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.

Cadillac ATS is one of the lightest cars in its segment. And making it so was a fundamental criterion for its development, as well as a guiding principle during the process. However, it was done in a manner that still guarantees a refined driving experience.

According to David Masch, the chief engineer for ATS, the car’s low weight gives it a more nimble and a more controllable feel, yet at the same time, it optimizes the efficiency and the performance of the powertrains. But, he says, they were careful in managing the weight to maintain Cadillac's signature degree of refinement.

Optimizing the mass of the ATS was the product of a four-pronged approach, which includes the strict adherence to Cadillac’s original architectural goals, the benchmarking of components to check whether lighter solutions were readily available, the application of a measured load management all throughout the car, and adopting a culture of weighing every component’s mass against every aspect of the development process.

Also contributing to the ATS’s low overall mass are the aluminum hood, the natural-fiber door trim panels, and the magnesium engine mount brackets. These features also reflect the brand’s systematic approach when it comes to evaluating every gram of the car. However, some weight had been deemed beneficial and essential to the ATS's driving experience. One example is the car’s cast iron differential, wherein engineers found that the ATS’s fuel economy can be improved with a cast iron differential instead of a lighter aluminum version.

While the Cadillac ATS’s rear suspension is made mostly of steel, the engineers’ focus on load management as well as on straight links allowed significant weight savings without the use of alternative materials. This has helped offset the weight of the car’s engine and transmission and has helped the new ATS deliver an almost-perfect 50/50 weight balance, at the same time contributing to reduced noise and vibration. The wheels have also taken a similar approach, wherein extra structural aluminum had been added strategically in order to further lessen vibration.

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