This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha
Johan de Nysschen – President, Cadillac & General Motors Executive Vice President
I’m going to be candid
“I’d like to do is to give you a very candid assessment, I suppose about the state of the Cadillac business. It may or may not be as frank as you are accustomed to hearing, but hopefully it’s what you want to hear.”
We have to really take stock of where we are
“I’m not here to try to sell anything to you. I am not here to try to impress you. But I think that unless we really take stock of where we are, we cannot implement and execute the strategies and tactics and operational measures to address the shortcomings and to begin to build the brand back to where we would like to take it.’
I’m a newcomer
“I’m a newcomer to the company and I kind of look at it with a fresh pair of eyes. ‘
I’m from Audi
” would like to make one small correction to the introduction, no Audi guy would ever want to be described as being from Volkswagen. I prefer to say my 20 years was spend at Audi, which probably gives you a bit of an insight into the way my brain in wired.’
GM is focused on the mainstream business, not the nuances of the luxury business
“there are lot of very smart people that I’m now proud to call my colleagues, but also a lot of people who – to be honest are more rooted in the needs and requirements for success in the mainstream business as opposed to understanding the finer nuances for success in the premium end of the business and the rule books are different.”
If you apply the same plays to the premium sector that you do to mainstream, it doesn’t work
“if you exercise the same plays in the premium sector as you would do in the mainstream sector, which are the requirements for the success there. I guess you do that for long enough and you take one of the greatest brands in the world and you turn it into one that have a great potential, but is no longer living up to that very high standard.’
You need to change the culture and systems completely
“it’s not just a matter of policy you also need systems, mindsets, even our dealer staff will need to come to terms with the new way of doing business.’
There’s really not a cadillac division within GM
“I’m referring today the reality that 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.’
The company is organized by function
“the company is organized by function and the functions work across all brands.’
You end up with a lowest common denominator approach
“it works particularly well when you’ve got brand that are Chevrolet, Buick and GMC positioned more or less in the mainstream part of the business. But imagine, what we are asking the fine men and women of General Motors to do. We said to them, please start your product planning discussions, your marketing planning discussions and your network development discussions, your distribution discussions with a full agenda.
In the morning, you cover all the brands and somewhere about 3:10 in the afternoon, you get to Cadillac. And now, we expect them to do a 180 degree shift in terms of the insights and understanding of the competitive environment and in terms of the application of particular strategies that are appropriate for that environment.
It can’t happen and what does happen is that you end up with kind of a, lowest common denominator approach that really is rooted in predominantly meeting the needs of the maintain stream business.”
A problem with the number of stores too
“we have a massive legacy issue with our retail distribution network, 929 stores. This will lead to of course very strong dilution of the volume throughput per store. It means the dealer profitability is somewhat challenged. That means dealer can’t invest into facilities, into people, into creating an ownership experience that supports the positioning of the brand.’
The luxury segment of the auto industry does 10% of the volume but 50% of the profit
:The global luxury market accounts for, depending on how you define the luxury market, 10% to 12% of the total auto business globally, but generates about half the profit. :
GM is a titan
“General Motors is a titan corporation. Seriously, you know, I read a lot of negative press about the company, but as an outsider whether it was in the VW Group or whether it was at Nissan, we looked at General Motors with trepidation. It’s a powerful competitor. It’s a company with massive resources, with great expertise, with great depth of skill and financial things.’
We don’t want a cadillac in every driveway, we want it in the right driveways
“one of the issues for us that we see as an opportunity is to get back to the original concept of premium exclusive motoring. It used to be the domain of a few. You had to have a particular station in life to get to these high-end brands.
And we have to hand it to the three leading German brands, they have become so successful that they’ve almost become ubiquitous, everybody drive one, there is one in every driveway. And the opportunity for us to say we don’t want to park a Cadillac in every driveway, but in the right driveways. ”
Captains of industry make things aspirational
“if people see the captains of the industry arriving at the airport or parked outside the golf club, driving a particular brand of automobile, then to conformation, that kind of automobile is driven by successful people. Therefore, it’s aspirational.’
We’re separating Cadillac from the rest of GM
“it’s been discussed and agreed and announced, you will be aware that we are now effectively separating Cadillac from General Motors. We are setting up dedicated organization and we really want to focus on this notion of securing 100% mindshare on developing the Cadillac business.”
We can’t just go commando though or we’ll fail
“I will absolutely as a new comer to the company and with the strong support that I’m getting from all of my colleagues, if I try to go to war with General Motors and the organization and I want to tell it this is how the world will work, I will definitely, definitely fail. It’s clear.
And so, how we do business must be taking into account how General Motors does business. I have set up the top layer of functions that I believe need to be inside Cadillac. This has been done and it’s been agreed. However, the bottom up construction of the organization is being done on a consultative basis.’
Moving Cadillac HQ to NYC
“there is a lot of talk and discursion about the decision for us to relocate Cadillac global headquarters to here in New York.
Particularly, a lot of the Michigan people were unhappy about that and I need to explain. It’s not that we have a problem with Detroit, we don’t. What we need to do is to create geographic separation. It forces process changes, it forces us to do things in a different way.”
We want to use our American heritage
“We’re an American brand, we definitely don’t want to try to out German, the Germans. We want to use our American roots and heritage as a key differentiator. And America is still, I have to tell you despite what you might hear on CNN and read in USA Today, are an admired country around the world. I say that as a non-American. And American products are highly regarded.’
“Cadillac will present itself as a bold American brand, bold and confident. We are sophisticated, but a modern progressive contemporary kind of sophistication, not the old world grand chandeliers kind of sophistication. That’s not the lady in the ball gown, but in the seductive black cocktail dress.
And then, of course, being American, we also have this deep-rooted belief that the future will be even better than it is today. Yes, we are about a little bit of domestic [ph] behavior, the joy of life and enjoying life to its fullest everyday. But there’s a fundamental belief that tomorrow holds even better prospects. And that will be a little of the swagger that we will come to market with. And you’ll see it expressed in the design language of our cars, you will see it expressed in the marketing communication tone and manner, you’ll see it expressed in our behaviors at Cadillac.”