Will General Motors Company Continue Dominating Ford in Luxury?

Although General Motors (NYSE: GM  ) is suffering from what appears to be a never ending barrage of bad news regarding its recall issues, the automaker does have some bright spots. 

Aside from a low valuation and nice dividend -- both of which Ford (NYSE: F  ) has as well -- GM sports a better luxury line than its Michigan counterpart. 

General Motors owns the Cadillac and Buick brands, while the Lincoln brand belongs to Ford. 

And while everything seems to be going downhill at General Motors at the moment, the automaker can still boast about its luxury lineup. At least, for now. 

A luxurious 2013, subpar 2014
In 2013, both Cadillac and Buick did well, showing full year sales gains of 21.9% and 13.9%, respectively. 

Lincoln on the other hand, dragged sorrowfully behind, with sales slumping 0.6% from year ago figures. Observe the table below for the full results:

Brand

2013 Sales

YTD Change

Cadillac

182,543

21.90%

Buick

205,509

13.90%

Lincoln

81,694

(0.6%)

Source: GoodCarBadCar (2013)

However, 2014 is shaping up to be different, for now, anyways. Although the brutal winter -- here in Michigan, we recently broke the snowfall record in Detroit -- has negatively affected sales, the luxury sales between the two companies has been the opposite from 2013. 

Through March, Buick has churned out a 11.1% increase compared to the same period last year, while Cadillac's sales have slumped 7.3%. Sales for Lincoln have soared 35.9% compared to last year's results. Below is a more thorough detailing of the first quarter:

Brand

2014 YTD Sales

YTD Change

Cadillac

39,588

(7.3%)

Buick

52,898

11.10%

Lincoln

21,603

35.90% 

Source: GoodCarBadCar (2014)

Ford's Lincoln line is indeed showing relatively strong growth in the first three months of 2014, but let's not also forget how many cars it's truly selling. 

Year-to-date, Cadillac has sold nearly twice as many vehicles than Lincoln, while Buick as sold 2.5 times the amount of vehicles. Between Cadillac and Buick, the duo has sold almost five times more vehicles than Lincoln this year. 

It's still too early to tell how the year will shape up. On one hand, poor weather is sure to slow down luxury car sales. On the other hand, Lincoln doesn't seem to be having an issue. 

A hopeful feather in Cadillac's hat
Last fall, the 2014 Cadillac CTS was named Motortrend's Car of the Year. The vehicle beat out other luxury automakers like Audi, BMW, Mercedes-Benz and Jaguar. 

While the announcement isn't exactly new news, it brings a much bigger story with it. It shows that Cadillac is innovating and making meaningful strides that will hopefully convert into auto sales, (but thus far, has failed to do so). 

The CTS isn't the only car Cadillac is focused on either. The Cadillac ELR, Escalade and ATS are being revamped in an attempt to be more attractive to customers, and the late arrival could be one reason sales are slumping. 

The ELR has very slowly been making its way to dealerships, while the Escalade will be available in the spring and the ATS will be available in the summer. 

Bob Furgeson, senior vice president of global Cadillac, said the brand "will release at least [one] new product a year for the rest of the decade." 

Weather isn't a problem?
While it's easy to assume that weather is slowing down luxury sales, other brands aren't feeling the same pinch. Below is the year-to-date auto figures for several luxury automakers:

Brand

2014 YTD Sales

YTD Change

Cadillac

39,588

(7.3%)

Buick

52,898

11.10%

Lincoln

21,603

35.90%

BMW

72,377

11.50%

Mercedes-Benz

77,238

5.80%

Audi

35,228

3.00%

Lexus

65,085

14.70%

Source: GoodCarBadCar (2014)

I find these results somewhat disturbing for Cadillac. While it has indeed made some noteworthy and positive adjustments to its lineup, something doesn't seem to add up.

Other luxury automakers -- namely Mercedes-Benz, BMW and Lexus -- have sold a lot of cars in 2014 and have demonstrated decent to strong growth. 

Despite the weather, everyone but Cadillac seems to be selling cars. This is not encouraging at the moment, but I'd like to see what a few months of nice weather can do for the automaker. 

The Foolish takeaway
I don't know that Cadillac and Buick will be able to outpace its European counterparts in sales volume or sales growth this year. I've surfed the web, trying to find an explanation. 

One theory that I have found in dozens of comment sections -- especially in What's the Matter With Cadillac? by the Fool's own Adam Levine-Weinberg -- is that the prices are simply too high. While comment sections may seem like an illegitimate source, consider that the people commenting are the consumers. They're telling us it's too expensive. 

And as things stand now, Ford's Lincoln brand continues putting distance behind it compared to General Motors' luxury lines in 2014. 

We're only one-fourth of the way through the year, so there's still plenty of race left to complete. Lincoln stumbled last year, but has gotten off to a good start in 2014. The question will remain: Can General Motors continue dominating Ford in luxury?

Only time will tell between the two. The crown still belongs to General Motors, but Ford is making a charge at the throne.

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Read/Post Comments (11) | Recommend This Article (2)

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 April 28, 2014, at 10:20 AM, funfundvierzig wrote:

    Given the customer-hostile culture of GM's arrogant and hyper-secretive Management, and the massive scandal of covering up deadly defective parts, why would an affluent buyer settle on a GM car, and not a Mercedes or Lexus or BMW or Audi? …funfun..

  • Report this Comment On April 28, 2014, at 10:31 AM, hunter3203 wrote:

    Lincoln has a long way to go before they'll be a relevant brand in the luxury market. GM has been investing in Cadillac's turnaround for well over 10 years. They've completely changed their lineup and are on the 3rd generation of their new designs. That's the kind of commitment that Ford will need to make to really make Lincoln relevant. Simply producing a luxury version of Ford cars and SUVs isn't good enough anymore.

  • Report this Comment On April 28, 2014, at 10:37 AM, sabebrush6 wrote:

    I'm a car guy. That said, the major problem with the Lincoln is that it looks just like every other car going down the road. It's not easily identified like the Caddy & Buick. You use to be able to tall what a car was 4 or 5 blocks away. Not any more. If you took the badges off you wouldn't know what they were.

  • Report this Comment On April 28, 2014, at 10:50 AM, Bkenwell wrote:

    Hunter/Sabe --

    I agree. You both seem to hit on similar points and I tend to agree. The cadillac brand is miles ahead of where Lincoln is right now. And Lincoln will have to do a lot of work to restore its brand reputation that it once had.

    Thanks for commenting!

    -Bret

  • Report this Comment On April 28, 2014, at 11:38 AM, al8603 wrote:

    My wife's first edition SRX with 175000 miles logged was showing signs of it's mileage so, we began shopping for a replacement. We visited Cadillac, Buick and Lincoln dealerships and test drove three similar vehicles.

    We ended up purchasing an SRX the Buick styling is odd and bulbous in her opinion. The SRX she feels is more distinctive, handles better, and is just more appealing to her tastes than either of the other two brands.

    That said, the price outfitted to her liking was over $50k. No way she said. So, we purchased a 2012 CPO SRX outfitted as she liked with a 100,000 mile bumper to bumper warranty and saved a bundle.

    We had to search Auto Trader to find it and drive a bit to get it but, for the savings it was worth the effort.

  • Report this Comment On April 28, 2014, at 11:55 AM, LungsOfSteel wrote:

    Lincoln is merely a Buick competitor, not a Caddy competitor. Ford ruined the equity of Lincoln 10 years ago when they started phasing out their luxury vehicles till all that was left was the Town Car, which is basically a taxi cab to tens of thousands of drivers. Now they have these near-luxury badge-engineered models that do nothing to harken back to the time of the Continental - American Luxury is Cadillac's to have.

  • Report this Comment On April 28, 2014, at 2:29 PM, HarryRSole wrote:

    It wont make a shred of difference once the lawyers are finished with GM. The end of GM is on the horizon. Good riddance to North Americas top scrap dealer!

  • Report this Comment On April 28, 2014, at 2:33 PM, HarryRSole wrote:

    "2014 Cadillac CTS was named Motortrend's Car of the Year" Yup by General Motor Trend magazine.

  • Report this Comment On April 28, 2014, at 2:33 PM, TMFTwoCoins wrote:

    One thing you have to consider is that sales of Lincoln's flagship sedan, the MKZ, had delivery issues during its launch last year. Sales of the MKZ for Jan, Feb, and March were 453, 945, and 2,360, respectively -- compare that to last month's 4,052 in sales. That makes for an easy comparison, especially considering the MKZ is Lincoln's best-selling vehicle this year.

    That's just to put Lincoln's 35% surge into perspective, not that it takes anything away from Cadillac's decline.

    Daniel

  • Report this Comment On April 29, 2014, at 8:41 AM, Jason87467 wrote:

    Ford is a very overrated company and it really shows with it's luxury cars.

  • Report this Comment On April 29, 2014, at 12:29 PM, bpainter wrote:

    From 1966 to 1985 a 3cent part caused 6000 accidents 1710 injuries and worst of all 300 fatalities this involved 23million vehicles. The transmission would slip out park into reverse. The problem was considered fixed by auto company by placing warning sticker on dash. Google P to R Transmission problem.

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