Will General Motors Company Continue Dominating Ford in Luxury?

Although Buick and Cadillac had an impressive 2013, the latter has struggled through the first quarter of 2014.

Apr 28, 2014 at 9:48AM

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.

Boost your 2014 returns with The Motley Fool's top stock
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Brett Kenwell owns shares of Ford. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers