January 8, 2012 / 11:08 PM / 7 years ago

GM challenges German brands with small Cadillac

DETROIT (Reuters) - General Motors Co (GM.N) has proved with the Chevrolet Cruze it can build a top-selling compact car, cracking a market long dominated by the Japanese brands.

Now the No. 1 U.S. automaker is targeting the entrenched German luxury brands with a more nimble compact Cadillac.

The 2013 ATS, shown on Sunday ahead of the Detroit auto show, is central to Chief Executive Dan Akerson’s mission to refashion Cadillac into a global luxury brand by winning over younger buyers with a sportier image.

The average age for Cadillac drivers was around 59 years old in 2011, according to CNW Research. That’s a decade older than BMW (BMWG.DE) and five years older than Audi (VOWG_p.DE), but on par with Mercedes-Benz. (DAIGn.DE)

Still, the average age of Cadillac drivers has fallen from about 63 in 1995. The Escalade SUV’s reception from hip-hop artists and the success of the CTS has helped upend Cadillac’s image as a “geezermobile,” said CNW President Art Spinella.

“It’s going to take them a couple of years,” Spinella said of the ATS. “You have to knock over these dominoes one at a time. It’s not like they all fall over all at once.”

The ATS is GM’s entry in an area now the domain of the BMW 3-Series and Mercedes C-Class.

The ATS, which tested at the demanding Nuerburgring race track in Germany, will be built on a new rear-wheel drive platform, but will also come in all-wheel drive. GM will make the car at its Lansing Grand River assembly plant in Michigan.

At less than 3,400 pounds, the ATS is the lightest Cadillac yet. Engineers fashioned the car with an aluminum hood and natural-fiber door trim panels, among other materials, to cut weight and improve handling.

Sales of the ATS are crucial to turning Cadillac into a global luxury brand, and moving it into a higher-volume segment to help GM achieve that goal.

Compact cars represent about two-thirds of the luxury car market in the United States, according to AutoData.

Brand image remains perhaps the most crucial in the luxury car market, where it can take a long time and a lot of money to overhaul consumer perceptions, TrueCar.com analyst Jesse Toprak said. “Luxury buyers still buy the brand,” he said.

But last year saw a reordering of the luxury car market in the United States, providing an opportunity for Cadillac to burst into the market in 2012.

Toyota Motor Corp’s (7203.T) Lexus brand, hurt by inventory constraints after the Japanese earthquake, lost its spot as the top-selling luxury brand in the U.S. market to BMW.

Reporting by Deepa Seetharaman and Ben Klayman; Editing by Bernard Orr

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