Cadillac is planning to increase the prices of its vehicles in the future to more or less match their German counterparts as part of the carmaker’s plans to boost its credibility among luxury vehicle customers. For instance, the Cadillac CTS sedan is similar in size to the BMW 5 series, but the base CTS is less expensive than the base 5 series by over $8,000.
Don Butler, vice president of marketing at Cadillac, however, said they intend to narrow the price gap for the next-generation CTS and other Cadillac vehicles. Cadillac is releasing the next-generation CTS for the 2014 model year. Speaking on the sidelines of the J.D. Power and Associates Automotive Marketing Roundtable, Butler said that as Cadillac develops products targeted against the best in the segment, the carmaker prices them similarly with their rivals.
During a speech at the Roundtable, Butler said Cadillac will be "unapologetic" about its vehicles as a serious global luxury brand. He, however, implied that Cadillac will continue to have some price advantage over its German rivals.
He said that although Cadillac wants to be competitive, the carmaker does not want to be in position where in a sense it is bribing consumers to experience its product. Cadillac’s vice president of marketing noted that the luxury brand’s global push will become more important to General Motors' bottom line as consumers are shifting to smaller, more fuel-efficient vehicles – which are affecting sales and profits of GM's light trucks.
Butler said that as a carmaker, GM needs a luxury brand to establish not only credibility but also profitability. Butler called the ATS compact sedan, now available in the United States since September, as the "anchor" of the Cadillac's bid for global luxury competitiveness.
The base model of 2013 ATS compact sedan has a starting price $33,990, compared to its rival, the 2013 BMW 3-series sedan, which fetches a starting price of $37,395. Both prices include destination fees. According to Butler, the luxury compact segment appeals to millennial shoppers for whom the ATS may be their first luxury car. Millennials, also called Gen Y, are those born in the 1980s and 1990s. Butler quipped that millennials, in general, represent a huge opportunity for Cadillac.