Please ensure Javascript is enabled for purposes of website accessibility

Why the 2017 Cadillac XT5 SUV Is Huge for General Motors

By John Rosevear - Feb 13, 2016 at 11:40AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Luxury crossovers are white-hot. Cadillac's XT5 is the first of several all-new Cadillac crossovers that will seek to boost GM's share of this highly profitable market.

The 2017 Cadillac XT5 crossover SUV will arrive at U.S. dealers this spring. Image source: General Motors.

What's happening: General Motors (GM -0.20%) said this week that its new 2017 Cadillac XT5 crossover SUV will have a starting price of $38,995 when it goes on sale in the U.S. in April. 

Why that's significant: At $38,995, the XT5 is about $1,400 more expensive than the model it replaces, but it will still have a starting price below all of its key rivals'. Volkswagen's (VWAGY -1.24%) Audi Q5 starts at just under $42,000, and even the cheapest versions similarly sized entries from BMW (X5) and Mercedes-Benz (GLE-Class) start at well over $50,000.

That said, the top-of-the-line Platinum version of the XT5, which starts at $63,495, is more expensive than the highest-trim version of Audi's Q5 and close to the price of the top Mercedes-Benz GLE variant. 

But the XT5 should find plenty of interested customers. It's an all-new midsize luxury crossover SUV that succeeds the Cadillac SRX. The SRX is an aging design that is in some ways outclassed by newer rivals, but it has been a surprisingly strong seller for Cadillac in both the U.S. and China. Despite its lame-duck status, global sales of the SRX were up 13.3% last year. That success hints at the potential for the new XT5. 

The XT5 is 278 pounds lighter than the SRX, and it's said to have much-improved driving dynamics. Its interior, in keeping with other recent Cadillac models, is also significantly upgraded, rivaling (or beating) the class leaders'. 

The new XT5's interior is upgraded significantly from the SRX's. Image source: General Motors.

Under the hood, the XT5 features Cadillac's new 3.6-liter V6 engine. It makes 310 horsepower, more than the outgoing SRX's V6. And with stop/start technology and a new GM eight-speed automatic transmission, the XT5 is expected to get better fuel economy than its predecessor as well.

What it means for GM: Other recent Cadillacs, including the CTS and CT6 sedans, have deeply impressed critics. The XT5 has a lot of promise: On paper, it looks similarly impressive. And it should give Cadillac a much-needed boost in the fastest-growing part of the global luxury-car market. 

Cadillac's sedans are great products, but SUVs are where the growth is happening. The brand has several more crossovers in the works, but its sales are likely to be subdued until they arrive.

The XT5 is the first of a wave of new Cadillac crossover SUVs expected to arrive over the next few years. Image source: General Motors.

Its price is impressive, too, several thousand dollars below most rivals'. Cadillac president Johan de Nysschen knows that he can't yet match the pricing of Cadillac's German rivals because the Cadillac brand still lacks the cachet of BMW and Mercedes-Benz. That's a lesson that Cadillac learned the hard way: It priced the CTS in line with German rivals, only to see sales slump as Cadillac's traditional buyers found themselves priced out of the new model. 

De Nysschen is determined to change that with strong products and carefully calibrated marketing. It's a process that will take years. In the meantime, he says Cadillac will build its reputation by offering great products at better prices than its rivals.

But given current global trends, it should be hard for Cadillac to miss with a well-executed midsize luxury crossover at a good price. We'll see.

John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors and BMW. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

General Motors Company Stock Quote
General Motors Company
$39.40 (-0.20%) $0.08
Volkswagen Aktiengesellschaft Stock Quote
Volkswagen Aktiengesellschaft
$20.13 (-1.24%) $0.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.