GM Desperately Discounts Escalade

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GM is worried – because Lincoln is showing signs of making a comeback.

It hasn’t been much noticed, but it is happening.

The new Continental, Lincoln’s flagship luxury sedan, is selling well – unlike Cadillac’s sedans – and now there is panic at Diversity Central (whoops, GM headquarters) about the 2018 Navigator.

With good reason.

It was the Navigator that launched the full-size luxury SUV craze, back in the ’90s. Ford’s idea first. Take an Expedition – a mere Ford – and pimp it out.

Price it out, too.

Manna rained. The profit margins were crack-like.

Cadillac saw it was Good – and copied it. On the strength of sales of the Escalade, Cadillac was able to rebuild its brand. People forget, sometimes, that Cadillac in the ’90s was like LaSalle in the mid-1930s or Buick is today.

That is to say, the new car for old people.

Cadillac bounced back and became hip.

Hip-hop, actually. 

But the Escalade is getting old. Literally and figuratively. The current model dates to 2015 – and three years is a geological epoch in the luxury vehicle business. When you spend $70k-plus on a ride, you don’t want it to look the same as last year’s ride.

Or three years ago’s ride.

The wheel may have turned. The current Escalade is becoming as dated in style and attitude as MC Hammer and parachute pants.

It gets . . . old.

Meanwhile, there has been a Rocky III-like resurgence over at Lincoln, which began with the new Connie – which emphasized style and gracefulness and luxury rather than the gnomesayin’ ethos Cadillac has come to embody.   

It has found buyers – and the tables are gradually turning. Cadillac is now dead in the water. Its sedans are unwanted; the Escalade is old and outre. It is the 4×4 equivalent of underwear down and showing your ass crack.

Heck, it has even got 4×4.

The current Escalade is all-wheel-drive. No Low range gearing and thus no of-road capability. Its main ability is drawing attention to itself, which may also be getting old – at last.

Thus, GM just announced it will deeply discount sales of its rebadged Tahoe by $5,000 – which will only accelerate the tailspin. 

Discounting is the death rattle for any vehicle, car or truck. It means you can’t sell the thing on the merits.

Tesla, for example.

You might as well hang a “kick me” sign on the trunk. It not only means you have to bribe people to buy your ride – bad enough – it means you’ve just poured gasoline on the depreciation rate of the thing. If you’re giving away the new ones, what does that do to the residual value – i.e., the depreciation rates of last year’s already-bought Escalades?

In effect, GM just sent every current Escalade owner a very large bill. To be redeemed come trade-in time.

This will make leasing new Escalades more expensive, too. Because residual value/depreciation rates dramatically affect how much a lease costs.

Which will probably make it harder to get people to lease them.

The vortex spins faster. 

Those holding GM stock might want to ponder the Significance as well. Resorting to finance flam-flam (the specialty of GM’s new CEO Mary Barra) rather than solid product is not Good News – if you have a stake in GM. One recalls – or probably ought to – Mitsubishi’s hit-the-iceberg policy of offering “buyers” the opportunity to drive away in a brand-new car having put no money down and not having to sweat a single payment for one full year.

Many “buyers” took that deal.

And exactly one year later, many of those defaulted on the deal. Leaving Mitsu to deal with the financial and reputational wreckage of all those thoroughly trashed year-old cars it had to try to sell again at a very deep discount. The brand has not recovered to this day.

We will see about GM.

. . .

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28 COMMENTS

  1. The GM models are good off road and I’ve seen some, although an infinitesimal percentage, be dirty and show some dings but these are country folk that use them for the most part.

    Back when the patch was booming I saw a convoy of 4 pulling heavy trailers loaded with expensive equipment passing me like I was tied down.

    Titled as trucks for many years there was a tax incentive for anything with a truck title. The entire cost of one could be applied to a single tax year.

    That tax incentive accounted for nearly all of the Hummers also.

    Down in Tx hill country where wealthy retirees lived saw the roads clogged with them.

    Drive up to a good BBQ joint and the parking lot was full of them…..or any upscale place.

    You could steal a black Escalade in Odessa or Midland and use it every day till you stole a newer one, especially with a set of 22’s or 24’s.

    Closing time at the bar had people going from one to another.

  2. Hi Eric,
    Why don’t you tell us how you really feel, heheh! Ford is finally starting to get it with Lincoln by getting rid of the huge garrish chrome grills and exhibiting a more Euro-Japanese look. The new Nav reminds me of an Infinity QX80.

  3. Chrysler is on record a few years ago as saying the Grand Wagoneer would be back in ’18 but now say it will debut as a ’19 on the Dakota platform. And this is where govt. comes in. They could sell more than they could make of the old style Wagoneer.

  4. The cringey ghetto schtick never made any sense to me. If you’re trying to position the brand as a sophisticated global luxury brand, why would you appeal to a trashy crowd like that?

    The new Navigator is a massive improvement. The exterior actually looks like a giant version of the Range Rover, which is a very good thing. It no longer looks bloated and ungainly. The interior looks very modern and sophisticated. It looks like something you’d find in a concept car. I’m glad Lincoln was smart enough to ditch the tired ghetto schtick with this new one.

  5. Is the American public is losing its taste for the blingwagon? No real off road capability but one $$$$ of a grocery getter with its refrigerator like good looks. Something like the Ford Transit would haul around the family just fine.

      • Blingwagon is a real word now, and I’d say badly needed and obvious in its meaning. You coined a good one. That’s how English stays fresh and vibrant. Nice job.

    • The GM models are good off road and I’ve seen some, although an infinitesimal percentage, be dirty and show some dings but these are country folk that use them for the most part.

      Back when the patch was booming I saw a convoy of 4 pulling heavy trailers loaded with expensive equipment passing me like I was tied down.

      Titled as trucks for many years there was a tax incentive for anything with a truck title. The entire cost of one could be applied to a single tax year.

      That tax incentive accounted for nearly all of the Hummers also.

      Down in Tx hill country where wealthy retirees lived saw the roads clogged with them.

      Drive up to a good BBQ joint and the parking lot was full of them…..or any upscale place.

      You could steal a black Escalade in Odessa or Midland and use it every day till you stole a newer one, especially with a set of 22’s or 24’s.

      Closing time at the bar had people going from one to another.

  6. Kind of interesting when we see little glimpses of what an actual free market entails. And the lengths these large corporations take to avoid it. Very little difference between how GM and a government agency are operated.

    If they want the premium price for this vehicle, they will have to spend a premium price building it. A real free market doesn’t pay a premium price for a rebadged Tahoe. Your competition wouldn’t allow you to be able to collect a premium price for a not very premium vehicle.

    Granted every business would like to collect as large a profit as they can. It quite natural. But most don’t seem to want to understand that competition is the best way to keep wild profit taking to a minimum. Its the built in counter act, no government action needed.

    Imagine if Caddy had to compete against four or five similar products to the escalade. They wouldn’t have ever gotten the prices they once got for it.

  7. This seems to confirm a bit what I’ve observed in the decade or so since the bailouts:
    GM and Chrysler, which took bailouts, have continued to flounder – occasionally creating an interesting or good-selling vehicle (like the Hellcat) but staying consistently mediocre across most lines.
    In contrast, Ford, who decided not to take bailout money, just stopped building shitty cars. They now have genuinely good offerings in almost all market segments. (hopefully the new Ranger and Bronco will round out the compact truck/off-road SUV market) Ford isn’t the best in all segments, and may not be in any segment, but their vehicles are consistently good across the board.

    What if Ford had taken bailout money? Would the big-3 all be struggling again? Or am I way off the trail here?

    • This happens over and over in history, a great example being the Marshall Plan, which was a system of US aid to Western Europe after World War 2. Countries which received more Marshall plan money recovered slower than those who received less, and Germany, Europe’s economic powerhouse, received least. It makes sense, though – people who expect aid sit and wait for it, while those who don’t have to work by innovating and producing.

    • Ford is an arrogant POS company that builds marginally better vehicles than it did 10 years ago. Ford customer service is non existent. Ford’s success has been in packaging. They do build roomy cars. Some of their cars do suck though. Like the Focus, like the Fiesta. Those two cars are plagued with transmission hesitation and shifting problems. Ford cars are difficult to drive as visibility is terrible and you have to navigate a bunch of menu picks to change the fan speed and temperature. Switch ergonomics are no good as well. Bailout or not, Ford isn’t that great.

      • Hi Swamp,

        Ford hasn’t – yet – embraced the alternate lifestyle (electric cars, etc.) yet so I give them a lot of credit for that. And there are still mostly car people running the show, not LGBT/Diversity/Priests of Musk, as at GM.

        • They also build fun cars, you can get V8 sports cars, and manual transmissions. I’m loving the heck out of my Focus RS. It doesn’t have any driving nannies either.

      • I agree, Ford generally builds hateful cars that I wouldn’t touch with someone else’s money. It’s a shame they survived the 1980s…

        • Theirs have been baleful. On the other hand, more, not less competition is needed in the car industry in general. Corporate oligarchy with government assistance is crowing out real innovation and alternatives. I want Ford to survive. I just think that they are too arrogant. On the other hand… what Eric says….

    • Ford took $8B in ’07 or ’08, I forget which, to no fanfare of the media. No doubt they needed it as did all of them. A great deal of this if not all goes right back to govt. being the cause. In the days of a fairly free market none of the big 3 needed any help except for eventually Chrysler that GM bailed out. GM bailed Chrysler out because it didn’t want the SEC to rear its ugly head and accuse them of monopoly.

      • The big 3 are a monopoly. As Eric has pointed out Renault is selling a brand new car for only $5000, of course it can’t be sold her because of safety. That tato car has to be 3 wheel to get around regulations but is a proof of concept that cheap economical electric free cars are possible.

            • Out here in the Tx desert I read “Adobe ” moniker. Great minds and all that, I was about to reply they were the new Stucco model made in Mexico, available in Desert Tan, and any other color you can get a wetback to apply.

              Oh, never mind my old ass.I’m the stupid old man out here in the desert busting ass trying to get black gold outta the ground so the fuckin Greenpeace crowd can try to con me outta my hard earned FRN’s typing on petroleum made laptops so they can demonize me and the entire industry while they trip lightly to the thermostat to use some more of that Natgas they rail about…..oh wait, that’s a heatpump running off Tx companies wind Gen sold at a loss cause we have a glut.

              Notice that price at the pump easing up? It’s going to get higher before it gets cheaper cause OPEC and NOPEC can’t agree. Fine with me. ….it just makes wages go up too.

              Come to the patch and face me to put face to name. I haven’t bumped anything but 24.5’s with this big ol piece of rebar…..hecho en Mexico.

      • Exactly, people think that Ford didn’t take a bailout because they didn’t get money when GM and Chrysler did. Ford just went out first cause they’re the shittiest of the three. They should be further on the path to recovery since they started down the path before the other two…

      • The money ford got was from the same pool of development cash for environmentally “friendly” cars or some other such nonsense that all the manufacturers dipped into.

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