Bloomberg News

GM’s Cadillac Considers Smaller SUV to Compete Against BMW X3

January 18, 2012

(For Detroit auto show coverage, see SHOW <GO>.)

Jan. 10 (Bloomberg) -- General Motors Co., already targeting Bayerische Motoren Werke AG with a new compact car, is considering a small sport-utility vehicle to compete against the German automaker’s X3.

“We’re looking at options there,” Kurt McNeil, Cadillac’s vice president of sales, said today in an interview at the North American International Auto Show in Detroit. “I think it would go a little bit more head-to-head with like the X3.”

GM is trying to boost sales for Cadillac with smaller models that those of BMW, which wrested the U.S. luxury sales lead from Toyota Motor Corp.’s Lexus in 2011. Detroit-based GM on Jan. 8 introduced the Cadillac ATS sedan to take on BMW’s 3 Series and Daimler AG’s Mercedes-Benz C-Class.

A small luxury SUV might build on Cadillac’s gains from the larger SRX sport-utility vehicle, which increased U.S. sales 11 percent last year. BMW’s redesigned X3 helped the Munich- based company displace Lexus, which had held the top ranking among luxury brands in the U.S. for 11 years.

GM hasn’t decided yet on a small Cadillac SUV, McNeil said.

“The fact that Cadillac is becoming more of a global brand will certainly play a role in that decision,” he said.

Cadillac’s new ATS sedan is scheduled to go on sale in the third quarter.

Monthly lease prices play a big part in the sale of compact luxury cars, with BMW and Mercedes advertising deals for the 3 Series and C-Class as low as $299 and $349, respectively, on their websites last month.

“We have to be as good or better than our main competitors,” McNeil said.

GM reduced Cadillac fleet sales, which were mainly to rental car companies, by 33 percent last year as part of an effort to improve the brand’s resale values, he said. Cadillac plans to have fleet sales down to no more than 5 percent of sales, from 10 percent last year, McNeil said.

--Editors: John Lear, Romaine Bostick

To contact the reporter on this story: Tim Higgins in Southfield, Michigan at thiggins21@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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