- For over half a century, Cadillac was the top-selling and most recognizable luxury car company in America
- However, an influx of foreign competitors like Mercedes-Benz and BMW began challenging the iconic automaker's status, and saw its sales begin to plummet.
- Now Cadillac sits far down on the list of best-selling premium brands in the US. But the answers to the company's problems may lie in the global market, particularly in China.
- Visit Business Insider's homepage for more stories.
Following is a transcript of the video.
Irene Kim: Owning a Cadillac in America synonymous with success and achievement. The company dominated the market, outselling all luxury automakers in the US for decades. Just 40 years ago, nearly one-third of all luxury cars sold in the US were Cadillacs. Now? Less than 7% of luxury cars purchased by Americans are Cadillacs, and the company is struggling to keep up with competitors it once outsold. So, what happened?
Cadillac got its start in 1902. It was actually formed from what was left of the Henry Ford Company after the departure of Henry Ford following disputes with his investors. Engineer Henry M. Leland was brought on to appraise the company's factory in order to sell it but saw instead potential. Leland chose to reorganize the company as Cadillac Automobile Company, naming it after French explorer Antoine de la Mothe Cadillac, the founder of Detroit, which was America's automotive hub as well as the home of the company. At face value, Cadillac's cars seemed almost identical to those the company produced under Ford. But they quickly distinguished themselves and gained a reputation for being better made and more reliable. In 1909, the company was purchased by up and coming conglomerate General Motors and officially named as its most prestigious division.
Over the next few decades, Cadillac set huge milestones in the auto industry, including the first passenger car with a fully enclosed cabin. Perhaps most impressive was the development of the first electronic self-starter. Up to that point, starting a car required the awkward and strenuous task of cranking up the engine. With some help from inventor Charles Kettering, Cadillac simplified it to just the push of a button. Breakthroughs like this inspired the company to adopt its iconic slogan: "Cadillac: Standard of the World.
Fast-forward to 1927. Cadillac established the concept of a "luxury car" with its LaSalle convertible coupe. Before the LaSalle, cars were strictly created based on their engineering needs. With this new car, it was the first time a company called in a designer rather than an engineer for the job. Designed by car stylist Harley Earl to be lavish and eye-catching, the LaSalle became a trendsetting automobile that once again highlighted Cadillac's high standards for carmaking.
Cadillac's success and technical progress continued through the 1930s. But then World War II hit, and the entire car industry slowed production in order to produce tanks and aircraft engines.
But that didn't stop the car brand. Cadillac introduced designs that came to both define the car industry and embody the prosperity of the "fabulous fifties" and 1960s. While the company received recognition for its continued engineering developments, it was Cadillac's iconic tail fins that became a staple feature of all luxury automobiles. Not to mention its cars' enormous dimensions and Dagmar bumpers, nicknamed after the voluptuous TV star.
At the height of its popularity, Cadillac was selling over five times that of rival Lincoln, and in 1968 managed to sell over 200,000 vehicles for the year.
But Cadillac was more than just America's most stylish and top-selling premium car brand. Through General Motors' aggressive marketing, driving a Cadillac became a status symbol in America, to everyone from celebrities and professional athletes to presidents.
Matt DeBord: It was the pinnacle of achievement in American society at that point. They also has these zany names like Fleetwood, Eldorado. They came up with these crazy names drawn from the most pretentious notions around European heraldic badges and stuff like that. And the whole idea was to sell people on the notion that they had really made it and they were gonna ascend to some kind of premium status in American society
Irene: At the start of the 1970s, Cadillac remained a dominating force in the luxury car market, as the idea that "bigger is better" still rang true with buyers. However, as the economy declined and a widespread oil crisis spread, owning giant, gas-guzzling sedans became far less convenient - and far more expensive. But more than anything, the rise of imported cars gave Cadillac some serious competition, and the brand started to lose ground as the standard of excellence in America.
Matt: When the Europeans showed up, the Germans in particular, with their snazzy little sport sedans, it was a revelation, and a lot of people who liked to drive gravitated toward those. And they were gonna go for Porsches, and BMWs, and Mercedes and that sort of thing. And they also started to think about European automobiles as just being better, and being superior.
And then the Japanese arrived with their little fuel-sipping machines that are really quite reliable relative to American cars. And so people started looking at these and saying, "Well it's a better car, it gets better fuel economy. Why am I driving around in this giant Cadillac?
Irene: Although the 1980s started well enough for Cadillac, with sales continuing to increase, the company responded poorly to this rise of imports. To compete with all the new compact foreign automobiles, the company began downsizing its entire lineup to create a team of smaller, fuel-efficient cars. But its cars quickly became indistinguishable not only from each other, but from General Motors' other brands as well.
And as the company hastily pushed out these smaller cars to try and match the influx of luxury imports, Cadillac encountered a number of failures, the prime example being the Cimarron, the smallest car Cadillac had ever produced to that point. It sold so poorly that it was axed from their lineup by 1988, just six years after its launch.
Matt: It's a Chevy with a Cadillac badge slapped on it. It looks like a Chevy. It's just a ghastly little car. If you wanted a Chevy, it was OK. But if you wanted a Cadillac, you looked at it like, "What the F is this, basically?" So it was just an embarassment. But it was an attempt by General Motors and Cadillac to keep the brand going in a much more competitive environment where some of the value proposition of Cadillac had gone away.
Irene: Consumers recognized the decline in quality of Cadillac's cars, and it reflected in the company's sales. Cadillac's share of the U.S. luxury car market dropped from 31% in 1980 to just 22% in 1990. As Cadillac fell, its competitor Lincoln reaped the benefits. Lincoln's share doubled during the course of the decade to 20%. And in 1998, for the first time in 59 years, Lincoln outsold Cadillac.
By the 1990s, Cadillac lost any appeal it had with the younger market. The running joke became that all Cadillac owners were "somewhere between 60 and death." America's luxury car market was now heavily dominated by Mercedes, with Toyota's newly introduced Lexus brand close behind, followed by BMW, whose sales were quickly rising. But in 1999, the introduction of what would become one of Cadillac's most iconic vehicles would prevent a total collapse and help revamp the brand.
The 1999 Escalade was Cadillac's answer to the full-size SUV boom, and its response to the success of Lincoln's Navigator. The Escalade not only performed well sales-wise, it became a pop-culture icon in itself, making its way into movies and music videos, as well as becoming a popular choice among celebrity car buyers.
Things were starting to look up. Cadillac saw a bump in sales, a rise in popularity with the youth market thanks to the Escalade, and somehow survived General Motors' 2009 bankruptcy that saw multiple brands dissolve.
Unfortunately, the 21st century has not been completely kind to the once glorious name of Cadillac. While Cadillac's array of modern sport sedans and performance models has been well received by reviewers and the media, the numbers say otherwise. In 2018, the brand saw its US luxury car market share dip to a lowly 7%, selling only 154,702 cars that year, which put it behind even Acura. And its sales among American buyers only continue to plummet.
But why? How does a company that continues to churn out high-quality cars with top-level technology, like its self-driving Super Cruise system, continue to dip in sales? Well, Cadillac took a long time to join the crossover SUV craze - something that now makes up 60% of luxury car sales in the US.
But despite its problems in the US, the company may have found its answers in the global market - particularly in China.
Matt: The US market is at peak levels right now as far as sales. So there's not a whole lot of additional room for growth. And you say, "Wait a minute. Where are we gonna see all the growth in the future?" And General Motors looks across the ocean and sees China, whose market is already much larger than the US market, in excess of 20 million in annual sales and could probably go to 30 million, or 40 million eventually. People don't have a lot of cars in China. And General Motors is looking at this situation and saying, "People in China are going to get richer in the future, and they're going to want to identify their status as a wealthy person with an automobile. Why shouldn't that be a Cadillac?" So they're just thinking, "Well, why don't we put Cadillac in there?" Well, they put Cadillac in there 10 years ago, and it's been extremely impressive.
Irene: Between 2016 and 2017, Cadillac sales in China exploded by over 50%, leading Cadillac to record it's second highest global sales mark in the company's 115-year history. The company already has plans to expand its network of dealers to 500 in China by 2025.
Matt: We look at a rise in Cadillac, we look at a fall in Cadillac, and the fall may be something that can't be arrested in the market where the brand was created. I mean it's one of the original General Motors brands. But they could create a brand that means something in another part of the world.