Is This How General Motors Will Fix Cadillac?

GM's slumping luxury brand gets a new boss. Can he turn things around?

Jul 13, 2014 at 2:35PM

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After a strong 2013, sales of the well-regarded Cadillac ATS are down over 20% this year. GM hopes this new coupe version will help draw buyers. Source: General Motors Co.

Is the Cadillac brand finally headed back in the right direction after months of disappointing sales?

Certainly the news is promising. General Motors (NYSE:GM) said on Friday that it had appointed Johan de Nysschen to a new role as a GM executive vice president and president of the Cadillac brand.

De Nysschen replaces Bob Ferguson, whose title until Thursday was Senior Vice President, Global Cadillac. Ferguson, who left his role as GM's chief Washington lobbyist to take over Cadillac in 2012, has been spending most of his time in Washington since March, dealing with the fallout from GM's recall scandal. GM on Thursday named him head of Global Public Policy.

Cadillac's sales rose about 30% last year under Ferguson's leadership, but the brand has slumped lately, losing ground in a rising market. With CEO Mary Barra clearly needing Ferguson's skills and contacts in Washington, the need for strong new leadership at Cadillac was clear.

So, is de Nysschen the right choice for the job?

Strong credentials for a difficult job
He certainly brings an impressive resume to GM. De Nysschen resigned earlier this week from Nissan (NASDAQOTH:NSANY), where he ran the Infiniti luxury brand from its global headquarters in Hong Kong, citing a desire to return to the United States. Infiniti's global sales were up 30% in the first half of 2014.

Before joining Nissan, de Nysschen spent eight years as the U.S. head of Volkswagen Group's (NASDAQOTH:VLKAY) Audi brand, boosting its share of the U.S. luxury market to 9.5% in 2011 from 5.3% in 2004, according to figures from Automotive News

De Nysschen will report to GM President Dan Amman in his new role running Cadillac. He'll be responsible for "all aspects of Cadillac globally including sales, pricing and network development, strategic brand development and marketing and product portfolio planning, including critical input for product engineering and design," GM said in a statement.

But here's his real job description: Solving Cadillac's biggest problem.

This is Cadillac's biggest problem
Here's Cadillac's problem: After years of stop-and-start efforts, Cadillac is finally -- finally! -- getting products that can go head-on with the German brands that rule the global luxury business. But it's not stealing nearly enough sales from those German rivals.

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The new-for-2014 Cadillac CTS sedan is Motor Trend's most recent "Car of the Year" award. Some reviews have rated it above BMW's 5 Series. Source: General Motors Co.

Cars like the Cadillac ATS and CTS sedans are no-excuses contenders, going head-to-head with rivals from BMW (NASDAQOTH:BAMXF) and Daimler's (NASDAQOTH:DDAIF) Mercedes-Benz in test after test and showing themselves up to the challenge, over and over. 

But the Cadillac brand is still damaged, thanks to decades of products that just couldn't compete. Plain and simple, it lacks the cachet of BMW or Audi or Mercedes. For many German luxury-brand loyalists, Cadillac is still a step (or two) down -- certainly not a brand to aspire to.

That's what GM needs to fix. It has to turn Cadillac into the brand that will make a BMW owner want to trade in his ride.

Having credible products is the first step toward making that happen. What's the next step? 

That's for De Nysschen to figure out. We'll see if he's up to the task.

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

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