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.
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.
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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