Last year, Cadillac described yet another plan to revitalize the brand in an effort to compete against the likes of Audi, BMW, and Mercedes-Benz. The automaker wants (very badly) to compete against it’s German rivals but does it? Has Cadillac in recent years been able to capture market share from the brand’s self-proclaimed rivals?
Based on vehicle registration data from the State of New York, the answer is no. At least not in New York.
Cadillac actually lost ground when we compare its new vehicle market share to its market share for older (pre-2014) models.
And the results look pretty bad when we plot Cadillac’s performance by county.
That’s a lot of red. At least Cadillac can point to Hamilton County as a bright spot, right? Not exactly. Hamilton County is a very small market for luxury cars. The total number of new Cadillacs registered in the county: 7.
Technically, the gain in Hamilton County is statistically significant, but banking on a market that only buys seven at a time could prove problematic.
So is Cadillac’s strategy failing? Not necessarily. Maybe absolute market share is not the best metric to determine whether the brand is meeting its goal.
Cadillac’s newest leader, Johan de Nysschen, said in this Wall Street Journal article from September 2014, that his strategy was to create the perception of scarcity. And if you want your vehicles to appear more scarce, then selling fewer of them (and having a smaller share of the market) might be a natural consequence.
So we need to look not only at total market share, but whether Cadillac is appealing to buyers who value scarcity – those who want a vehicle to differentiate themselves from all the “ordinary” folks who drive a BMW or Mercedes. In Cadillac’s ideal world, it would be poaching customers who might otherwise buy a German luxury car.
Cadillac is not keeping pace with Mercedes, but it seems to have had a bit of success against Audi and BMW. The problem is that almost all the counties where Cadillac is improving its position are small markets (see my earlier comment about Hamilton County). The only victories Cadillac can claim against its German rivals are (literally) small ones. Like a few dozen cars here and there.
Whether losing market share is intentional or not, I guess it is one way to create the perception of scarcity.
So what does the broader, current geographic market look like in New York for new luxury vehicles? See the chart below. As noted the wealthier counties are to the left and the less wealthy counties on the right. Cadillac is the dark green color – the color that basically disappears as you move left – towards counties with higher median household income.
There is another missing element to consider – transaction prices. While Cadillac’s new scarcity plan (losing market share?) might mean less total vehicles sold, if they’re sold at higher prices, meaning lower-to-no incentives, something GM is notorious for, then the overall brand could see a lift in both perception and in residual value.
Time will only tell if Johan de Nysschen’s grand plan will come to fruition, but one thing is clear based on this albeit small data set: as median household income increases, the number of Cadillacs decreases.