Cadillac to Restrain from Nonsense Incentives

Up to this time Cadillac was a trend follower when it came to incentives. When other automakers unveiled their programs, the American luxury marque would quickly raise the stakes to match its rivals.

"A year ago, we'd get to the 10th of the month and it would be 'Oh, holy smokes, we're tracking behind,' " says Kurt McNeil, Cadillac's vice president of U.S. sales and service. "Or 'Mercedes just announced this or Lexus just announced this; we need to match it.' "

Now Cadillac executives reassure us they're not going to change their mind about the incentive scheme, in spite of the fierce competition, even if sales fall short. As confidence is high at Cadillac, discipline is part of their new strategy, which involves simplified incentives, as GM ends a profitable year. That won't be easy, as rivals feel the pressure and up the bargains in an effort to keep their market share.

Cadillac sales are up 38 percent through November, ranking higher than Lexus, which was up 8 percent, Mercedes Benz, 19 percent, BMW, 12 percent and Infiniti, up 26 percent.

With holidays approaching, other manufacturers are again raising incentives, testing Cadillac's determination. Attempting to retain the lead of the luxury segment for the 11th year in a row, Lexus raised incentives by 82 percent in November from a year before to an average $2,105 per vehicle, according to Edmunds.com, quoted by AutoNews. Cadillac incentive spending fell 6 percent in November, to $5,359 per vehicle. BMW and Mercedes Benz are also trying to cut costs. Cadillac remains the luxury brand with the highest incentives averaging $4,829 through November. BMW's were next at $3,658.

"Cadillac's product lineup is getting a little aged," except for the SRX crossover. "I think that discipline will be challenged by competitors with new models that can pick up market share with fairly low incentives," warned Jeremy Anwyl, CEO of Edmunds.com.

Cadillac is making its promotions more comprehensible so that salespeople can have a consistent dialog about models. Dealers say customers have complimented Cadillac's new program for the 2011 model year, including maintenance in the cost of the vehicles. What customers want from a luxury brand is comfort, security, control, not a small bargain on the condition to switch from a competing brand or to get their car loans through a certain bank.