General Motors (NYSE:GM) has just hired Johan de Nysschen, the former chief of Nissan's (NASDAQOTH:NSANY) Infiniti brand, to head its troubled Cadillac luxury brand.

De Nysschen will be Cadillac's third boss in just two years, and he faces the same tough task that stumped his predecessors -- how to revive the 112-year-old brand to effectively compete against BMW, Daimler's (NASDAQOTH:DDAIF) Mercedes-Benz, Volkswagen's (NASDAQOTH:VLKAY) Audi, and Toyota's (NYSE:TM) Lexus.


Johan de Nysschen. Source: Infiniti.

All four brands have overtaken Cadillac in the U.S. market. Whereas BMW and Mercedes dealers can't keep enough cars on their lots to keep up with demand, Cadillac dealers have struggled with an average four months' worth of unsold vehicles. As a result, Cadillac dealers have resorted to heavy discounts, which undermine the brand's high-end reputation. Meanwhile, safety recalls on nearly every Cadillac model have tarnished the brand.

GM President Dan Ammann told dealers that de Nysschen is a "master brand builder," and stated that he would be granted "a lot of autonomy" to turn things around, according to Reuters. Does de Nysschen stand a chance, or will he simply repeat his predecessors' mistakes?

The problem with the numbers
Cadillac's U.S. sales over the first six months of 2014 tell a dismal tale:


Luxury Brand

First half sales (U.S.)


















General Motors




Source: Company and industry websites.

Sales of Cadillac's lowest-priced model, the $33,000 ATS sedan, have plunged 22% this year, despite being voted North American Car of the Year in 2013. The $76,000 ELR, a misguided attempt to challenge Tesla's (NASDAQ: TSLA) dominance of the higher-end EV market, has only sold 390 units over the last six months. By comparison, Tesla is estimated to have sold 7,400 Model S EVs during that period.

As a result, Cadillac dealers have started discounting the ATS by up to $6,000 and the ELR by $20,000.


The 2014 Cadillac ELR. Source: Wikimedia Commons.

The problem with brand perception
A core problem dragging down sales is Cadillac's brand perception among younger buyers.

Today, the average age of a Cadillac owner is 65, compared to 49 for BMW and 48 for Audi, according to research firm StrategicVision. Last August, AutoTrader's Next Generation Car Buyer Study revealed that Cadillac ranked lower than BMW, Lexus, Audi, and Mercedes -- in that order -- in terms of vehicle brand consideration among millennials.


The classic perception that Cadillac just can't shake. Source:

That's the exact same problem that Cadillac struggled with in the 1980s -- even back then, baby boomers considered Cadillac a brand for old people, which helped BMW, Mercedes, Porsche, and Audi gain market share in the high-end U.S. market.

When we consider that both millennials and baby boomers perceive Cadillacs as cars for the elderly, it's no wonder that Cadillac's U.S. market share plunged from 48% in the 1970s to 1% today. That's why GM hired de Nysschen, whose former brand Infiniti had an average owner age of 49.

That's not to say that Cadillac doesn't have any younger fans. The Escalade SUV is fairly well-known among younger Americans, thanks to its prominence in hip-hop culture. Unfortunately, that pop culture-assisted boost, which started with the second generation of the vehicle in 2002, didn't last very long. In 2004, annual U.S. sales of the Escalade peaked at 62,250 vehicles. Last year, Cadillac only sold 22,514 Escalades.


Cadillac's 2015 Escalade. Source: GM.

Times are certainly tough for Cadillac, but that doesn't mean that the brand is doomed to be retired like Oldsmobile just yet.

China could be the answer
China is the one bright spot for Cadillac, where an increasingly affluent middle class is driving sales of luxury vehicles. McKinsey & Co. forecasts that China could soon overtake the U.S. as the world's largest market for premium cars. That's the second big reason that GM hired de Nysschen -- under his direction, sales of Infiniti vehicles in China soared 130% in the first half of 2014 to nearly 14,000 vehicles.

Cadillac also isn't weighed down in China by its legacy as a brand for older drivers. Sales of Cadillac in China soared 72% in the first half of 2014, outpacing the 32% growth of China's luxury vehicle market. That jump has led GM to declare that Cadillac sales in China will rise at least 40% to 70,000 vehicles in 2014 and claim 10% of the luxury car market. That would still put it behind BMW, Mercedes, Audi, and Lexus, but at least Cadillac's sales growth would be headed in the right direction.

At 70,000 vehicles, Cadillac would become a threat to Lexus, which sold 70,400 vehicles in China last year. To capitalize on its current surge in sales, Cadillac will follow Mercedes, BMW, and Audi's example and start building cars locally in China.

The Foolish takeaway
In conclusion, Johan de Nysschen certainly has his work cut out for him. He must clear dealer inventories while limiting heavy discounts that could cheapen the brand. He needs to rebrand Cadillac for younger drivers. He needs to focus heavily on growth in China, which could make the brand a viable threat to the top luxury carmakers.

That's a tall order, but considering Nysschen's experience at Infiniti, it's one that he just might be able to fill.

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Leo Sun has no position in any stocks mentioned. The Motley Fool recommends General Motors and Tesla Motors. The Motley Fool owns shares of Tesla 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.