I thoroughly enjoy driving the latest Cadillacs, especially the compact ATS. If the new ATS-V were available in a wagon, it would pretty much be my dream car. But these cars haven’t been selling well. Why not? To paraphrase Cadillac’s recent ad campaign, have they dared too greatly? Or have they not dared greatly enough?
In one respect, Cadillac dared too greatly. Cadillac feels (with at least some justification) that its latest cars are at least as good as BMWs, so (likely also under pressure to deliver a profitable business case) they priced them like BMWs. The thing is, perceptions lag reality. Reputations are built (or lost) over a period of at least a few years, if not a decade or more. If your product has improved, you can only charge commensurately once buyers fully realize this. When Lexus introduced the 1990 LS, the base price was $35,000. Then, as the car’s reputation grew and spread, they increased the price. The 1994 Lexus LS 400 started at $50,000. They absorbed losses for two or three years, but the reputation the initially low price helped Lexus build has lasted for 25.
The latest Cadillacs might be great cars, at least for people who enjoy driving, but is there anything daring about them? Certainly not the styling, which has been toned down from earlier expressions of Cadillac’s “art and science” design language. The styling of the original, 2003 CTS was daring, that of the second-generation 2008 was less so, and that of the third-generation 2014 hardly at all. It’s a 2010 Mercedes-Benz E-Class with a different face.
And the Cadillacs’ performance? The ATS and CTS do handle better, subjectively at least as much as objectively, than the German cars with which they compete. But they don’t achieve this performance by doing anything radically different than the Germans. They don’t take any technological risks. They do what BMW has been doing, in cases using similar components from the same suppliers, just better. Doing the same thing just better might be an admirable achievement, but it isn’t daring.
Cadillac did dare somewhat greatly by prioritizing handling more highly than BMW has been in recent years, as the Bavarian company has watered down the formula that made it great in pursuit of broader appeal. Unfortunately, the weak sales of the resulting Cadillacs might just substantiate that BMW has to do what it has been doing if it wants to sell over 300,000 cars to Americans and nearly 2,000,000 cars worldwide every year. As much as I personally wish reality were otherwise, there simply might not be enough premium sedan buyers who care more about handling than rear seat and trunk space. Gambling that if you built a better-handling car, then more such buyers would materialize...apparently not a good bet. To dare is to risk failure, but you should at least have reasonable odds of success.
Aside from handling, the ATS and CTS don’t meaningfully surpass the Germans in any particular way. Nor do they lag well behind them in any way save rear seat and trunk space in the ATS and the CUE infotainment interface in both. Overall, they’re parity products, about as good as the Germans in just about every area.
This quest for parity is a problem. You don’t steal customers from competitors by offering products just as good. Your products have to be better, and not just a little better. To get many people to switch, your products have to be much better in at least one way that car buyers care deeply about.
I wonder if General Motors realizes this. They certainly didn’t realize this back in the 1990s, when I observed hundreds of product development meetings inside the company as the basis for a thesis. Time after time I heard teams discuss how they were going to match competitors in this or that area. If only they could match Toyota’s quality survey scores, car buyers would come flooding back.
They did not seem to realize that Toyota didn’t gain its following by matching or slightly exceeding GM’s quality. They gained this following by greatly exceeding GM’s quality. With the average car now very reliable by historical standards, it’s probably no longer possible for a new player to carve out a meaningful competitive advantage in this area.
Similarly, it’s possible that BMW has already made such a good BMW that no one can steal many customers from them by offering a better BMW. You can make a better BMW—Cadillac has—but the difference in the current cases clearly isn’t large enough to overcome the inertia inherent in consumer preferences. Is a larger advantage possible? Maybe, maybe not. Given my personal preferences, I’m happy to see Cadillac and others make the attempt.
But what if a difference this large cannot be achieved, what then? Well, you might do something radically different than what has been done before. While this avoids the challenge of exceeding the already very good, even already excellent, it brings its own challenges. To begin with, it’s not easy to “think out the box” (a cliché pulled from within the box). It’s even harder to imagine something that will be both very different and highly desirable to consumers. The great majority of people, whether car buyers, car writers, or car makers, react negatively to things that challenge established conventions, especially at first. There will be critics. Impeded by these critics and the zeitgeist they express, radically better ways of doing things fail all the time (if not every time).
A radically different product involves so much creative, technical, and sociocultural risk, to field one a company must truly dare greatly. It can be done, even in the inherently conservative premium car space, as it has been done, just not by Cadillac. At least not yet. We’re promised that great stuff is coming, and I’m personally hopeful.
Let’s revisit the Teddy Roosevelt quote from the ad that launched the campaign:
It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.
Which car company does this make you think of? In what ways should a car company dare greatly? Who is actually doing it?
Michael Karesh operates TrueDelta, a provider of car comparisons, including reliability stats, pricing, and specs.