz have been lording over the luxury compact segment thanks to their monthly lease offers on the 3 Series and C-Class, which in some cases, amount to $299 a month.

Libby noted that BMW and Mercedes-Benz, with their 3 Series and C-Class offerings, already offer extraordinary equity “in the mind of the luxury consumer." Cadillac vice president for marketing Don Butler, however, remarked that GM would not engage BMW and Mercedes into a price war. Butler said engaging in a price war could make it seem that GM would not be successful in building the brand as it is already “distressed from the start.” 

He says that the price war is comparable to “almost bribing people” just to give the Cadillac ATS a shot. The new Cadillac ATS compact as well as the XTS full-size sedan are the first of the luxury brand’s new offerings since it introduced the coupe version of the CTS sedan in 2010.

The new offerings come as part of Akerson’s strategy to offset declines in sales of high-margin trucks by boosting luxury brand sales. Cadillac had been a symbol of American luxury, with countless premium products built throughout its brand existence.

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