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GM Holden pulls the plug on Cadillac for Oz two weeks before the CTS was due on sale
22 Jan 2009
GM HOLDEN today postponed the Australian reintroduction of General Motors’ flagship Cadillac brand for the second time – this time indefinitely.
Company chairman and managing director Mark Reuss made the announcement this afternoon, citing an inability to do justice to the troubled US car-maker’s flagship luxury marque in the current economic climate.
“It’s a tough announcement for me and the Holden team here today, but we’ve made the decision and direction in the last week or so that we’re going to indefinitely delay the Cadillac introduction to Australia,” he said.
“We only really had one chance to launch the brand here in Australia and … we just believe we couldn’t give it the best chance that it deserves as our flagship brand in Australia at this time, given the situation both globally but also here in Australia.” Mr Reuss said he made the decision to postpone the Australian relaunch of Cadillac himself after talks with GM executives.
He said it was a difficult decision for him personally after spending time as a development engineer to establish models like the CTS mid-size sedan, which was due to be launched nationally in Melbourne on February 11 before going on sale in March.
From top: Cadillac STS, CTS wagon, CTS-V and CTS Coupe.
“It’s a very tough decision for me personally because I had a lot of my prior life in developing what’s now the Cadillac portfolio,” he said.
“We’ve got a great set of cars here and the reaction was very positive in Sydney as well, when we showed the car and the coupe.” GM Holden had planned to launch the CTS sedan last September before delaying the national media launch until February, the same month Australian CTS production was due to have begun.
Despite having no cars to sell, the company then staged the Cadillac brand launch at the Sydney motor show in October, where a local-specification right-hand-drive CTS made its Australian public debut alongside the CTS Coupe, which first appeared at the 2008 Detroit show and was confirmed for Australian release in late 2009.
A V8-powered V-spec version of the CTS Coupe was also on the cards, while the CTS sedan was due to have been launched with a 3.6-litre petrol V6 similar to the Commodore’s. Both 2.9-litre turbo-diesel and perhaps even all-wheel drive versions were also expected to surface here.
Cadillac revealed the CTS Sport Wagon at the USA’s Pebble Beach Concours in August, where the new-generation SRX medium SUV was also unveiled. Both models were also on the radar of Holden’s GM Premium Brands’ division, which had planned local releases within two years.
But today Holden said the risks of launching Cadillac in both Australia and New Zealand here outweighed the rewards.
“We just weren’t 100 per cent able to do the brand and the car justice here in a very tough market and a very tough global economy,” said Mr Reuss.
“So we’re looking right now to not launch Cadillac with the risk of things happening that would not be as positive as we would like for the brand and the car here.
“So to be able to get another shot at launching Cadillac here we have to be able to do it both from a resource and financial standpoint that the brand and the car deserve.
“Right now, we aren’t able to do that so this again is painful, and it’s one of those tough decisions that you have to make. But we really have to focus ourselves on reinventing Holden with the small car that we’re going to localise.
“We want to be able to get Cadillac right, and there’s time in the future to be able to do that, but right now there’s probably bigger risk that reward in doing it, so that was point at which we made the decision.” Mr Reuss said Cadillac models beyond the CTS were part of discussions to halt the brand’s reintroduction here, but that the decision to abort the Cadillac plan was his alone. Right-hand drive production of the CTS continues.
“We’ve got a portfolio of Cadillacs in Detroit. Not all of that is right-hand-drive-capable so I don’t think the amount of product is necessarily an issue for us and I only think it will make the delay of Cadillac into the future even more viable because we do have the products to launch it right. It is do we have the resources behind it and right now the answer is no,” he said.
“I did a lot of conversation, but in the end the decision was mine. Detroit supports me in that decision and I was there for a week. I accept the accountability for not doing it and the responsibility for not doing it. I’m doing what I think is right for GM and Cadillac but more importantly for our customers.” Holden would not divulge the extent of its financial investment in the CTS or Cadillac here to date, but said that significant launch spending in the form of advertising and promotional materials had not yet been committed to.
It is known the first model from the historic US luxury brand received Australian Design Rule compliance in mid-2008, and Holden confirmed that the 89 vehicles it has already landed in Australia will be redistributed globally.
“It (the investment) is not significant yet, so this is the right time to be making this call because right now we have right-hand drive cars that are in the country obviously and we’ll be looking at the world market to redistribute those.
“From a launch expense standpoint we haven’t crossed over into the place that we really start spending yet, and that’s why really we’re making the decision now,” said Mr Reuss.
The Holden chief said the 14 dealers earmarked to retail the CTS in Australia were advised of the decision today, but that the process to halt Cadillac’s Australian return began two weeks ago.
He said Holden was in ongoing discussions to compensate two dealers that had already committed finances to retail the CTS.
“We talked to our highest stakeholders here today dealer-wise and got absolutely no questions on why this was the right thing to do. It is the right decision for us here in this climate.
“Yes, there were a couple of dealers who had spent money that we’re in very close communication with and we’re going to work through all the issues with those two dealers.
“We are before the edge of the cliff on the rest of the dealers that would have distributed Cadillac on investment.
“We obviously looked at that very carefully and are prepared to work through the issues with two of the people who have spent money and we’re doing that and they totally understand.
“They’re happy that we’re not two years down the path and looking at this like ‘gosh, what do we do’.” Mr Reuss said GM Holden would continue to support the Saab and Hummer franchises in Australia, but admitted the fact that both GM Premium Brands marques were under “strategic study” played a factor in the decision to add a third luxury brand to its portfolio.
General Motors has confirmed that the future of both Saab and Hummer are under review. It also revealed at this month’s Detroit motor show that production of Chevrolet’s Holden-engineered Camaro convertible and right-hand-drive Camaro coupe would be delayed by one year, abolishing the chances of Holden introducing the Chev brand in Australia in the near future.
“We made commitments with our dealership body on that (Saab and Hummer),” said Mr Reuss. “We are prepared to honour those commitments. That’s all I really have to say.
“You have to look at this whole situation … what we don’t want to do is to (launch) our number one flagship brand through a channel where we have two brands that are under strategic review, so obviously you’ve got to think about that when you think about whether you bring Cadillac into this or not.
“Right now we’ll obviously continue to support Saab and Hummer and the dealership channels that we’ve established in providing those to the public.
“I think we’ve stated publicly that those are brands that have been listed as under study for strategic review in company with the US government’s short-term loan activities that are going on.
“That continues to be the effort around Saab and Hummer right now and packaging up those and looking at all sorts of different options for those including sale.
“So that’s where we are right now. I haven’t got anything else to say that’s changed right now on that.” Mr Reuss praised the team whose plans to reintroduce the Cadillac brand here had been cancelled at the 11th hour, but said Holden’s focus would remain on selling Commodores and production of the Cruze-based small car in 2010.
“The whole team did a fantastic job in taking the 89 cars,” he said. “When you bring any car in from as far away as Lansing in Michigan to Australia … “We took the first 89 cars and worked through the right way to ship the cars here and we did a tremendous job of that and got all the issues resolved.
“We were watching the economy here on a daily basis and watching the industry on a daily basis and watching everything we’re doing with the US government from a parent company standpoint, and there are a lot of tough times ahead for our GM parent company.
“The whole situation we’re going through with the US government is very tough, so we’ve got to make some good calls and some tough calls on where we focus the resources that we have.
“In Australia we are focussing everything we have on the core fundamental activities here, so you start looking at things from that standpoint and you really look at where the market is going to be and you say ‘if you can’t do it at 100 per cent then why are we doing it?’. And we can’t, so these are tough calls but they’re the right calls.” Mr Reuss added that, if it eventuates, Cadillac’s return to Australia would remain a long-term strategy, and therefore no sales volume forecasts had been made.
“Because it is a niche luxury brand we really had very little target on volume here other than what we needed to make money price-wise on it.
“So weren’t looking at any volume commitments at this point of time because this is a historic brand on its way back into Australia. It must be a long-term strategy, so the volume part of it didn’t really matter.
“This is a long-term strategy discussion and decision, and we want to reserve the right to bring Cadillac back in here because we think there’s a great market and we’ve had great reaction to the car, so we really want to protect the future for Cadillac here.” Holden said that because pricing for the CTS had not been announced it was unaware if any deposits had been taken, but said they would be refunded.
Mr Reuss added that privately imported examples of the CTS were a possibility, but weren’t his preferred option.
“That’s not the way we want to bring Cadillac in here,” he said.
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