Interview: Johan de Nysschen on the Future of Cadillac
Recently, we had the opportunity to sit down with Johan de Nysschen, president of Cadillac, to talk about the future of the brand. As usual, the outspoken executive had plenty to say. For example, de Nysschen had a couple theories that explain why sedan sales are on the decline in the U.S.
“It’s partially happening because of energy prices, where people are less focused on fuel consumption and sedans being lighter,” he said. “But also it’s been driven now by the entry of younger consumers who really are less tuned into dynamics and handling and all of those things that used to excite enthusiasts. It’s more about the way cars complement and enable their lifestyle now. And candidly, I also have to say it may also be influenced a little bit by the decay of America’s infrastructure. When roads no longer support high-performance sport sedans and ultra-low-profile rubber, people are going to respond to it.”
Sadly, when asked whether Cadillac would consider selling a lifted wagon like the Audi A4 Allroad or Volvo V90 Cross Country to attract buyers interested in a more practical, capable alternative to a sedan, de Nysschen told us it won’t happen any time soon.
“I think those are interesting entries,” he said. “The Audi Allroad is a little bit of an inbetweener, if you like, because it is drawing on the Avant model and turning it into more of a robust character. For Cadillac, our focus right now is getting into the core segments. Our crossover entries are going to be exciting, athletic, and very attractively designed but also functional crossovers. We don’t see in the near term that we would enter this inbetweener space.”
Considering that the XT5 is the only crossover that Cadillac sells right now, we probably should have seen that answer coming. Thankfully, he also doesn’t see Super Cruise turning future Cadillacs into autonomous transportation pods.
“For us, it would make no sense to spend all the time, resources, and, candidly, money to put all this dynamic substance into our cars—our cars are fantastic to drive, they are rewarding, they’re exhilarating, they’re comfortable, luxurious, refined, but they’re also performance cars—to put all of that capability into the vehicle and then remove the option of driving,” he said. “That would be absurd. For us, luxury is about having the freedom to choose. And a Cadillac personal autonomous vehicle will have autonomous capability, it will allow the driver the opportunity to drive themselves and enjoy a finely crafted automobile, but when the mood takes them or the circumstances dictate, they can let the car do the onerous part of driving for them. That is the longer-term timeline, the horizon view for Cadillac.”
He also isn’t worried about other automakers’ driving-assistance features getting more attention than Super Cruise.
“Super Cruise is going to expand into additional Cadillac product entries besides CT6, and we think that this very controlled gradual rollout with a very conservative approach to emphasize safety is exactly what is expected from Cadillac,” he said. “We have a duty to help create and enable the future by giving both consumers and regulators confidence in the technology. Because it’s not only the technology hurdles that have to be mastered but also the psychological hurdles and the concerns of regulators. For us, that weighs far more heavily than having bragging rights about being first to market.”
Even though crossovers and Super Cruise are important to the future of Cadillac, its performance cars aren’t going anywhere. In fact, it sounds like more are on the way.
“V in the future will continue to play a very important part in terms of creating this halo brand cachet around Cadillac,” he said. “We are a luxury brand, but we are also about producing exhilarating driver’s cars, and nowhere is this more clearly brought to bear than in V. Not all Cadillacs will feature Vs [in the future], but certainly a far broader part of the future portfolio will see this sport and V-Sport execution.”
When it comes to racing, Cadillac has no plans to drop that program, either.
“I think the DPi formula has proven to be quite exciting, and it truly is so that we harness our motorsport programs to also provide technical know-how and feedback that takes into account our road car development program,” he said.
That said, don’t expect to see Cadillac field a Le Mans entry any time soon. Why? Cadillac isn’t popular enough in Europe yet.
“Well, the DPi cars can’t race at Le Mans,” he said. “They set up the regulations to prohibit that. So that would have to be one thing that gets taken out of the way. Secondly, to build a car that complies with the Le Mans regulations right now is simply not feasible for us because we don’t have a strong presence in Europe. I don’t think you’d get the return on investment that I think is really required to justify it, so for me, I think we’ll stick with our current motorsport program, which is U.S.-focused.”
Although Cadillac’s racing efforts are still focused on the U.S., its sales efforts are now focused on China. Cadillac recently finished building a new factory there, and from the sound of it, the investment is already paying off. Even though U.S. sales were down 8.0 percent in 2017, a 50.8 percent sales increase in China meant Cadillac saw an overall increase of 15.5 percent
“The Cadillac plant in Shanghai is, in fact, the most modern General Motors plant in the world, and it’s highly automated,” he said. “For us, the investment into this state-of-the-art plant in China has given us the ability to kick-start a very wide range of product offerings at very competitive prices because we could circumvent the various tariffs that are applied to imported vehicles. But it also really forces you to focus. If you have that kind of investment into fixed costs and structural costs, you better make sure you develop the volume really quickly to support it.”
However, that doesn’t mean Cadillac plans to build cars that are exclusive to the Chinese market. According to de Nysschen, it’s not necessary.
“Generally, luxury car consumers the world over are savvy people,” he said. “They’ve had their perceptions and opinions shaped by the fact that they are well traveled. But even if they aren’t, the world is a global village nowadays. Everybody has access to information. It shapes people’s wants, desires, and tastes. There are some specifics that are different, like colors, trim, and some feature content. But predominantly, what drives a luxury car consumer in China and Europe and the United States is not that disparate.”
So if Cadillac plans to build the same cars in China that it builds here, does that mean we’ll soon see Chinese-manufactured Cadillacs sold in the U.S.? Probably not.
“I think this will be determined by a number of considerations,” he said. “One of the things that we have to consider is that if you export from China, whatever you produce and export there you share with a partner. So it would have to be a product with a pretty compelling advantage to be financially more attractive than building the car locally. More likely you would do this for entries that are relatively low volume, that are required for the Chinese market in the first place, that might be interesting for export markets but where the volume opportunity is just too limited to develop tooling. The second scenario would be where you have surplus capacity in China and you’ve got greater demand in other markets that you are unable to supply with your U.S. manufacturing base. So it’s incremental.”
Eventually, though, that might change.
“In the long run, I think it stands to reason that global OEMs would like to integrate their global manufacturing footprint including China into their global supply chain,” de Nysschen said. “It allows flexibility, it allows you to far more effectively leverage investments so you could tool up one car in the U.S., tool up one car in China, and reverse export them so that both sides win. The current regulatory environment does not yet support that, but those are some of the things that would have to happen in the long run to really allow China to be playing a very prominent part of our global manufacturing footprint.”