Australia still part of Cadillac’s strategy

CADILLAC remains committed to re-entering the Australian market but not before General Motors shores up the premium brand’s business in China, the US and Europe, pushing the timeframe for a launch Down Under out into the first half of next decade – at the earliest.

GM has been planning to return Cadillac to the Australian market following an aborted attempt in 2009, when the US auto giant filed for chapter 11 bankruptcy and set about restructuring its operations during the global financial crisis.

Speaking to Australian journalists, including GoAuto, at the Geneva motor show this week, Cadillac president Johan de Nysschen said the company’s right-hand-drive strategy was “very closely interlinked” with its European strategy, meaning a move into markets such as the UK and Australia would have to wait until the brand had sufficient product and volume in Europe.

“We will only be able to expand our footprint in Europe when we are able to bring the right products to this market,” Mr de Nysschen said. “That is our major prioritisation now to create the two big volume hubs, for Cadillac globally through the United States and China.

“Not discounting the importance of other markets, but we need to build up the product portfolio. You can’t invest in all the vehicles unless you have the volume, and the quickest place to unlock the volume is with the two biggest markets.”

General Motors will work on increasing Cadillac’s presence in Europe now that it has sold Opel and Vauxhall to France’s PSA Group, and Mr de Nysschen said the need to consider the UK would necessitate right-hand-drive product development.

“It is somewhat inconceivable to want to come to Europe and be more than a boutique player without considering the United Kingdom,” he said.

“When you go into right-hand drive for the United Kingdom, that opens up opportunities for right-hand-drive markets elsewhere in the world because you want to generate economies of scale.”

He said that ensuring the brand had a robust product line-up was critical to launching in a new market and to appease potential dealers.

“What we are doing with development of new products, we are developing them with right-hand drive in mind so they are right-hand-drive-enabled,” he said.

“The idea is we wish to synchronise the rollout of right-hand-drive versions so that if we do decide to enter a market, such as for example in Australia, we would be able to give a dealer network a showroom as opposed to entering one car at a time because that is not really a feasible way to establish a network.

“It means that we will have about a two-year window early in the next decade, we will be able to synchronise the expansion of our portfolio in a relatively short space of time to embrace more right-hand-drive engines.

“And therefore it is not on the immediate time horizon but very much part of the future gameplan.”

When pressed on timing for a return to the Australian market, Mr de Nysschen was unable to specify a year.

“We have no particular year in mind at the moment. We must recognise that there is always a cost of entry into new markets and really our nearer-term focus is on the investment into the new products, new technology and developing the major volume markets,” he said.

“When we feel that we have got the financial wherewithal to go and attack a sophisticated market like Australia, with a strong and sustainable and winning strategy, then we will make that call. But it certainly is envisaged as part of our future plan.”

Mr de Nysschen confirmed that Cadillac was in no way impacted by the recent deal cut by GM to sell Opel and Vauxhall to PSA.

“Cadillac is not part of the transaction that has been specifically carved out.

We will continue with the rollout of the Cadillac strategy for Europe and Russia as per the original plan,” he said.

“Quite some time ago already we established Cadillac of Europe as a fully owned subsidiary distinct from the Opel business.

“To be clear, we did enjoy some logistical support services from Opel and during this transition period they will continue to deliver those.

“In the longer term the rollout plan will certainly be to keep Cadillac distinct and independent, being managed directly from New York and our European headquarters in Zurich.”