Cadillac wants its new vehicles to earn prices

LOS ANGELES -- Cadillac's decision to price the soon-to-launch CT6 sedan well below competing vehicles says a lot about the cutthroat state of the market for big luxury sedans, brand boss Johan de Nysschen says.

But it may say more about Cadillac's broader strategy to compete in the upper tier of luxury.

In recent years, Cadillac dealers have chafed over what they viewed as wishful pricing. Sticker prices often have been at or near eye level with the Germans, as was the case with the ATS sedan in 2012 and the CTS sedan in 2013.

But the CT6 that goes on sale in March, along with the XT5 crossover that soon follows it, are the first major launches under de Nysschen's watch. He is following the playbook he deployed while helping build Audi of America into a powerhouse last decade: to price below BMW and Mercedes and gradually ratchet up pricing as the brand's cachet grows.

"That's precisely what we're going to do," de Nysschen said in an interview at the auto show here this month.

Sticker prices on the CT6 sedan, for example, range from $54,490 to $84,460 at the top of the range, including shipping. That's far below the pricing on the BMW 7 series, which has comparable size and power and runs from the low $70,000s to around $100,000.

De Nysschen said he would rather price the CT6 to sell than be forced to ladle out incentives, which has become common in the market for midsize and large luxury sedans. He said average incentive spending in recent months has equaled a lofty 17 percent of transaction prices in those categories. 

"Knowing that, it seemed to be more sensible to price CT6 right and let the car gain traction," de Nysschen said. "We need to give the car time to establish a reputation. With a very compelling product offering and a good price, I think that's the way to do it." 

He said pricing for the XT5, which has not been announced, will follow a similar path, promising that it will be "competitive." 

Bill Wallace, owner of Wallace Cadillac in Stuart, Fla., likes the strategy. 

"We see it all the time: If the lease payment is the same, they're going to buy the Bimmer," Wallace says. "If you can give them an excuse [to choose Cadillac], then you've got a shot."