GM to young adults: Please start buying Cadillacs

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Eagles lead singer Don Henley once spoke of his disgust at seeing a Grateful Dead sticker on a Cadillac, the ultimate sign of '80s luxury.


But what would he think of young adults today, who don't seem to be that interested in Cadillacs to begin with?

On a recent call with investors, Cadillac manufacturer General Motors (GM) said that the once-classic American car is failing to resonate with the current generation of young adults—and that they are planning to do something about it.


"A lot of emphasis right now and focus is being on answering this question: What does Cadillac as the brand stands for—particularly bearing in mind that millennials are going to play this important role in the future," Johan de Nysschen, GM's Global President for Cadillac, said on a call with investors last week.

He continued:

…While Cadillac unquestionably has a high degree of brand awareness…the reality is that it represents in its heritage a more classic expression of luxury.

And millennials are interested in a more contemporary, more progressive expression of luxury. And therefore our brand personality has to evolve to begin to also address these requirements and expectations.

Data from industry analysts LMC Automotive show that, to date, 16-35 year-olds have shown no incremental interest in buying Cadillacs, despite the fact that they represent an ever-increasing share of all car buyers.

This image was removed due to legal reasons.

LMC analyst Bill Rinna said that, indeed, Cadillacs still mean much more to young adults' parents.

"The Cadillac brand image still tends to be stronger with the older generations," he said in an email. "This, coupled with their greater overall wealth and ability to pay helps skew the numbers in their direction."


Cost also seems to be holding back Caddie purchases buy younger adults: Their average transaction price "hover[s] above $50K," Rinna said. Data from J.D. Power and Associates show that while younger adults are buying more cars, they are still buying them at lower price points and using longer leases.

GM seems to be aware of all this. De Nysschen explained why, for instance, most new Cadillac models only use random letters and numbers:

Buyers of the future—millennials—less so than people of our generation, a lot of them have no idea what an Eldorado is," he said on the call. "And I'm pretty much willing to guarantee that no millennial consumer in China has any idea of what a Deville is…

So it’s important to find a nomenclature strategy that is able to communicate that, which is what takes you away from names to this kind of very unromantic very rational alphanumeric combination.


For what it's worth, LMC data show the Cadillac Escalade SUV resonates most with 16-35 year-olds, with the demo representing 15 % of all Escalade purchasers.

You can get a sense of how GM thinks it can reach young adults (whether accurate or not) from its latest ads. Here's one from this summer that strives to associate Cadillacs with cool downtown New York City:

And here's one from their Facebook campaign, focusing on design details, which de Nysschen said on the call young adults were obsessed with:


De Nysschen agreed, however, that pricing, would ultimately have to adjust for any strategy to work.

"For most customers, when I see a Cadillac price [compared with] a BMW, they say the Cadillac is too expensive."


GM is convinced that young adults will be there in the future. De Nysschen said that in five years, four out of every five luxury cars both around the world will be bought by someone from Generation X or "the millennial generation."

But Rinna is not so sure: Many other premium and mainstream brands, he said, are also putting out luxury cars whose prices will have to come down to match younger adults' wallet sizes. Most remain north of $30,000, Rinna said.


"This isn’t just a Cadillac issue."

Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.

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