Cadillac XTS: Resetting Expectations for Luxury

The all-new Cadillac XTS will be officially unveiled on November 16 at the Los Angeles Auto Show and—surprisingly—the car is actually beginning to gain some positive interest from the critics. It’s a surprise because new cars don’t come with much lower expectations than the XTS. After all, even GM’s CEO Dan Akerson doesn’t seem to have much faith in the car, famously announcing it would only be “competitive” with its rivals, as opposed to, I don’t know, setting the Standard of the World.

Nonetheless, as I mentioned, the XTS is attracting some buzz, greatly assisted by the fact that it will show off Cadillac’s new SYNC rival—CUE. That seems to be giving people the impression the new full-size luxury sedan is some kind of forward-pointing entry that will at least give Cadillac something to build on beyond the Cadillac CTS. In fact, I even came across the following quote from a writer for the Jalopnik blog. In setting the XTS apart from the two vehicles it’s going to replace, the Cadillac STS and Cadillac DTS, we find out: “There's nothing wrong with either of those vehicles if you're a 70-year-old retired accountant living out your final days in Boca, but they were out-of-place in the new Cadillac lineup.”

Now, that may be a fair description of the old-school DTS, but it puts a highly inaccurate spin on the history of the STS. Going back and tracing the life of the suddenly much-maligned STS shows exactly why Cadillac is still spinning its wheels trying to compete with the likes of BMW, Mercedes-Benz, etc., etc.

Down the Memory Hole

For those whose memories don’t extend as far back as 2005, here’s a little refresher course: At that point in time, Cadillac was in much the same place it is now. The CTS was gaining traction in the marketplace, but the company was still looking to take ye olde next step to prove that car wasn’t just a fluke. Thus, the brand was looking to replace an older, more traditional front-wheel-drive full-sizer —the Cadillac Seville—with a vehicle that would perform in the bigger lux segments the same way the CTS was doing in the mid-size arena.

That was the STS. Leveraging the same proven platform as the CTS, and featuring a slight evolution of Cadillac’s cutting-edge “Art & Science” design language, the STS seemed all set to accomplish its goal. And the critics agreed. It may seem hard to believe, but the car fared very well against its German competition in its initial comparison testing.

Motor Trend put the STS up against a contemporary BMW 545i and said that: “It comes close to the harder-edged 545i in most areas of performance, while managing superior ride quality, stopping distances, and ease of use.”

Csaba Csere, writing for Car and Driver, said: “The STS drives beautifully with quick reflexes, excellent grip, and the kind of honest responses that let you drive it perfectly smoothly … . This STS [with the Northstar V8] is unquestionably the best Cadillac I've ever driven.”

Now, I fully realize that those enthusiast mags aren’t necessarily the final word on vehicle performance and quality, but—except for the CTS—it had been decades since a Cadillac had even achieved this much.

The requisite V-Series variant was added to the mix soon after, and built strongly on the initial success of the STS, and then … Cadillac gave up on the car in pretty much the same way it did with the Cadillac XLR. If the brand had merely given the STS the same attention and resources it gave the CTS, the whole issue of the adequate-only XTS would have been mooted.

The Price of Real Luxury

A key point of contention with the STS was its price. Even though it undercut the cost of its rivals, the car was still relatively expensive for a Cadillac. The base model started north of $40,000 when that was a lot of coin, and the tally for the V-Series was up in the high $70’s. To be clear, there was not much question of whether the STS was “worth” that kind of money, only whether customers would be willing to pay it.

The answer remains hazier than you might think, too. Certainly, STS sales started dropping precipitously after it delivered 33,497 units in its first full year on the market, falling to 25,676 in 2006, then 20,873 a year later, and 14,790 in 2008. Last year the STS sold fewer than 4,500 units all told, and this year it will be lucky to break 4,000 sales. But the global economic meltdown surely played a part in this. The CTS itself lost about 20,000 annual sales between 2008 and 2009, and only really began turning things around when its next-gen model appeared. The STS never got a second-generation redesign.

The STS-to-XTS narrative reads to me as if Cadillac didn’t want to continue to upgrade the former, because that would have led to an equally upgraded price. Instead, Cadillac is resetting expectations—and pricing—at a lower point by introducing the XTS.

It’s a bit chicken vs. egg, if you ask me. People are leery of paying true lux money for Cadillac products because so many recent Cadillac products haven’t been of the true lux variety. Then, when sales of a true lux model like the original STS are weak, it scares the brand away from even trying. Instead, it brings out something like the XTS—which, remember, even GM’s CEO doesn’t think is all that hot—and that just makes it harder to get people used to paying true lux money.

Small Sales from Big Luxury

What Cadillac should keep in mind is that it would be fairly easy for one of its full-size sedans to become a sales success even if the brand went “all in” luxury-wise—and price-wise. If you look at the big sedans from the traditional luxury brands, the volume bar is set quite low: Among the Audi A8, BMW 7 Series, Lexus LS and Mercedes-Benz S-Class, the top seller in October, the Lexus, only accounted for 1,186 sales. The leader on a year-to-date basis, the Mercedes, had only delivered 9,804 units by the end of last month. The A8 only had 382 customers in October.

Which is good, because if we ever do see another range-topping full-luxury flagship sedan from Cadillac, it will be hard-pressed to sell any better when people are more used to paying half such a vehicle’s likely MSRP to get into the XTS.