The New Head Of Cadillac Says It Isn't An Independent Luxury Brand

Cadillac's new head, Johan de Nysschen, made some very interesting comments about the General Motors division on a Barclay's conference call with analysts this week.

(Thanks to Seeking Alpha for the transcript.)

Specifically, de Nysschen said that Cadillac, which has been part of GM for a century, isn't really a separate brand.

To many longtime observers of GM, this is a firm statement of the obvious. GM is basically a holding company with four divisions or brands: Chevrolet, Buick, GMC, and Cadillac (that's down from the period of GM's heyday, when Oldsmobile and Pontiac we also in there, and also from the pre-recession period, when GM still supported Pontiac, Hummer, Saab, and Saturn).

Cadillac is supposed to be the luxury brand, but unlike BMW and Mercedes, is doesn't have a clear luxury identity, separate from the rest of GM.

According to de Nysschen, "Cadillac is heavily matrixed within the General Motors organization and to be really candid with you - idea that there exists a Cadillac division, that's not so."

He added: "The reality is that the company is organized by function and the functions work across all brands. Now this may in principle would be very fine and you can achieve a great deal of synergy I don't challenge to that .... [But] if you try to run the luxury business the way you do the mainstream business, you will lose every single time. And guess what, Cadillac hasn't been winning."

Oof!

De Nysschen, who ran Infiniti prior to coming to Cadillac, isn't exactly new to this issue. The divisional structure is a key to GM's identity - a residue of the creation, in the mid-20th century, of the greatest manufacturing enterprise in human history.

It helped GM achieve a dominant share of the U.S. market.

But in the world of modern luxury autos, Cadillac is in a strange place.

The brand is really more like Corvette - which is ostensibly a Chevy, but in reality exists in its own kind of separate world. Cadillac is now sufficient exotic to merit its own quasi-independent status. The lack of that could be holding the brand back, as de Nysschen observed.

Cadillac will soon begin reporting financial separately from GM, it was reported this week.

The question is: What to do about it a brand that isn't really a brand?

Cadillac's sales and marketing operations were recently moved from Detroit to New York. But might GM consider something...stronger?

Would it be worth spinning off Cadillac as a separate company, much as Fiat Chrysler Automobiles just announced it would be doing with Ferrari?

Food for thought.