Cadillac's new chief vows no retreat on pricing strategy

DETROIT -- Cadillac has no plans to back off its sharply higher sticker prices or sweeten incentives to improve slumping U.S. sales, new brand chief Johan de Nysschen said today.

De Nysschen, who arrived at General Motors Aug. 1 after a two-year stint at Infiniti and two decades building Audi into a luxury powerhouse, said in an interview that Cadillac must be willing to forgo some traditional buyers as it works to attract the higher-end clientele it's now courting with a revitalized vehicle lineup.

"We cannot deny the fact that we are leaving behind our traditional customer base," de Nysschen said. "It will take several years before a sufficiently large part of the audience who until now have been concentrating on the German brands will find us in their consideration set."

De Nysschen, 54, arrives at a tense time for Cadillac, despite a revitalized vehicle lineup that many consider its best in decades.

U.S. sales, which accounted for about 73 percent of Cadillac’s global volume in 2013, fell 5 percent through August this year vs. an 8 percent gain for all luxury brands. Dealer lots have been bloated for months amid sluggish sales across its sedan lineup, including the ATS compact that Cadillac is counting on to court younger buyers.

Some Cadillac dealers and market pundits blame GM's strategy of pricing the vehicles head-to-head with BMW, Mercedes-Benz and other luxury leaders. They say steeper sticker prices -- some redesigned 2014 CTS models go for more than $10,000 above a comparable '13 -- have turned off buyers.

De Nysschen defends the strategy, calling the ATS and CTS "segment leading" in design, craftsmanship and driving dynamics. He is confident that legacy buyers who are unwilling to pay the higher prices eventually will be replaced by import buyers as Cadillac builds out its product portfolio and enhances its brand appeal by offering a better customer experience.

"Either you have to bring your volume aspirations into alignment with reality and accept that you will sell fewer cars," de Nysschen said. "Or you have to drop the price and continue to transact at the prices where you were historically.

"I think the logical conclusion is that it's better to build off a very solid base in terms of [product] credibility, charge a fair price for the car and realize you have to wait until the volume comes," he said.

GM President Dan Ammann, to whom de Nysschen reports, has given the South African native broader authority than any Cadillac chief in recent memory to plot the brand's course globally. He will run everything from sales and dealer-network development to marketing and product planning, and have "critical input" on engineering and design.

De Nysschen emphasized that Cadillac must operate as a stand-alone entity and make decisions on product development, sales and marketing and in other areas outside the sphere of the other GM brands.

"Nobody who goes to work at Mercedes-Benz, BMW or Audi works on a part-time basis for those brands," he said. "They are absolutely 100 percent immersed in annihilating the opposition."

He confirmed media reports that Cadillac is considering moving some functions to New York, although he said the scope of its future presence there is unclear. He said it's undecided whether he or his direct reports would be based there.

Aside from improving Cadillac's U.S. performance, de Nysschen will inherit an aggressive plan for growth in China, where the brand aims to double sales in 2015 to roughly 100,000 vehicles. He visited the country last week.

De Nysschen said he "very much enjoyed" his time at Infiniti, where he was based in Hong Kong. The Cadillac job appealed to him in part because he and his wife wanted to relocate back to the U.S., where their two adult children live.

He intends to stay at Cadillac for the long haul, which would end years of turnover in the brand's executive ranks. He estimates it will take 10 or 15 years to return Cadillac to "its position as one of the pre-eminent global premium brands."

"That more or less sums up how much I see left of my career," de Nysschen said. "It seems to dovetail quite nicely."