Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.
It's not a surprising or revolutionary product, but it's pretty important.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Check out the latest GM earnings call transcript.
General Motors (GM +0.00%) revealed its much-anticipated 2020 Cadillac XT6 crossover SUV at the North American International Auto Show in Detroit this past week.
It's a significant product, one with an outsized role to play in CEO Mary Barra's bid to boost GM's profitability. Here's a closer look.
In a nutshell: The XT6 is an all-new "three row" (seven passenger) crossover SUV that will fill a major gap in the luxury brand's lineup, and -- GM hopes -- help reverse Cadillac's U.S. sales slump.
Properly speaking, the XT6 is a luxury crossover SUV based on the same architecture that underpins GM's well-regarded Chevrolet Traverse and Buick Enclave, both of which were all-new for the 2018 model year. Naturally, being a Cadillac, it can be loaded up with more luxury features than either of those two.
The XT6 will be offered in two flavors: Premium Luxury and Sport. Each gets unique interior and exterior trim and similar-but-different lists of standard and optional features. Sport models get a more-agile-feeling suspension and standard all-wheel-drive; Premium Luxury models are tuned for a quieter, smoother ride, with all-wheel-drive optional. All XT6s will feature the new Cadillac styling that GM first introduced on the Cadillac Escala show car in 2016.
All XT6s will come standard with the same 3.6-liter V6 offered in the one-size-down XT5, making 310 horsepower, with a nine-speed automatic transmission. The XT6 will go into production alongside the XT5 and GMC Acadia at GM's Spring Hill, Tennessee, assembly plant this spring.
Three-row luxury crossovers don't sell quite as well as their smaller counterparts, on average, but the sales are still significant -- especially with the fatter profit margins that are typical on luxury vehicles.
Here's how the XT6's likely rivals did in the U.S. in 2018.
| Vehicle | 2018 U.S. Sales |
|---|---|
| Acura MDX | 51,512 |
| Audi Q7 | 37,417 |
| BMW X5 | 45,013 |
| Infiniti QX60 | 47,370 |
| Lexus RX | 111,641 |
Data source: Automotive News. The sales total for the Lexus RX includes both two-row and three-row variants.
Cadillac's dealers would love to have had a piece of that pie. But right now, those dealers have nothing to offer you between the XT5, a midsize "two row" (five passenger) crossover, and the big truck-based Escalade SUV. They do, however, have a full range of up-to-date sedans. While that's good for customers who still want sedans, it's a problem for GM's Cadillac dealers: Sedan sales have slumped in the last few years, while crossover SUV sales have soared.
A year ago, the XT5 was Cadillac's only crossover -- a situation that led to many complaints from dealers and may have contributed to the ouster of Cadillac president Johan de Nysschen last spring. Ironically, one of de Nysschen's last acts as brand chief was to unveil the compact XT4 crossover, which has done pretty well in both the U.S. and China since it went on sale in the third quarter of 2018.
The compact Cadillac XT4 crossover, introduced last year, filled a big gap in the Cadillac global lineup. The XT6 fills another. Image source: General Motors.
The XT4 filled a big gap in Cadillac's lineup -- perhaps the biggest. The XT6 fills what is probably the next-biggest gap. When it arrives in a few months, Cadillac dealers will finally have what they've been demanding for several years: a full line of crossover SUVs to sell.
The hope is that the XT4 and XT6 together will give Cadillac's sales, and GM's margins, a meaningful boost over the next year. We'll see if that's how it plays out.