Inventory and Incentives

[antsy]

Cadillac’s channel strategy for the ATS involves favoring wealthy ZIP codes where Cadillac is counting on growth. But these locales (places like Miami, wealthy areas of California etc) tend to favor import luxury brands rather than Cadillac, and sales are not meeting internal projections.

Tied up in all this are inventory levels, which have been consistently above 100 days of supply for several months, currently there is a 122 day supply of ATS’. It will take Cadillac time to pull themselves up, and good product is the first step of a long journey. However in firmly entrenched markets difficulty is magnified.

Cadillac decided to fight the war before winning the small battles, Superiority in small luxury sedans is not won in ultra exclusive parts of town, its won in suburbia through terrors that Joe Neighbor is suddenly better off than you. An ATS on every block, a chicken in every pot.

If you consider the high dollar ZIP codes and the kind of cars one sees there an interchanging medley of 7-Series, S-Class and A7/A8’s pops into mind. Range toppers, ultra luxury Saloons. Imagine them as the Generals in automotive hierarchy. The ATS and the 3-series are mere soldiers. Trying to impose a soldiers life style on a General has never flown well and it wont fly now.

The truth: There are significant rebates and inventory levels on a car that had outsized expectations.

[Truthiness]

The rebates and incentives are definitely a sign of weakness, but if the ATS looks and feels as nice as its competitors, the trick for Cadillac is getting enough of them out on the road that they look popular. Once that happens there will be a snowball effect. That is why Cadillac is resorting to incentives and rebates. I'd agree that an import car is generally favored in these areas, but its all about keeping up with the Jeffersons. If your neighbor has a BMW, you either want a BMW, or something that is nicer. Right now the Cadillac ATS is nice, but isn't better than the BMW. Maybe a marketing strategy that stressed the value of supporting American industry over foreign imports would be effective.

[Cadillac.Fan]

At a time like this where cadillac is going through a major overhaul and trying to establish a new identity these rebates and incentives are needed

[HoosierDaddy]

The rebates and incentives are definitely a sign of weakness

At a time like this where cadillac is going through a major overhaul and trying to establish a new identity these rebates and incentives are needed

It's just one business model. They are not a sign of weakness and they will continue no matter how successful Cadillac is. No manufacturer want's to be changing the MSRPs every month based on supply and demand. What the typical buyer will pay for ANY car is variable. The GM, Ford, etc. have publicized rebates. Other's have backroom kickbacks to the dealers which let them pass the savings on to buyers. Both have the exact same purpose: to sell cars for less to the people who won't pay enough to cover invoice and expenses.

[cfrp]

many successful brands will have incentives and promotions.

it's just the way of business. if you want to sell products quicker you put them on sale.