Nov. 16 (Bloomberg) -- General Motors Co. will show its new Cadillac XTS sedan today, the first of two new cars the automaker is introducing to boost its slowest-growing U.S. brand this year.
The Cadillac XTS, which GM will aim at buyers of Volkswagen AG’s Audi A6 and Daimler AG’s Mercedes E-Class, will ship to U.S. dealers in spring 2012, the Detroit-based automaker said in an e-mailed statement. GM has said the smaller ATS luxury car will follow in the summer of next year.
Cadillac’s U.S. deliveries rose 5.6 percent this year through October, trailing increases by GM’s three other brands and well as gains by Audi, Mercedes, and Bayerische Motoren Werke AG’s BMW. GM relies on two models, the CTS midsize sedan and the SRX sport-utility vehicle, for almost three-fourths of Cadillac sales as it ends output of DTS and STS sedans and skips over the Escalade SUV for major upgrades.
“The luxury segments are very much dependent on new product, and Cadillac has kind of let itself get behind,” Alan Baum, an industry consultant at Baum & Associates in West Bloomfield, Michigan, said in a phone interview. “They’ve been able to get by with it because SRX clearly has been very successful and they’ve done some variants on CTS.”
Chief Executive Officer Dan Akerson plans to expand Cadillac’s lineup so that GM can position it with Chevrolet as GM’s two global brands. To do so, Akerson has to bolster Cadillac’s presence outside North America, where the brand has registered 82 percent of its worldwide deliveries this year through Sept. 30, according to LMC Automotive.
‘Work to Do’
“Part of the logic behind wanting to grow Cadillac over time is to create another profit engine in the company, another source of high-margin business” in addition to pickups, Chief Financial Officer Dan Ammann said in a Nov. 9 conference call with reporters. “We’ve got work to do to grow that business to a greater scale.”
Cadillac’s U.S. sales growth has slowed this from a 35 percent surge in 2010. Audi has increased deliveries through October by 17 percent, while BMW boosted sales 13 percent and Mercedes grew 8.2 percent, according to Autodata Corp., the Woodcliff Lake, New Jersey-based researcher.
“For Cadillac, as they try to continue rebuilding the brand, they need a flagship,” said Jeremy Anwyl, chief executive officer of auto-market researcher Edmunds.com in Santa Monica, California. “You need something that’s sort of an aspirational statement of what the brand stands for.”
GM will introduce its Cadillac User Experience, or CUE, an in-car navigation and media system with tablet computer-style touch screens, as standard in XTS, Don Butler, Cadillac’s vice president of marketing, said in an Oct. 11 interview.
The CUE system includes 8- and 12-inch LCD screens that sense an approaching hand. Its touch controls pulse when tapped or swiped, and the system offers applications such as Stitcher radio and Pandora Media Inc.’s music service.
GM will announce pricing for XTS later, as well as additional sites for assembling the car outside of Oshawa, Ontario. The sedan is 17 inches longer than Mercedes’s E-Class and eight inches lengthier than Audi’s A6. The car is four inches wider than E-Class and nine inches narrower than A6.
The XTS shares the global architecture being used for the new Chevrolet Malibu and Buick LaCrosse sedans, reflecting another goal by Akerson to reduce development costs. Less than one-third of GM’s global sales last year came from vehicles built on core architectures such as compact and mid-size cars, GM said at an Aug. 9 investor conference.
Ford Motor Co. gets more than 70 percent of sales from its main architectures, according to Adam Jonas, a New York-based analyst for Morgan Stanley.
In addition to the German nameplates Cadillac aspires to take on, XTS will compete with a refreshed Lincoln MKS that Dearborn, Michigan-based Ford also will introduce this week at the Los Angeles Auto Show.
While GM and Ford are trimming costs by sharing architectures and parts, the strategy presents the automakers with the challenge of distinguishing the models enough to justify the price premium to cheaper models, said Dave Sullivan, a Troy, Michigan-based analyst for AutoPacific Inc.
“The investment in CUE will help differentiate the XTS and show that Lexus and Lincoln have some catching up to do,” Sullivan said.
--With assistance from David Welch in Southfield, Michigan, and Alan Ohnsman in Los Angeles. Editors: Bill Koenig, Jamie Butters
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