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General Motors Company (GM), Ford Motor Company (F): Is Cadillac Really Back?

Cadillac’s 2014 CTS. Photo Credit: General Motors.

General Motors Company (NYSE:GM) is years behind Ford Motor Company (NYSE:F) in certain aspects, such as operating margins in its North American region. That’s mainly because Ford Motor Company (NYSE:F) has put much of its effort into consolidating platforms, improving operations and running plants at optimal capacity. On the other hand, General Motors Company (NYSE:GM)’s luxury Cadillac brand is years ahead of Ford Motor Company (NYSE:F)’s Lincoln lineup and continues to rebound in today’s market – sales are up 30.3% through July. With that success you’d expect high fives across the Cadillac conference table and raises galore. Instead, one top Cadillac executive was fired and another recently quit. So is Cadillac’s surge really that impressive, or is there a much longer path ahead?

Cadillac surges
After the first quarter, General Motors Company (NYSE:GM) drove home press releases that Cadillac was surging and announced that its year-to-date sales increase of 38% was its best since 1976.

“Cadillac is back,” said Bob Ferguson, vice president, Global Cadillac in a press release. “Our growth is product-driven, new luxury vehicles with dramatic design and performance drawing new customers to showrooms.”

There’s no doubt about the above statement’s validity regarding new product design and vehicle performance driving customers to showrooms. More importantly 70% of ATS buyers are choosing the flashy ride as their first Cadillac, stealing market share from rival luxury brands.

Cadillac’s CTS previously had found major success; years ago it won Car and Driver’s highest award three consecutive years in a row. The 2014 CTS will be redesigned and looks to impress consumers with its upgrades when it hits the showroom.

The claim that Cadillac is back isn’t quite correct in the grand scheme of sales:

Graph by author, information via Automotive News DataCenter; 2013 sales projected from first six months.

To be fair, as the automotive market continues its rebound from the depths of the recent recession, nothing is really “back”. The overall market would somewhat replicate the above graph as well.

Still, Cadillac sales have a long journey to get back to the very successful days of old. The part that General Motors Company (NYSE:GM) has been so excited about, regarding its best increase since 1976, is the uptick at the end of the graph circled in red – and that’s projected from the first half of sales, not guaranteed. In addition to that, I started the vertical axis at 100,000 or the uptick would hardly be noticeable. Here’s a better look at the circled part of the graph – Cadillac’s monthly sales over the last year – without projecting the next six months.

Graph by author, information via Automotive News DataCenter.

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