Cadillac, long the king of Detroit's auto brands, is abandoning Motown, reported The Wall Street Journal.
General Motors Co. said on Tuesday that its struggling luxury brand will move 50 key employees and its headquarters to New York next year amid a wider effort to carve Cadillac out as a stand-alone business unit with more autonomy. Long run from Detroit, GM's brass feels being in Manhattan will help Cadillac better reach luxury buyers.
The move is being spearheaded by Johan de Nysschen, a 54-year-old South African recently tapped to lead Cadillac and pull it out of a tailspin. Several GM executives said locating in New York would help appeal to those now buying cars from Daimler, BMW or Volkswagen's Audi.
Hired this summer by GM Chief Executive Mary Barra after a troubling rise in Cadillac inventories and a slump in sedan sales, Mr. de Nysschen was most recently running Nissan Motor Co.'s Infiniti luxury-car division and is best known for helping turn around Audi in the U.S.
The strategy has been tried before with little success. Several years ago, Ford Motor Co. moved its stable of luxury brands, which then included Volvo, Land Rover, Jaguar and Lincoln, to Irvine, Calif., in hopes of better understanding buyers on the coasts. It abandoned the effort after only a few years.
The Cadillac move to New York has been discussed among GM's brass for several months, but Mr. de Nysschen pulled the trigger on the relocation shortly after taking his post. Michigan Gov. Rick Snyder, speaking at an event on Tuesday, said "you wish that wouldn't happen from a Michigan perspective," but noted GM and other auto makers continue to house massive research and development operations in his state.
Cadillac will open offices in SoHo next year, housing the majority of the brand's functions. Vehicle development will remain in Detroit.
GM President Dan Ammann said in a statement that a change of scenery is necessary "to provide Cadillac more freedom to cultivate the brand in pursuit of further global growth." GM Product Chief Mark Reuss said "what we want to do is create a new trajectory…doing the same old thing probably generates the same old results."
GM has owned Cadillac for more than a century and the brand is one of Detroit's treasured trophies. While its image has slipped in recent decades amid strategic errors and market-share declines, the Cadillac name remains synonymous with high-end luxury.
The decision to relocate comes as Detroit is looking up. Many of the city's once-abandoned areas have been revitalized, and business leaders have outlined extensive investment plans to stoke momentum.
But Mr. de Nysschen said, "There is no city in the world where the inhabitants are more immersed in a premium lifestyle than in New York," he said.
Analysts said he may need to do more than rent new office space to pull off a turnaround. Cadillac has fallen into disarray with dealers complaining about too much inventory, vehicle pricing and a lack of leadership.
Karl Brauer, senior analyst with Kelley Blue Book's KBB.com, said it is important that management doesn't let the relocation of Caddy's headquarters get in the way of real progress.
"Cadillac's product line is the strongest it has been in decades, yet the brand is losing sales and market share," he said. "What's really needed is clearer direction in Cadillac's sales and marketing efforts…hopefully the move doesn't delay this process."
Earlier this year, Ms. Barra reassigned then-Cadillac chief Bob Ferguson to handle its Washington, D.C., operations as the company struggled with its ignition switch recall. She left the Cadillac position unfilled for months as Mr. Ferguson split his time between his Washington and Cadillac roles.
Cadillac sales have fallen 4.7% overall through the end of August, dragged down by a 15% slump in sales of Cadillac cars, according to Autodata Corp. Sales of the ATS sedan, which competes with popular German sedans like the BMW 3-series, plummeted 20% from a year ago. And sales of the CTS, redesigned to compete with Mercedes-Benz's E-Class sedan, are down 6%.
Mr. de Nysschen is preparing to order production cuts at a Michigan factory that builds Cadillac ATS and CTS sedans, which have U.S. inventories well over 100 days' supply as of Aug. 31. He wants to expand Cadillac's lineup over time by adding a premium luxury sedan to compete with German models such as the Porsche Panamera and an "emotional sports car" along the lines of the Audi R8—models aimed at a higher income bracket than most of Cadillac's offerings today.
