Electric Cadillac Can’t Compete With Tesla, GM Tries Frequent Flyer Miles

Cadillac ELRCadillac sales continue to sputter at General Motors. In fact, the brand is the only make at GM that has seen a year over year sales decline for the period ending in September at a time when the auto industry was booming. Specifically, Cadillac has logged in 127,837 sales for the first nine months of 2014 compared to 133,414 in 2013 for a sales decline of 4.2 percent. GM will now offer frequent flyer miles to help spur sales at the division.

The marketing move at GM follows a decision to relocate Cadillac’s sales team to New York City. That move, along with the renaming of Cadillac models, was criticized by Automotive News as follows:

It is most disappointing that the new head of Cadillac had this decision thrust on him without any chance to evaluate the situation or get some wise advice from outside the company — from his dealers, for example. It would appear that he had no choice in the matter.

The success of Cadillac is going to be product — pure and simple. Create great products for the dealers and customers, and GM will see a resurgence of the brand. It would seem foolhardy to put the marketing folks as far away as New York so they can be completely ignored on all product decisions.

The article seems to state a very logical strategy to succeed in a very competitive industry; that is to create vehicles that offer the best value. The political minds (embedded by Team Obama after the bailouts) at GM never seem to grasp this one simple theory. Just look at the previous losing strategy at Cadillac of trying to hype the commercially non-viable ELR (a gussied up Chevy Volt) to help drive showroom traffic. Other than from the media, interest in the ELR has been practically non-existent.

The Cadillac ELR was hyped as GM’s green alternative to the plug-in Tesla. A piece by one of GM’s media proponents ran in November of 2013 titled Watch out Tesla, here comes Cadillac’s ELR. It comes as no surprise to me that Tesla had nothing to worry about. So far in 2014, Tesla has sold about 11,000 Model S vehicles compared to an embarrassing 885 Cadillac ELR sales. Yes, that paltry ELR sales figure is for the entire year.

I find it hard to believe that GM’s management is that inept that they really thought a $75,000 Cadillac version of the Chevy Volt would actually be a big seller. To really get a laugh at the performance of the ELR, watch the end of the TFL Car video which has the excited commentator exulting over the cars blazing zero to sixty time of 9.4 seconds. “I thought it was faster than 10 seconds; yes, yes; now we’re talking!”

Tesla’s Model S does a zero to sixty in about 5 seconds. With performance standards so low at Cadillac, is it really a big surprise that they are struggling? Other than the excited test driver in the TFL video, there are not many car enthusiasts that would be impressed with a zero to sixty time of 9.4 seconds for a $75,000 car. That brings us back to the question of whether or not GM really thought they had a winner with the Cadillac ELR. Why would they invest millions of dollars in advertising if they didn’t?

Earlier this year, a debate raged about a controversial Cadillac ELR ad that ran during the Winter Olympics. The debate should have focused on why GM was even running ads for the ELR instead of about the quality of the ad. The only reason to spend millions of marketing dollars on a car that sells at a rate of about a hundred a month would be to drive showroom traffic to dealerships. Whether GM management believed the ELR would actually be a viable competitor to Tesla or they believed controversial ads would drive sales of other Cadillac models, they have once again proven themselves out of touch.

Sales of the Cadillac ELR have been so dismal that supply of the vehicle had bloated to 725 days; practically unheard of in an industry where 60 days is considered optimal! GM offered dealerships $5,000 each just to spur test drives. And we should never forget that taxpayers help subsidize the affluent buyers of Cadillac ELRs with a federal tax credit of $7,500 each.

Now we have GM management looking to right the Cadillac ship. GM teams up with American Airlines and gives away frequent flyer miles just to test drive a Cadillac. The cost to GM is undisclosed and probably is not included in their incentive spending figures. Add to that the seemingly desperate moves of changing the scenery for the Cadillac marketing team to NYC and the renaming of vehicles. One has to wonder if the politically-conditioned minds at GM will ever realize that the key to success in the auto industry is very basic. Build the best vehicles at the best values.

Mark Modica is an NLPC Associate Fellow.