Cadillac Still a Lemon for GM

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The General Motors Co. (NYSE: GM) Cadillac division can boast that Motor Trend named its new CTS as “Car of the Year.” The accolade does not offset the fact that Cadillac’s sales run so far behind the industry luxury car leaders that a basket of awards cannot solve its sales problems.

After Motor Trend described all the safety, engine and comfort advantages of the CTS, the editors got to the heart of the matter:

In simple mathematics, the Cadillac CTS makes an obvious value play by pricing its base model well below the starting price of its competitors at $46,025. It likewise prices the impressively high-performing Vsport model below the V-8 competition, while the standard, mid-level V-6 model competes head to head on price.

While those price advantage numbers may be true, Cadillac’s image and the quality of its cars have prevented it from gaining even modest ground on industry leaders: Toyota Motor Corp.’s (NYSE: TM) Lexus, BMW, Mercedes and Audi. Despite recent problems, Tesla Motors Inc. (NASDAQ: TSLA) has begun to take market share from them all.

By most measures, Cadillac ranks number five in luxury car market share in the United States. Sales of leaders BMW, Mercedes and Audi continue to grow robustly. Each has started to sell less-expensive cars, hoping to ride the power of their brands. These new products pit them squarely against Cadillac’s smaller cars. Cadillac also faces the difficulty that its crossover (the SRX) and large SUV (the Escalade) are ancient by industry standards.

Cadillac’s highest hurdle is the perception the driving public has of the quality of its cars. It ranked barely better than average in the J.D. Power Initial Quality Survey. In the J.D. Power Vehicle Dependability Survey, it ranked below average.

Cadillac may have produced models that have turned the heads of part of the automotive press. But sales numbers and quality perception continue to show the extent to which, against its major rivals, it is a failure.

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