A Solid Plan at Cadillac

News in the Wall St. Journal (paid subscription) is that the new head of Cadillac, Johan de Nysschen, will take steps to revive the brand in light of sluggish sales in the USA. His approach is practical but it may not be enough to stem the slide in sales versus the German competition from Audi, Mercedes and BMW.

The complaints? Prices are too high. Instead of reducing prices or creating an artificial stimulus via promotion, de Nysschen will reduce inventory and cut back on production. Cadillacs will now be harder to get – and resale should not be negatively affected. It is called “scarcity” and consumers will hopefully see Cadillac as more desirable because supply is more limited.

To supplement that change, de Nysschen will beef up production of SUVs, where Cadillac has no problem with slow sales. Cadillac Escalades are “flying off dealer lots”.

The final change in this brand revival is to reduce the 900 or so dealerships in the USA. Again, Cadillacs become harder to get, more exclusive.

Sustain price levels, reduce inventory and dealerships and the costs that go along with them and reinforce the most popular products. A common sense approach well short of re-positioning the brand altogether, but will it be enough? Competing with three of the world’s most successful luxury car brands is no easy task. It will be interesting to see how well this strategy plays out.

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