Cadillac (GM) Investor's Presentation

[fordtech1]

that's from January 2016

I was referring to that for 2015 since it's the last full year.

[fuzzymoomoo]

I was referring to that for 2015 since it's the last full year.

what are they at YTD for 2016? I can't find it on their website.

[fordtech1]

what are they at YTD for 2016? I can't find it on their website.

I had a hard time finding it myself. However, I just found it. I was wrong.

 

http://thenewswheel.com/cadillac-sets-all-time-sales-record-in-china/

[jasonj80]

ATP in Luxury market are pretty much a garbage way to look at a luxury company with so many units being sold as leases. A lease transaction price can be booked at a higher retail sale value then the you discount the Money Factor, discount other fees and even if the lease comes back at less than what was paid over the lease the wholly owned finance company can use that loss as a gain elsewhere. Look at what BMW/MB have been doing for dealer loaner sales.

 

That being said with the conversations I've had over the past week Lincoln under Fields will never take on The Germans/Lexus/Cadillac, and to be honest what most said was after the Expedition / Navigator launch the next batch of New Ford Product had the finance dept in charge of product and will be okay at best when they hit the market. One persons exact words were Ford's best product days are behind them for a while.

[fordtech1]

GM has spent 12 billion on Cadillac. That's a bunch of money. Guess we will see how it pays off. Cadillac just doesn't do it for me. They have a couple cool vehicles but I'm not a buyer. I am not much of a Lincoln buyer either though.

[jpd80]

That chart for Lincoln ATPs looks suspiciously like GM has just grabbed the combined Ford-Lincoln ATP data and used that

I don't know whether Ford actually splits out the ATP data for Lincoln separate to Ford.....

 

Or do we actually believe that Lincoln achieves near same ATP as Ford's combined vehicles..

Edited November 28, 2016 by jpd80

[jpd80]

GM has spent 12 billion on Cadillac. That's a bunch of money. Guess we will see how it pays off. Cadillac just doesn't do it for me. They have a couple cool vehicles but I'm not a buyer. I am not much of a Lincoln buyer either though.

Cadillac is on a spending trajectory that would give other car makers a nose bleed..

and that's on top of the billions Cadillac has already spent to get to this point.

 

Surprising when you realize that shared global platforms and vehicles

like Escalade, XT5 and XTS make the bulk of sales and pay the bills.

Edited November 28, 2016 by jpd80

[akirby]

That being said with the conversations I've had over the past week Lincoln under Fields will never take on The Germans/Lexus/Cadillac, and to be honest what most said was after the Expedition / Navigator launch the next batch of New Ford Product had the finance dept in charge of product and will be okay at best when they hit the market. One persons exact words were Ford's best product days are behind them for a while.

 

That will be extremely disappointing.

[rmc523]

 

That will be extremely disappointing.

 

It seems like an odd proposition when on the other hand, they've launched Ford Performance with vehicles like the GT and Raptor.....you'd think the products would go the other direction (be better).

 

What exactly does "take on the Germans/Lexus/Cadillac" mean though? If it simply means not following their same exact formula like Cadillac has done, that's not necessarily a bad thing that will mean neutered products. It could instead just mean following and expanding the "quiet luxury" mantra, but improving the vehicles' capabilities with a focus of confident, capable vehicles/platforms rather than being canyon carvers.

[grbeck]

Ford has made it very clear for several years now that Lincoln will not be chasing the Germans, and, by extension, Cadillac, which has been chasing the Germans. This isn't exactly news.

 

The Cadillacs aimed directly at the German competition - the ATS and CTS - have flopped, so I'm not seeing where this is necessarily a bad thing. Like it or not, a Lincoln version of the BMW 3-Series is unlikely to gain much traction in the market, no matter how good it is.

 

As for Ford's best product days being in the past - perhaps the corporation is taking a page from the Toyota/Honda playbook, and making comprehensive changes to existing platforms in the future? It's not as though the current Fiesta, Focus and Fusion are terribly outdated next to the competition. The current Fusion, for example, is hardly the 2016 equivalent of the 1994 Tempo. The basic platforms are solid.

[akirby]

I guess it depends on what not chasing Lexus means. Obviously they don't need ultra high performance like BMW but to me the Continental is a direct Lexus competitor.

[jasonj80]

 

It seems like an odd proposition when on the other hand, they've launched Ford Performance with vehicles like the GT and Raptor.....you'd think the products would go the other direction (be better).

 

What exactly does "take on the Germans/Lexus/Cadillac" mean though? If it simply means not following their same exact formula like Cadillac has done, that's not necessarily a bad thing that will mean neutered products. It could instead just mean following and expanding the "quiet luxury" mantra, but improving the vehicles' capabilities with a focus of confident, capable vehicles/platforms rather than being canyon carvers.

 

There has been a huge switch at Ford, Engineering used to have much more latitude in what they could do, this is no longer the case. Everything now is about cost and how to boost profit, if it means leaving off features or using cheaper materials so be it. One said the Aluminum F-150 would have been killed in this environment. Fields is very arrogant, one of the older woman called him Nasser part 2, what he or his people say go -- there is no point in arguing as it won't make a difference even when you show customer data that is contradicting what they say. In fighting is happening again and managers are worried with the layoffs that they need to protect their jobs and building walls. I wouldn't be at all surprised if performance promise is being cut or already has. I don't know anyone over there anymore, they left about 18 months ago. They also are getting the Detroit Bubble Mentality again, if it works in SE Michigan it must work everywhere. They have all but killed incremental improvements to vehicles, only updates will take place at MCE and redesigns.

 

Lincoln isn't being given as much freedom as they even had a year ago, features are being pulled from future product and it is now along the lines of we will let the competition do it first for a generation then add it to our vehicles, lower cost then. I mentioned that exact thing about quite luxury, I got a sarcastic response of Yes, "it will be quiet, a Ford with a bunch of sound deadening and a noise cancelling system"

 

​GM is throwing billions at R&D not just at Cadillac but across the board, Ford is trying to make the most short term dollars possible. It's the fundamental difference between a company run by an Engineer and someone that holds an economics degree and an MBA. The thinking process is totally different.

Edited November 28, 2016 by jasonj80

[BORG]

I do think Lincoln is trying to replicate how the heart of the luxury car industry evolved 20 years ago from Lexus and Audi. They are very attracted to that low-cost/low-risk approach to growing a business from within Ford's existing resources. Those brand would later evolve into something much more substantive later. It's certainly MUCH harder for Lincoln now to penetrate the market in any meaningful way because it's so diverse and mature and it's clear at this stage that they still have many years to go before they figure out what brings in the new customers. Right now I am of the opinion that Lincoln is simply repeating its own history and the US market is mostly uninterested, but China has more breathing room.

 

I don't trust Field's instincts for this business but I know he is also trying to clean-up a mess created in the wake of Mullally who pushed the company too far on thin resources, especially under One Ford. But I do get the sense that Fields is essentially returning Ford to its previous business practices and I know morale is very low and he is not liked.

 

This has always been the problem with Detroit car companies, especially Ford, they basically leap from one crisis to another with wildly different leadership and vision. You would think a company with Family ownership could maintain some degree of continuity.

Edited November 28, 2016 by BORG

[akirby]

If pushing thin resources is responsible for all the quality issues the last few years then that should be fixed first.

 

Cheapening Fiesta, Focus and Escape is probably a good move market wise. It's riskier with Fusion, Mustang, Edge and Explorer and I think it would be downright suicide on full sized trucks, utilities and vans.

 

I don't think anyone was expecting bespoke platforms for Lincoln but they do need considerable differentiation and higher performance.

[grbeck]

Regarding GM's expenditures - the corporation has a history, since at least the late 1960s (think Chevrolet Vega), of spending tons of money and delivering results that range from mediocre to disastrous. Perhaps this time is different. But I doubt that Ford is the only company that is, to some extent, shackled by its past corporate culture.

[BORG]

Ford is good at avoiding failure which seems to be the key difference. But Ford also has a history of risk aversion until Mullally really changed that, briefly but quickly.

 

Right now Ford seems to be coasting since the rehab so the air is getting a little stale up here.

 

Certain things concern me about Ford lately, their lack of marketing is perhaps the biggest one as the brand is starting to disappear altogether. They also lack design leadership at the company so they have made no progress since Mays left and have been iterating and recycling old designs for years with no clear approach to evolve, especially their interiors which have not moved upscale with the rest of the industry and MCEs have done very little. EcoSport is entering an important new segment but it's clear their efforts here are far too late and notably inadequate, they are going to have a very hard time adding new Ford customers to fill their shrinking car business. Ford is also shifting more of its attention toward commercial fleet products while their retail and car sales shrink, growing their dependency on F-Series even bigger.

Edited November 28, 2016 by BORG

[rperez817]

Ford is good at avoiding failure which seems to be the key difference. But Ford also has a history of risk aversion until Mullally really changed that, briefly but quickly.

 

They're not the type to dare greatly haha.

[RichardJensen]

I'm not going to get into questions of leadership styles--Mulally worked with Fields for seven years.

 

Show of hands: Who thinks that Mulally strongly objected to Fields succeeding him as CEO?

 

And while we're at it:

 

Show of hands: Who thinks that this 17M/year pace is sustainable near term?

 

Bottom line is, lean years are coming. And Ford can either rein in product investment now and spend through the upcoming vehicle recession.

 

Or they can pretend that this time the business cycle has been solved for good.

 

If I wanted to engage in some stereotyping about engineers, I'd point out that they're unlikely to understand the first thing about business planning. As in, 'we're forecasting a 15-25% revenue decline over the next 36 months, so how do we stay ahead of that?'

Edited November 29, 2016 by RichardJensen

[jasonj80]

I'm not going to get into questions of leadership styles--Mulally worked with Fields for seven years.

 

Show of hands: Who thinks that Mulally strongly objected to Fields succeeding him as CEO?

 

And while we're at it:

 

Show of hands: Who thinks that this 17M/year pace is sustainable near term?

 

Bottom line is, lean years are coming. And Ford can either rein in product investment now and spend through the upcoming vehicle recession.

 

Or they can pretend that this time the business cycle has been solved for good.

 

If I wanted to engage in some stereotyping about engineers, I'd point out that they're unlikely to understand the first thing about business planning. As in, 'we're forecasting a 15-25% revenue decline over the next 36 months, so how do we stay ahead of that?'

I agree with that statement, the difference that is really concerning with me is moral, company moral is plummeting and that has a huge impact on the future, when your good people that are hungry for more and better leave you are left with the employees that are not hungry or innovative; status quo and a pay check are what matter and that is what they care about.

 

When you want to add feature XXXX on your car, the competition has XXXX feature on their car, our own customer care clinics show that feature XXXX is desired. But finance comes in and says no it adds XX to the cost and the feature is left out -- there is a HUGE problem.

[BORG]

I agree with that statement, the difference that is really concerning with me is moral, company moral is plummeting and that has a huge impact on the future, when your good people that are hungry for more and better leave you are left with the employees that are not hungry or innovative; status quo and a pay check are what matter and that is what they care about.

 

When you want to add feature XXXX on your car, the competition has XXXX feature on their car, our own customer care clinics show that feature XXXX is desired. But finance comes in and says no it adds XX to the cost and the feature is left out -- there is a HUGE problem.

 

 

That's definitely the Ford I remember, it's one of those things they had fixed under Mullally. It also explains why Ford's tech features have suddenly stopped progressing.

Edited November 29, 2016 by BORG

[RichardJensen]

But finance comes in and says no it adds XX to the cost and the feature is left out -- there is a HUGE problem.

 

Not necessarily.

 

Why?

 

Because you can add certain features quickly.

 

First priority for Ford, right now, is making sure they can navigate a suddenly very uncertain near-term.

 

Compare the first few cars engineered under Mulally--and engineered to maximize gross margin--with what was engineered when the market was coming out of the downturn.

 

About the only 'feature' that Ford had ahead of the competitors was first gen. Sync. Materials weren't on par and other gadgetry was just on par. At least this time around, Ford products are going to hit the slowdown on par with the competition instead of behind it.

 

---

 

Never forget that Henry Ford was an engineer and Alfred Sloan was a bean counter: Which company survived the Depression in better shape?

Edited November 29, 2016 by RichardJensen

[jpd80]

Meanwhile GM is guffawing about Cadillac's global sales at 250K/yr after spending a collective $20 billion

post BK to end of the decade. Anyone with half a brain can see that GM is going to wait a long time to see

a return on all that cash..... in short, they need to see those much higher ATPs brought by Escalade.

Edited November 29, 2016 by jpd80

[grbeck]

I'm not sure that I would use Ford and GM in the 1930s to make points about the benefits of conservatism in product development spending during hard times.

 

Ford essentially stagnated after the introduction of the 1932 V-8, thanks largely to Henry's stubbornness. Granted, that wasn't because of concerns over cost. Henry hated anything that he didn't think of first (it didn't help that he suffered a stroke in the late 1930s). Ford refused to adopt independent front suspension, and didn't adopt hydraulic brakes until 1939 - well after every other manufacturer except for Willys. By the late 1930s, Ford had the reputation of being dead last in the adoption of new features.

 

GM rolled out independent front suspension in 1934, made the move to hydraulic brakes in its senior divisions that same year (Chevrolet would get them in 1936), and was aggressive in introducing new styling, particularly with the Buicks and the Cadillac 60 Series. In 1940 GM introduced the first successful automatic transmission, Hydramatic, which gave it an enormous competitive advantage.

 

Sloan did cull superfluous models when necessary. GM phased out both Marquette and Viking, the companion makes to Buick and Oldsmobile, respectively, early in the Depression. GM kept Oakland's companion make - Pontiac - but phased out the Oakland. LaSalle was almost discontinued, but a last-minute reprieve gave it a few more years.

 

By the eve of World War II, Ford was third to Chrysler and fading fast, while GM was firmly established as the number-one car company. Chevrolet was the best-selling marque by far, Cadillac completely dominated the luxury market and Buick and Oldsmobile dominated the medium-price market. GM was viewed as the styling and technology leader.

Edited November 29, 2016 by grbeck

[RichardJensen]

I'm not sure that I would use Ford and GM in the 1930s to make points about the benefits of conservatism in product development spending during hard times.

 

It's a bit of a stretch, I know.

 

But I get a little tired of people acting like engineers are by definition better at making strategic decisions for a an entire company--or that product strategies should never change.

 

Ford's economists were far ahead of the curve in calling the last slowdown, and when you're anticipating something like that, you have to take steps that people elsewhere in the company may not like.

[grbeck]

I agree on that. I also agree that the new-vehicle sales are likely to slow down in the coming months.

 

Regarding those who voice concern - first, I'm not seeing where several current Ford platforms are behind those of the competition. A thorough, Toyota-like update should keep them competitive in the future. The one really outdated passenger car is the Taurus, but the full-size, non-premium passenger car is dying in this country. I doubt that an all-new Taurus will reverse that trend. (I certainly don't see too many new-generation Chevrolet Impalas on the road around here.)

 

Second, spending big bucks on unique Lincoln platforms is not a surefire way to ensure a good return on investment. For all of the money that GM has spent on Cadillac, the two models keeping the lights on are those that use common corporate platforms - the Escalade and XT5. I read a recent review of the new-generation Porsche Panamera, and came away thinking that it would cost Ford (or anyone else aside from Daimler-Benz, BMW and Lexus) a fortune to build something competitive with that model. And there is no guarantee that customers would embrace it, as the badge on the hood is very important in this segment. It already makes the new Cadillac CT6 seem outdated.

Edited November 29, 2016 by grbeck