2014 NEW YORK AUTO SHOW

After strong surge in 2013, Cadillac stumbles in Q1

Peffer: “Crowded and competitive segment”
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NEW YORK -- Cadillac last year began billing itself as the industry's "fastest-growing full-line luxury brand."

It was a short-lived distinction.

Cadillac sales fell 7 percent in the first quarter, to 39,588, compared with a 1 percent gain for the industry overall and an 8 percent rise in the luxury segment. Among the top seven luxury brands, it was the only one with lower sales.

The lost momentum is a setback for Cadillac, which has been riding a product revival that had it poised to break away from the pack of second-tier luxury players, though it's still far behind the top three: Mercedes-Benz, BMW and Lexus.

One factor in Cadillac's recent drop has been slumping sales of the ATS, the entry-level sedan that became its No. 2 seller, behind the SRX crossover, with 38,319 sales in 2013, the first full year of sales. ATS sales sank 25 percent in the first quarter.

Cadillac U.S. sales chief Bill Peffer acknowledges the stiffening competition in the compact luxury segment, which got more crowded last year with the addition of Mercedes' $30,825 CLA front-wheel-drive sedan. Prices for the ATS start at nearly $34,000, including freight.

"It's a very crowded and competitive segment. There are new entries in there all the time," Peffer said during an interview at the New York auto show last week.

Peffer cited several "green shoots" that point to Cadillac returning to growth mode after registering sales declines in each of the past four months.

Although March sales declined 6 percent because of a drop in fleet sales, retail deliveries edged up 3 percent. The CTS mid-sized sedan's market share has increased each month since its November launch, Peffer said. And the number of Cadillac lease expirations is expected to more than double this year, giving dealers the chance to show the brand's revitalized lineup to more customers.

New vehicles are on the way, too. Cadillac dealers have about 2,000 sold orders pending for the redesigned 2015 Escalade SUV, the first major update to the showy large SUV in eight years. The ATS coupe goes on sale this fall.

Peffer wouldn't back an earlier forecast of double-digit U.S. sales growth made in January by his boss, Bob Ferguson, who is Cadillac's top executive. But he said Cadillac is "on a path for growth."

"We're going to grow," Peffer said. "I think you have to, with a couple big launches coming up. There is a massive amount of interest in the new Escalade."

You can reach Mike Colias at mcolias@crain.com.


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