LOS ANGELES (Bloomberg) -- General Motors' Cadillac luxury line, working to revive its image, will begin reporting financial results about 2017 and double global sales by the end of the decade, said Johan de Nysschen, the brand’s chief.
The next three years will be a period of heavy investment in products, dealerships and manufacturing, which will dilute GM’s results, he said. By 2018, Cadillac’s contribution will be on par with the other brands and by 2020 it will produce profit margins of 10 percent or more, de Nysschen said today in an interview at the Los Angeles Auto Show.
His plan will require the discipline to accept slower sales growth while re-establishing Cadillac’s place among the top brands in the world, worthy of transaction prices that are now almost $47,000, within $1,000 of BMW, he said. De Nysschen is focused on growing in China with a distinctly American style of luxury that is bold and confident, sophisticated yet optimistic.
“If we want to reinvent Cadillac, the last thing we want to do is to try to out-German the Germans,” said de Nysschen, who worked at Volkswagen AG’s Audi before a stint running Nissan Motor Co.’s Infiniti.
Annual sales will probably double by 2020 to more than 500,000 globally, he said.
“It’s going to take a lot of effort and time to make their products acceptable to the 1 percent of the population that would be the buyers,” said Joe Phillippi, an auto analyst with AutoTrends Consulting. “Cadillac is 14 years into this, and they’re only about halfway around the course. It’s going to take another seven to 10 years and a huge amount of investment.”
Cadillac, which revealed high-performance versions of the small ATS today at the Los Angeles show, covers only about half of the range of the auto-luxury market, de Nysschen said. By 2020, it will be more like 90 percent. For example, the brand will reveal its CT6 flagship sedan at the 2015 New York auto show, he said.
GM President Dan Ammann, when he was chief financial officer, reorganized the company’s internal reporting systems to give top executives a better view into how and where the company was spending and making money. That is what will eventually allow Cadillac to account for its investments, expenses and revenue well enough to break out its results from the rest of the automaker.
Such reporting probably won’t be possible before 2017, de Nysschen said, noting that “Dan’s in a hurry.”
While premium brands account for only about 10 percent to 12 percent of global vehicle sales, they produce half of the industry’s profit, de Nysschen said.
“General Motors wants part of that,” he said.
CEO Mary Barra has told de Nysschen he will have the time to develop Cadillac into a world-class luxury brand and that the company won’t chase sales at the expense of building the brand’s image, he said.
“There’s a bit of patience because it’s an investment,” de Nysschen said. “We need to have that for it to gain traction. If you try to harvest too soon, you actually repeat the sins of the past.”