Cadillac's Resurgence Critical to Chevrolet Silverado's Future


By Tim Esterdahl

Cadillac's new brand chief recently laid out the future of the brand and explained why GM is willing to invest in rebuilding it. According to a Motley Fool report, GM is spending money on Cadillac to help GM trucks. What the heck does Cadillac have to do with GM trucks? Simple. Profits, lots and lots of luxury-car profits offsetting future truck margins.

It is no secret that corporate average fuel economy requirements for pickup trucks will cause manufacturers to use all sorts of fuel-efficiency tricks. Terms like turbocharging, hybrids, diesel, aluminum and high-strength steel for reducing weighting will become part of "truck-guy speak" in the foreseeable future.

All of these fuel-economy innovations have one big problem: They make trucks more expensive to build, and truckmakers have been reluctant to pass those costs onto customers. Instead, Ford and other manufacturers have added features and options to entice customers to spend more on pickup trucks. Also, there are more luxury pickups to choose from. This isn't by accident; truckmakers are looking for ways to keep healthy profit margins and offset the higher production costs. Luxury vehicles help them accomplish that.

Cadillac to the Rescue

Getting back to Cadillac, GM is quite serious about making the luxury brand relevant again, and the reason is profits.

"The global luxury market accounts for, depending on how you define the luxury market, 10% to 12% of the total auto business globally, but generates about half the profit," said Cadillac President Johan de Nysschen in the Motley Fool article.

Another example of a luxury brand's importance is demonstrated by Volkswagen Group. Porsche and Audi, two luxury brands owned by VW, accounted for just 18 percent of the group's total sales. However, they contributed 65 percent of VW's profit.

GM is a lot like VW in volume, but it doesn't have the luxury-brand recognition or sales like Porsche and Audi do.

Cadillac Isn't Alone

All this talk about Cadillac and GM begs the question of how the other truckmakers stand. Ford is currently working on resurrecting Lincoln, its luxury brand. You could literally insert the word "Lincoln" in place of "Cadillac" above and the facts would be the same.

Fiat Chrysler Automobiles is bringing luxury brand Alfa Romeo back to the U.S.)There are plans in place for eight new vehicles to be introduced in the next four years. These vehicles are clearly meant to help create profit at FCA, which has a considerable amount of debt after the merger.

This leaves just Nissan and Toyota. Both companies have a luxury car division (Infiniti and Lexus respectability), and they are both growing.

Forbes reports that "Lexus is the fastest growing manufacturer among the top luxury car brands," and the recent introduction of several models should keep that momentum going.

Infiniti hasn't done so well in the past, yet it is on pace to increase sales by 13.6 percent over last year. Among luxury brands only Lincoln and Lexus have grown faster according to a Motley Fool story.

What does all of this have to do with shiny new pickups loaded with premium features? While it doesn't always seem obvious, the growth of luxury brands and luxury trucks is critical to the future of pickup makers. If those brands and products slip, profit margins shrink and funding for future vehicle innovations takes a step back. As the saying goes, "you fund tomorrow's vehicle with today's sales."

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Why no article with a link to Motortrend truck of the year?

Oh yah, it's not in Ford's best interest so this sight won't post it.

Toyota won't have to resort to questionable mpg tricks unless they want to. They had NEVER had a loss until the big economic meltdown a few years back--meaning profit for 70 years. Also, they sell huge volumes of cars that get great mpg--not to mention big profits with Lexus.

Alfa Romeo a luxury brand ?????

FORD the best there was the best there is the best there ever will be

Sounds like new math to me.

FORD the best there was the best there is the best there ever will be

Posted by: FORD | Dec 8, 2014 11:13:24 AM\
Yeah, best at combusting in your driveway at 3am. That's real Ford quality right there.

Unlike the big 3, Toyota isn't bound to truck sales for profits. Toyota has no problems putting up profits year after year.

Joke all you want about Toyota cars like the Prius, Corolla and the Camry, fact is Toyota is putting up profits that the big 3 wish they could obtain.

It's not possible that PUT's missed it! This website is biased or owned by ford!!

I did e-mail them about it last week. So they do know...assuming they read their e-mail.


Please don't start that. We already have fanatical extremist Ram---s, and we don't need anymore regardless of their favorite brand. This is coming from a Ford fan as well.

Well, the F-150 just didn't cut the mustard.

I knew the ride quality would suffer, in 2009 Mike Rowe told us all about Ford making longer leaf springs for a better ride. That way, they went back to a "worse" ride by choosing to go back to shorter ones to lose a few pounds in 2015.

I wonder what else the sacrificed? Will it crash test like a 90s model truck?

A few hundred pounds saved, but poor steering, 1 to maybe 2 mpg? Can't stop better then the others, it should, being lighter.

Can't get near it's rated mileage.

For this, you get to pay more, pay more insurance, have few body shops to work on it in the event of a wreck, to barely squeak out more mileage?

The Colorado? 36K gets you a decailed up 4x4 small bed, no hitch, and that's a cheaper version than the GMC? And it doesn't even have airbags in the seats? Roadwhale will love that!

It doesn't even get it's rated gas mileage, 24 highway, Motor trend got 22.2, wow!

But I guess it's good competition for the other little trucks. I was reading on motor trend's site and there was somebody with a 98 ram saying he was going to get one just because it fit in his garage, well I am the opposite of that person. I give a dang about if it fits in the garage, I buy it for what I need it for. And I don't see a whole a lot of bang for the buck, just overpriced midsize truck.

Well I guess Chevy is trying to make their Silverado's benefit from Cadillacs, because right now they have to give them away, the full size ones, and considering what the prices are they selling for, iandthe maintenance that they give you so you take their truck off their hands, they barely make anything.

So tell me, what is next for the full-size GM trucks? Maybe an eight speed for all the trucks in the next couple years, or 10 speed? They're going to have to do more than that, but they could just keep on selling them at bargain rates and keep on being same old Chevrolet,

Motortrends truck of the year is meaningless. Not only did the Colorado, but also the transit and a host of other vehicles finished ahead of a Denali duramax. Gmafb as a transit van and the Colorado aren't even in the same league as the Denali. So hence the motor tread pickup of the year is insignificant. If you guys want to read it go to motortrend and stop fill this site with the whining garbage about it.

Now the new cadiallac ats v motor in a silverado/Sierra would be sweet.

Its the same reason GM Ford and Chrysler gave up on small/mid sized cars and went whole hog on SUVs and Trucks. It was a quick fast money strategy that worked great until fuel prices dramatically rose, incomes stagnated, the housing bubble collapsed along with the double dip recession. This nearsighted short term "planning/strategy" over the last 30 years is what made Chrysler into Fiat and GM into a welfare case. Everyone loves profits and especially fast easy ones. The kind you can make from big expensive vehicles laden with costs and features that have a clientel that can easily and is often happy to absorb them.

The lure of fast easy money... Short term planning. I never looked closely or considered the luxery market this way (just trucks and SUVs) but it makes sense. It explains the importance of building such a brand and the reasons companies spend billions launching (lexus/infinity) and billions successfully rebuilding (audi), and waste billions in failed attempts to rebuild (Lincoln/Cadillac) these high (or at least potentially so) low volume name plates.

Luxery brands require big money investments and demand CONSISTENT excellence over a long time to build the brand's name, prestige and following. These are things that brands like Mercedes, BMW, Lexus have always done well at and enjoy the reputations they deserve. Its something that Acura wrestles with, and that Infinity and Linclon don't get at all. Its something that Audi has rebuilt itself from after many attempts and something Cadillac rides a roller coaster on. Flashes of brilliance don't cut it in this market. Every manufacturer has those. Its about the LONG haul.

@ TRX4tom,
I agree on pretty much everything you said, I was thinking soon Chevy will have the flintstone version with the floor cutout so you can run and get better MPG's, as far as the Colorado, I don't see this being truck worthy, but that's my opinion, I could never understand the use for a small pick-up.

Cadillac? The tail doesn't wag the dog!

It's just the most stup!d article ever. The Silverado will remain the #2 most profitable vehicle in the world, with or without Cadillac. And with or without luxury Silverados.

Even with CAFE encouraged technologies. the Silverado will remain the #2 most profitable vehicle in the world. The Silverado carries all of GM, just as the F-series makes Ford possible.

They could kill all of Cadillac and that's a hiccup for GM. Kill the Silverado/Sierra and GM is DONE!!

@trx tom
kbb just tested an f150 supercrew 4x4 on a multistate roadtrip and got over 26 mpg in a truck that is rated 23 highway. They also said ride quality was much improved and 2nd only to the ram. How does it compare to your precious toyota? I think you'd be hard pressed to find any unbiased reviewer say the tundra is better overall, even before this redesign. And then how does the colorado compare to the tacoma? You realize how ridiculous your comments are?

Cadillac needs to make some full sized pickup trucks with a variety of engine choices! Seriously there's no denying how popular pickup trucks are in North America, so I believe that this could be a great way to make the brand relevant and strong.

Some of Tim's comments are quite accurate.

The comments on recovering the costs of pickups/SUVs is important. I do believe you will see the average transaction prices increase. This affects all wanting to drive a pickup.

For a while now I have discussed the cost of development, design, re-tooling, affecting sales. Who pays for this?

I do think another factor will be the shorter length of a product cycle, that is the length of time a platform is used before is it replaced.

This all costs lots of money. GM trying to spread the cost load into the more profitable Escalades will help keep the Silverado on the road.

For many who comment on this site you will see a rise in the cost of buying pickups. This is inevitable, gone are the days of the pickup being a cheap first vehicle.

The average transaction price is over $39 000, That is a lot of money. It will only rise. Owning a new pickup is now squarely in the "middle class".

The Big 3 in particular must keep pickups "expensive" to create the profits necessary to keep their car companies solvent'ish.

The odd thing is, they are doing this at the expense of you the pickup person. The pickup person is "subsidising" the car driver in some ways.

This means that the US pickup market is distorted and requires some way of introducing more competition to reduce prices at the retail level.

It will change the vehicle manufacturers. It will also change the intended market for pickups. The pickup is a sign of middle American success, even Australian success.

But, if those ridiculous profits are too large will the middle class look at another vehicle in lieu of a pickup?

As some already discussed, the Colorado might grab some of the bottom end of the middle class as the full size is grabbing the upper end. This doesn't indicate that the midsize customer is a bottom feeder. I would think a bottom feeder is someone who buy a $14 000 eco-hack. But, they probably can't afford much else.

Mike, don't quit your day job. Ha.

It is going to be hard for Ford or GM to resurrect their luxury vehicles globally, both Cadillac and Lincoln are struggling in their home market, let alone a global one.
Automakers should be aiming to make profits on everything they sell not just a couple of lines

I don't understand where all the anger is coming from?
PUTC is just the messenger, its a story from Motley Fool
If you don't like the story don't read it.

funny how you guys complain that PUTC is in bed with Ford and all the stories are about Ford and at the same time its YOU that talks about the F-150 on a GM story, yet you complain and trash PUTC !
ha ha ha ha ha !

@Robert Ryan,
Caddy and Lincoln are not very recognisable outside of the US.

I do think you are correct that the auto manufacturers should look at where the cash is. The real cash, not the cash that is protected via uncompetitive instruments.

The US government does have a responsibility in changing the market so the US economy isn't reliant on expensive subsidised/protected industries. We must do the same in Australia.

I see it this way. If the US pickup market is protected and that protection is removed/reduced then car profits will have to increase to make up for the short fall in pickup prices.

This would maintain the popularity of pickups vs car/CUVs, etc.

The car companies will still turn a profit but they will be forced to sell cheaper pickups and more expensive cars.

Pickups will increase in numbers.

Ford does not and never will equate to luxury. Luxury means reputable well built vehicles with class which Ford cannot produce or even come close. Unless the new standard for luxury is flimsy and poorly built.

@BAFO - The Silverado doesn't need the help of Cadillac. But Cadillac would've been dead and buried, along with GM, if it wasn't for the Silverado, GM would've been a footnote in history, along With Studebaker, AMC, etc., long before the bailouts.

Chrysler was only bailed out 2X b/c they had Dodge trucks going for them.

Bottom feeders aren't necessarily limited to entry level. Especially fleet buying multiple vehicles at a time. I can easily afford the bling, but don't want it.

But pickup trucks are still an incredible value. And will remain so. They're not exactly giving away CUVs.

The average transaction price of trucks is skewed by those luxo trucks and buyers abandoning luxury cars for pickups. And businesses scrambling for huge write-offs at the end of the year.

And it was you that said aluminum pickups wouldn't be affordable by the common man or woman. They start $500 less than the Silverado.

Simple for GM. Liquidate all your assets, pay the American taxpayer back, and fade into history. The world would be a better place without GM

@BAFO - If the US pickup market is "protected", why can't why can't Nissan, Toyota and Honda find buyers for their pickups? Some are 1/2 tons!!!

@Big Al

"I see it this way. If the US pickup market is protected and that protection is removed/reduced then car profits will have to increase to make up for the short fall in pickup prices."

Hmm, isn't that what Australia did. How did the work out for them? How many automobiles will Australia produce after 2017 when the last domestic auto factory shuts down?

It is funny that you recommend that the US should do the very same thing that killed the Australian auto industry. Given the Australian auto industries track record on their auto industry, I don't think you should be given other countries advice on how to run their auto industry. How about this. Only courier that have an auto industry can make recommendations to countries with auto industries. That only give you two short years.

Luxury divisions also help with powertrain development- engines and transmissions that first see the light of day in pefromance cars, can have any roll-out bugs worked out while the volume is small, before then being adopted into the truck lines. Examples include the 4-valve Ford V8's in the last decade, GM's LS family and new 8speed, and Toyota's UZ and UR V8's.

Anybody who can read an annual statement can see what the profit margin on Fords pickups are. And it's north of 50%. So why do manufacturers ( ALL of them) keep adding 'bling'? Easy profits, pure and simple. And to pick a fight, the cost to manufacture has NOT skyrocketed, That is a lie. It has gone up, yes, but not anywhere near what the price increases have been in the last 10 years. Let me ask you. Has your wages/income doubled in the last ten years? Or has your purchasing power gone down?
Getting rid of Glass/Stegel and the chicken tax (protectionism at it's worst) has made us into a society that exists souly to service the Corporation. The crash of 08 was felt by everyone. But has everyone benifited from the "recovery"??? H*ll no.

How come this site hasn't announced Motor Trends 2015 truck of the Year winner?? Autoblog announced it last Wednesday!! Ford fans aren't going to be happy to see the winner!! LOL

The new Head of Caddy is clueless. They raised the prices so much, no one is buying, only leasing. The new caddys are nice but they don't have the track record in reliability, desirability, resale value and prestige, you cant force that, its earned, Cadillac hasn't earned it, BMW, Mercedes-Benz and Audi have.

Smart people considered Caddy when they offered a lot for the money at a greatly discounted price that would help with the resale value issue.

Back to the new head of caddy, the GM Trucks don't want or need your head, they are fine on their own.

The best Caddy is actually a Chevrolet SS, at 47k no way, at 37k OK, Kerbeck Chevrolet had a few with the 10k off and at 37k that's a steal for what you get, now put the 8 speed and Mag ride and offer manual transmission in the SS, put the new vette engine and 10k off and I am buying.

In a world full of unicorns and pixie dust, it makes economic sense to maximize comparative advantage and forego a country's manufacturing base if beneficial.

But in an unstable world full of sabre rattling, terrorism, despots, upheaval, embargoes, etc., only the stupidest of countries would do so.

That is why I bought a pickup made in the USA--including the engine, transmission, etc. I want to support manufacturing in the USA. Some on here would buy "their brand" if it was made in a Chinese sweat shop so long as it had a Ram, er, their emblem on the hood... .

No post on Motor Trend's Truck of the year award! Is this a real truck site or WHAT?

This article doesn't jive with what we have been told in the past that the full size pickups were highly profitable and that their sale helped subsidize the development and costs of the autos. I find it hard to believe that Cadillac would subsidize GM trucks and that Lincoln would subsidize Ford trucks, but I can see the development of a Cadillac engine being shared with other GM products including trucks. I believe the profit margin will be less for all trucks due to the cost of meeting the new fuel standards--a lot of development costs on new technology that will take years to recover. A lot of money is being spent by Ford and much more will be spent as will be spent by GM and Chrysler to meet these standards over the next 10 years, much more than has been spent in the past.

Cadillac should build this to get me interested in buying their cars

I agree with DM that without Silverado/Sierra GM would be done but I also fear the same would be true without Ram and Jeep Chrysler would be done and possibly Ford without the F series, if not done Ford would be very weak. The industry as a whole is too dependent on trucks and it is hard to break the dependency. GM would survive without Cadillac as Ford would survive without Lincoln but without trucks the picture would be grim. Toyota and Honda don't depend as much on trucks.

I love these comment threads; usually more informative and entertaining than the article itself.
Cadillac important to Silverado? This reads like another fluff article from Motley Fool. GM has to keep spending big time on the Silverado to keep market share. Been buying new Silverado's since '88. Bought an F-150 in '04 to see what all the shouting was about; didn't like it; traded it in for wife's '05 Mustang. Getting ready to trade in my '11 Silverado for another new one. Seems like everyone has their favorite truck: Ram, F-150, Chevy, etc. And all the rest are just unworthy of any intelligent person's consideration. Probably we get hung up on our first truck, and just keep on buying them. That's me, anyway.

Looks like fiat-ram will follow ford into the turbo charging game .This again shows how far out front ford is in producing the best truck on the rd.

Ford has parking assist' trailer management' sway control' 360 all around monitoring with camera's' power tailgate' new military grade aluminum that is stronger then steel in this application' just too mention a few of its new truck enhancements.

Chevy has a new step bumper and square fenders for round wheels. Another gm break threw right there.

Toyota doesn't even have a built in trailer brake yet but it does have a newer uglier design.

Ram -fiat again fumbles at the bottom of every quality ratings survey but that's not surprising as that's where ram-fiat usually rank.

Nissan welcome to 2015 or 2016 by then you'll be out dated once again.

The Cadillac brand is dying off.
Its the baby boomer generation that grew up in the 50's-60's and 70's that the top of the line luxury car was the Cadillac. You were rich and important if you owned one.
The only people buying one now are old over 60 and they are getting too old and their driving skills and excitement is gone, so they seem less likely to want to own a truck..
I think many people that post here on PUTC are old and they can't seem to let go and accept they are no longer building pickups to appeal to them, instead they build pickups to appeal to the new younger generation.

Harley Davidson motorcycles are made in India

The comment you made is quite accurate, I really think you hit the nail on the head;

"I think many people that post here on PUTC are old and they can't seem to let go and accept they are no longer building pickups to appeal to them, instead they build pickups to appeal to the new younger generation."

That's why the Colorado is such a refreshing addition to the US pickup market. It's catering for the younger people.

The active people are targeted by GM with the 2015 Colorado, the surfer, the guy with the trail bike, the guy who owns a small 6 000lb fishing boat.

The young family who likes to go out camping, fishing and hiking.

When the diesel comes out it will also appeal to the younger people like you stated.

Those old worn out guys you mention want the V8s and Caddy's.

Just read that Fiat is coming out with a new Pentastar V6 next year with D.I.and Turbocharging. Anyone surprised they would eventually copy Ecoboost ?? The code name for it is PUG for Pentastar Upgrade lmao!!!!! Kinda what the front end of a Ram looks like .

@Big Al

"When the diesel comes out it will also appeal to the younger people like you stated.

Those old worn out guys you mention want the V8s and Caddy's."

I thought you stated before that only young childish people care about 0-60 or wanting to fast. If that is so, then wouldn't the statement of a slow diesel appealing to a younger market be false. That last comment just proves that you are out of tune with not only most American drivers, but the younger ones as well. If anything I see the quicker and more powerful V6 in the Colorado being more of a choice for younger people or the I4 if they can't afford the V6. The little diesel is more for the old guys who are only concerned with fuel mileage especially since it will be the more expensive engine choice. Why would they pay more to go slower and not that much cost savings unless they tow often. Most of those young guys who want a diesel are going for the more powerful big boy diesels found in the 250/2500s and up, but this new 5.0L Cummins might change some of that. Being in my mid 30s, I am not quite that old as some of the rest of you guys.

@Tim Esterdahl - You have Toyota of the brain. And it's no doubt Lexus subsidizes the existence of the Tacoma and Tundra.

After following this site for the last couple years, this Motor Trend truck of the year is annoying. If you use the search feature, you can find all previous truck of the year winners, as well as articles about the comparisons and who won, however no mention this year... Seems like the "media" is hell bent on bringing all negative news for GM quickly, and filtering out any positive. I found it ironic that MSN/Autos has a listing showing the Motor trend TOTY candidates with the F150 shown in the picture, without any mention of the actual winner... However they do have a story about the Colorado/Canyons recall that was released in October. It is listed like it is "another recall" when in fact it only states the # which were effected by the October recall. Without a doubt, Ford is awesome and advertising, and GM seems to be very poor (or the media outlets are filtering)...

I think some of the comments by Cadillac's new chief are being taken out of context. No one is saying that the Silverado isn't important to GM but diversifying profit centers is. Other countries around the world do not buy into large pickup trucks like the US and Canada do. China is now the largest automotive market in the world with India expected to be #2 within about 5-10 years max. Those markets are focused on smaller and more affordable cars for the masses and luxury for those with wealth.

Buick has been a top seller in China and brings in healthy profits but I believe that Cadillac will earn even higher margins for GM than Buick so why not try and make those products world class? In Europe and Asia if GM can succeed in making Cadillac a top tier seller with the profit margins to boot then GM will likely have twice the overall profits to work with and cushion themselves against any one market, industry or segment bringing them down. Ford is doing a similar strategy but is far behind GM in terms of China/Asia sales with no premier flagship brand anymore.

I think a new CTS would be fantastic and I'd probably buy that over the current E class or 5 series but Audi's A6 would trump the Cadillac for me personally but I am not in that market so the point is moot.

Hopefully snagging Audi's former chief will help get Cadillac pushed up market sooner rather than later. Maybe a good 3 year old CTS will be in my future ;)

I don't think offering a smaller truck is a generational thing, there's still going to be full-size offerings. We're always going to have farmers who need to pull heavy trailers. You can check with the FFA about that. The Colorado is more about a pseudo-outdoorsy lifestyle, perfect and suitably-named for the people of Denver, Colorado. Though don't expect to drive it up Saxon Mountain Road, which I drove up yesterday in a Wrangler.

"Buick has been a top seller in China and brings in healthy profits but I believe that Cadillac will earn even higher margins for GM than Buick so why not try and make those products world class? In Europe and Asia "
One reason Buick unlike other U.S. named if not built cars sells a lot in China, is that the last Emporer used to be driven around in one.
Still GM badged products are being overtaken or have been overtaken by VW, who are doing very well in China

@Jessie, there's no mention of it again because they do not cover car/truck crossovers

I'm amazed that some still attempt to justify their own paradigms by using what 5% of pickup owner use their pickups for.

No one has ever stated to my knowledge not to have larger and more capable pickups.

But be honest when discussing issues and don't confuse your wants over reality.

If you want a big V8 because you can, just state that. It's great to want a big V8. If you want a diesel it's great, state that. It's not hard using sincerity in a discussion. What have you to lose?

Comments like;
"I don't think offering a smaller truck is a generational thing, there's still going to be full-size offerings. We're always going to have farmers who need to pull heavy trailers. You can check with the FFA about that. The Colorado is more about a pseudo-outdoorsy lifestyle, perfect and suitably-named for the people of Denver, Colorado. Though don't expect to drive it up Saxon Mountain Road, which I drove up yesterday in a Wrangler."

The reality is around 80% of pickup use is private, that is a load of less than 1 000lbs once in a while and towing 7 000lbs once in a blue moon.

Middle America isn't farmers, they are generally suburbanites living outside a city or large town.

It's well and good to want and have whatever vehicle you want.

But reality is reality.

The people who do haul a considerable amount of weight or tow a considerable amount of weight regularly would buy a HD.

I read with some interest to ones who "thought" that Caddy was sustaining the GM pickups. I don't recall anyone making that statement.

But Caddy does value add with very little investment on GM's part quite well. This value adding is what was discussed.

As for the Caddy engines. The only Caddy engine I know of in a pickup is in the Ram. The VM diesel was designed primarily for GM and Caddy in particular, not the Ram.

Believe it or not the other Caddy engine is in a midsizers. The Colorado V6. Hmmm...............some food for thought.

The Colorado/Comaro/Commodore/SAAB, etc V6 was a joint venture between Holden and Cadillac.

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