Cadillac's 2013 ATS Has Changed the Game


2013 Cadillac ATS. Photo: General Motors.

Ford (NYSE: F  ) has created one of the most impressive turnarounds in business history and leads General Motors (NYSE: GM  ) in many ways. However, Ford trails its rival in one key area for future growth -- having a successful luxury line. Lincoln has been forgotten in Ford's turnaround story, while Cadillac is on fire right now, much to the delight of GM's management. Let's look at how the ATS is helping driving success at Cadillac and how it changed the game for consumers and investors.

Welcome back, Cadillac
"Cadillac is back," said Bob Ferguson, vice president, Global Cadillac. "Our growth is product-driven," with "new luxury vehicles with dramatic design and performance drawing new customers to showrooms."

So far this year, Cadillac has seen its largest sales increase since 1976.

"Think about that," Kurt McNeil, GM's vice president of sales operations, said in a conference call earlier this month. "We're talking about the days of disco, when Cadillac was strictly a U.S. brand back then, not one that's directly challenging the German luxury brands and gearing up to triple its sales in China over the next couple of years."

In addition to the surge in sales, roughly 70% of Cadillac ATS buyers are purchasing their very first Cadillac. That's a huge percentage and represents incremental sales and market share stolen from competitors -- a huge win for Cadillac and no small reason for this year's Cadillac surge.

The 2013 Cadillac ATS offers a unique choice among most luxury cars: a 2.0L turbocharged engine with a manual transmission. For those looking for a sporty and luxurious ride, the ATS can be equipped to meet that expectation. Its engine lineup has a 2.5L four-cylinder option as well as a 2.0L turbocharged four-cylinder one, while still offering a 3.6L V-6. The 2.5L engine puts out about 202 HP, while the 2.0L turbo generates an impressive 272 HP. As impressive as the 2.0L engine is, being one of the most power-dense engines in the industry, the award-winning 3.6L V-6 tops it with 321 HP -- nearly as much HP as my 2010 Mustang GT.

Once consumers take the flashy ride for a spin, it's evident the luxury sport sedan is as nimble and exhilarating as Cadillac claims. It's assumed that this ride would be luxurious, but in addition to the horsepower, the interior technology gives consumers a superior feel. That's backed up by Edmunds.com, which notes that the ATS finally gives the U.S. a medal-worthy vehicle in the segment, and consumers reviewing the ATS give it an average of 4.5 out of five stars.


2013 Cadillac ATS. Photo: General Motors.

What's more, the ATS took home the 2013 Detroit Auto Show's "North American Car of the Year" award. That was no small feat, either, as it was the first Cadillac to win in the 20 years the award has been presented. Moreover, J.D. Power & Associates named Cadillac second for customer satisfaction, trailing only Lexus in the luxury division. Check out just a handful of its interior tech features, according to GM's press release:

  • Bluetooth phone connectivity with voice recognition.
  • USB, auxiliary, and SD memory card ports.
  • Sirius XM satellite radio with a three-month trial subscription.
  • Keyless access and keyless push-button start.
  • Reconfigurable 5.7-inch instrument panel cluster display.
  • Full-color reconfigurable head-up display.
  • Leatherette or leather seating surfaces.
  • Seven-speaker Bose sound system (standard model).

Investing takeaway
Luxury brands are important to the elite global automakers for a couple of reasons. First, they bring in higher transaction prices and better margins per vehicle. This is especially true as more technology and premium options are available. For example the Cadillac ATS starts at about $33,000 but can quickly surpass $50,000 with options, and that brings in a nice bottom line figure for GM.

Second, the automotive industry is extremely loyal between brands and models. You're either a Ford truck guy or a Chevy guy -- there's no gray area. Naturally, as consumers grow older and increase their purchasing power, the next step up from a basic Chevrolet, Buick, Ford would be to the luxury level of that same automaker. This is where Cadillac is reaping the rewards, while Ford loyalists are leaving for competitor lots because the Lincoln luxury line isn't up to par, yet.

Bottom line
By the end of the decade, GM expects global luxury volume to increase by nearly 3 million vehicles, while the luxury share of the overall market continues to surge. Thanks to game-changing vehicles such as the Cadillac ATS, CTS, and XTS, GM is well positioned to drive in higher profits on its vehicles. It's also positioned well for success in the world's largest and fastest-growing auto market -- China.

One thing is for sure: Cadillac is back.

GM expects its Cadillac lineup to do extremely well going forward, but that won't be enough for GM to remain a top automotive investment. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market," names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free -- just click here for instant access.


Read/Post Comments (15) | Recommend This Article (13)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 15, 2013, at 10:17 AM, thebar20 wrote:

    Really a good move on this divisions part.

    Caddy has always been a classic motor

    car. I have the two seater convertable of

    this new model line. 6 Speed, Love it to

    death, Put it way above the new Jag, Convert,

    Handles better, Not as sluggish, and has

    power to burn.

  • Report this Comment On June 15, 2013, at 10:22 AM, TMFTwoCoins wrote:

    Yep, I agree. I was impressed when I took it for a spin and the sales definitely backup the reviews, so far.

    Thanks for reading,

    Daniel

  • Report this Comment On June 15, 2013, at 10:29 AM, VegasSmitty wrote:

    Recall maker of the century!

  • Report this Comment On June 15, 2013, at 11:27 AM, oldtymer2013 wrote:

    I just wonder if it is made I Canada. Caddy used to ship the cars to a warehouse near the border and take the fenders, trunk lids and hoods off and ship the cars across the border. Then they were re-assembled. This was done to avoid paying taxes. So if one thought the paint may be a bit off or a part not fitting just right there was a reason to this.

  • Report this Comment On June 15, 2013, at 12:00 PM, bugmenot wrote:

    Government Motors should continue supporting China and avoid paying US taxes.

  • Report this Comment On June 15, 2013, at 12:05 PM, TMFTwoCoins wrote:

    @oldtymer2013

    Cadillac is really eclectic when it comes to its production parts and where it is assembled. For instance, some engines for different models can come from Canada, some parts from Mexico, some from overseas while some are assembled in the U.S. The parts are streamlined much better than in the past though, minimizing inconsistencies.

    @bugmenot

    GM is putting billions of investments into China, as well as the U.S. As an investor, you have to like that GM is making investments in its future growth. As taxpayers, I understand your frustration, believe me. The nearly $50 billion in tax write-offs on its profits isn't fair, in my opinion.

  • Report this Comment On June 15, 2013, at 12:38 PM, quepasa2quepasa wrote:

    No one has said a thing about twin turbo with an auto 8 speed transmission? Is it has nice as the ATS? Need a reply please, thank you

  • Report this Comment On June 15, 2013, at 1:29 PM, jamesdan567 wrote:

    Bankrupt Motors has never made a car as well as Tesla and never will. If the luxury car market expands as they hope, they will only know it by reading Tesla's sales figures. With the cadillac you are locked into $4 a gallon and more in the future. Over the life of the car (150K miles at 26mpg) thats an extra $23K in gas costs, whereas over the same distance a Tesla S model will cost you $7K in electricity. If you drive across country, Tesla provides free electricity at its fast recharge stations. After fuel costs, the Tesla S, having received the highest rating (99/100) ever awarded an american car by consumer reports, costs the same to own and operate as a cadillac at 50K. Do you want the best US car ever rated or the ATS? You never want to visit a gas station again? Tesla is the present and the future of driving.

  • Report this Comment On June 15, 2013, at 2:02 PM, GotTradinSkills wrote:

    There's a lot to love about Tesla and its vehicles, but at its low volume of sales it isn't the "present". It may very well be the future, but all global automakers have the financial ability to compete with tesla as they develop their own technologies.

  • Report this Comment On June 15, 2013, at 5:40 PM, originalsoul31 wrote:

    I had the pleasure of driving a 2013 ATS with the 2.5L engine, while waiting on some minor work to be done to my 2003 CTS. Overall, this is a very nice car. The only gripes I had about it were the acceleration had a tendency to be slow at times, and the CUE touch panel didnt respond too well (had to really find the pulse points, which is too much while trying to drive). Nonetheless, I was quite impressed with it.

  • Report this Comment On June 15, 2013, at 8:51 PM, ziggyfff wrote:

    I see a lot of dumplicans trying to diminish this brand and car because they associate a Caddy success with an Obama success and they cannot stand that...you might might as well stop the lying comments, it's already happened...

    P.S. go with the turbo 4... lighter weight means a more nimble car

  • Report this Comment On June 15, 2013, at 9:25 PM, AmericanFirst wrote:

    FYI,

    The new Lincoln MKZ outsold the ATS in MAY, with one-half less incentives offered by Cadillac on the ATS.

  • Report this Comment On June 16, 2013, at 6:43 AM, ReallyLily wrote:

    I've owned two Caddies, a 1994 Sedan De Ville and a 1996 Sedan De Ville. Loved the smooth ride, the luxury,the power and the classic looks. Hated the gas mileage. Driving a Honda today. Would so love a NEW Caddy, but it's not in the cards now that I am retired. Sure would buy one tho if I could. Will do that when I win the lotto for sure and it will be Silver or Red or Black.

  • Report this Comment On June 16, 2013, at 7:22 AM, gism28 wrote:

    I do not see anything special about this very small 2 seat car. With any equipment its mid to high 40's The back seat and trunk are useless. It does not compare to the competition especially the BMW 3 series. Its way over hyped.

  • Report this Comment On March 18, 2014, at 11:43 AM, merrill1930 wrote:

    I have owned foreign made cars for the last 40 years. The frau and I decided we needed a new car . We are approaching the twilight years of our lives.

    We decided to buy American this time. Big mistake. We purchased a new 2013 ATS Caddilac 6 cly. about 6 months ago. The car vibrated constantly in idle from day one. After a few weeks we brought it for service. I don't know if I should mention the dealers name. They are quite reputable. Anyway, they kept the car for 2 days and could not fix the problem. In fact the service manager tried 2 new vehicles of the same type and the vibrating still existed. They said this is the way it is and nothing could be done to correct it. As of today after contacting GM in Detroit they contacted service manager at the dealership a week ago. They called me and will get back to me.

    I also got feedback from another publication that drove the same car for almost a year now and the problem of vibrating stiil exists. HELP!!!

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