Caddy's ATS could crowd CTS
New compact sedan is similar in size, price
DETROIT -- The arrival of the new Cadillac ATS sedan in showrooms this week is likely to put sales pressure on the brand's workhorse for the past decade: the CTS sedan.
The two cars overlap in size and price. The CTS, considered mid-sized, is 8 inches longer than the compact ATS, and the $39,995 sticker on the lowest-priced CTS is just $1,500 more than that of the ATS with a 2.0-liter turbocharged engine, which is expected to be the volume model.
Usually when two models are close in price, shoppers go for the bigger one. But the CTS has gotten long in the tooth: The current generation was launched in fall 2007 as a 2008 model.
That is likely to result in some CTS shoppers choosing an ATS, which is expected to become Cadillac's sales leader in short order. Cadillac executives expect to sell roughly 50,000 ATS sedans in 2013. Last year GM sold 55,042 CTS units, including coupes and wagons.
It's a temporary problem. GM promises the next-generation CTS will be longer, sleeker, plusher inside and loaded with more content, which will create clear separation between the cars. The redesigned CTS is expected to go on sale in the fall of 2013.
Until then, "You recognize that CTS will be cannibalized to a point by having ATS there," says Chase Hawkins, who became Cadillac's U.S. vice president of sales and service in June.
It's an example of Cadillac's growing pains at it tries to square up its offerings to those of luxury-brand stalwarts such as BMW. The redesigned CTS likely will be sized to match the Mercedes E class, for example, much as the ATS was designed to offer an apples-to-apples choice with the German luxury compacts.
Until the next-generation CTS arrives, Cadillac is telling dealers to tout the outgoing model as a good value that offers more car than its smaller sibling. Also, because it's not offered with the Cadillac User Experience infotainment system found on the ATS and larger XTS sedan, it could appeal to tech-averse buyers who prefer a simpler interior.
The challenge, Hawkins says, will be to balance production of the two cars so GM doesn't end up with an oversupply of the 2013 CTS. GM is likely to increase incentives on the car eventually, but too much cash on the hood could hurt its image in the long run.
"You don't want to end up distressing CTS too much ahead of the new launch and apply a significant amount of incentive on the car if you don't have to do that," Hawkins says.
Hampden Tener, Cadillac's global product director, noted that for the 2013 model year GM removed the base CTS from the lineup to create more price breathing room for the ATS.
On the next-generation CTS, "all that in-between ground will resolve itself," Tener says.
"The level of equipment and execution of materials will step up quite a bit."
For now, Cadillac dealers who have been starved for fresh product are in no mood to complain. Before the June launch of the XTS, Cadillac's lineup had been stripped to just three nameplates.
"We think the ATS is going to attract a lot of younger buyers," says Greg Heath, vice president at Mark Christopher Auto Center in Ontario, Calif. "We've already got nine hand-raisers."
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