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Saving $20,000 on a New Cadillac?

Source: courtesy of General Motors
Edmunds prices a 2013 Cadillac ATS made by General Motors Co. (NYSE: GM) with a performance package and driven 12,000 miles at $27,000. That assumes the vehicle is in excellent shape. If the dealer has inspected the Cadillac and “certified” it, which presumes it is in better than excellent shape, and it has a warranty, the price might rise to $30,000. A similar brand new model — a 2015 Cadillac 2015 with a performance package — retails for $42,000 to $50,000, depending on options. No wonder Cadillac has trouble selling new cars.

Of course, there are several other reasons, beyond savings, why people do not buy new 2014 and 2015 Cadillacs. Among them is that people do not like the brand. Cadillac sales fell 18% in November to 13,178. For the first 11 months of the year, they were off about 6% to 154,500. Sales of the entry-level ATS were supposed to salvage Cadillac’s faltering prospects. Instead, its sales fell 24% to 2,282, compared to the same month a year earlier. For the first 11 months, the drop from the same period last year was 20% to 27,425.

The new car/used car problem plagues many dealers and many brands. However, the conventional wisdom within the industry is that the most popular cars hold their value the best over time. While that is a theory, it is borne out by the prices of many luxury cars, at least. Mercedes could make this argument, and so might BMW. Their new car sales have risen in the 10% neighborhood this year. That, by itself, gives credence to the used car value proposition, if price support for used cars is based on new car sales.

Cadillac has entered, or perhaps has been in for some time, the vicious end of the used car cycle. Too few people want its cars, compared to competing models, so even the value of its used cars are pressured downward. The theory can only be completely proved on a car-by-car basis. However, based on a broad sample, Cadillac has a problem.

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