After a number of high profile failures to enter the European market in a big way, the folks at Cadillac want to be a niche player and are willing to accept the lower volumes that go along with such a strategy.  By keeping volumes low, and presumably margins high, they expect that they can be profitable from year 1.

I think this strategy is sound and will succeed.  Cadillac’s current design language is unique and appealing.  There has always been a segment of the automotive market that is interested in something different and Europe is no different than the United States in this regard.  In Europe where Mercedes-Benzes, Audis and BMWs are common and cover a multitude of uses including taxis, rental cars, executive cars and the vehicles of choice for captains of industry, there is an opportunity for something “different.”

For example, in a part of the world where station wagons (called “Estates” and sometimes “Avants”) are enormously popular, Cadillac has a terrific entry in the CTS Sport Wagon.  Ironically, in the U.S. the CTS Sports Wagon is expected to be a niche product at best, I bet it could be the brand’s best seller in Europe.

Here’s the challenge for Cadillac in Europe.  Quality.  European luxury car buyers have become accustomed to a very high quality standard and expect it to be met.  If Cadillac can meet this expectation, then I think they will be a successful niche brand and could probably expect measured year over year growth.  Long-term, they will need to figure out how to offer a diesel, but initially I think they can get the ball rolling without one.

The industry needs more niche brands and I’ll bet Cadillac can have a very nice piece of business in Europe, as long as they keep their volume aspirations in check.  Ultimately, that may be the biggest challenge of all.

Please comment below, I’d love to know what you think…

Generally speaking I thought the advertising game within the game was just OK, not great.  Within the automotive segment, six manufacturers stepped up for the Super Bowl:

As I said in an earlier post, the tough part about advertising in the Super Bowl is that while the football game is the primary draw, the advertising contest comes in a close second.  As an advertiser you have to be willing to do work that will stand out and entertain because the very next day the “results” of the ad contest will be published in USAToday.

I always watch the Super Bowl hoping that one or more of the automobile manufacturers will break out of the category mold and amaze us.  Here’s my take on the automotive commercials, from best to worst:  

I think Audi was the automotive standout this year.  A lot of industry veterans would have lined up to say that advertising a diesel on the Super Bowl was a waste of money because Americans don’t like diesel. As they have done for the last year, Audi takes on America’s perception of diesel.  Audi recognized that Americans are interested in being environmentally responsible but at the same time find the “green movement” a bit over the top.  The “Green Police” was a nice idea with enough oomph to do well in the ad contest.

Volkswagen’s “Punch Dub” commercial was the second best automotive entry. While it was a little bit more of a traditional car commercial, I thought it was fun to watch and did a nice job of illustrating the breadth of the VW product line with the warmth and humanness that we’ve come to expect from VW.  The Stevie Wonder ending was a master stroke.

I know that Hyundai’s ads introducing the new Sonata will be criticized by the advertising industry as “expected.”  Despite being more traditional category commercials, I think that they did a good job of making specific points that communicated an overall sense of quality engineering.  Better quality paint than Mercedes-Benz and the idea that the car is “handmade”   spoke to quality while the film itself made the product look terrific.  These ads won’t win any advertising awards, nor did they do well in the ad contest, but they got their message across and the product looked great.

The Dodge Charger commercial was certainly a departure from the category norm, particularly for Detroit. Some have said that they thought advertising the Dodge Charger (high performance/in-efficient) seemed out-of-step with current societal sensibilities. Perhaps, but I was left wondering if the notion of the “hen-pecked” male was even more out-of-step.  I hope that there is a segment of the male population who will identify with this commercial and go buy a Dodge Charger to affirm their manhood.

I sincerely hope that Kia’s execution appeals to young families as intended. While entertaining, I found the commercial silly and didn’t learn anything.

Honda’s ad for the Crosstour seemed forced, although I got the point that it offered a a level of utility in a sporty package.

Overall, my take is that VW, Audi and Hyundai made good use of their Superbowl investment, the others did not.

As reported in today’s Detroit News, Audi of America’s Johan de Nysschen called out the current political leadership for “falling in love” with electric vehicles.  He’s absolutely right, EVs and Hybrids have become the fashionable automotive technology and Washington’s choice for the future.

The only problem is that EVs won’t make a difference for two decades.  The New York Times reported that “plug-in hybrids would not have a significant impact on the nation’s oil consumption or carbon emissions before 2030.” To be clear though, de Nysschen is not saying EVs and Hybrids are wrong or won’t play an important role in the future. What he’s saying is that Washington is picking winners and losers from a technology point of view rather than remaining agnostic, and he’s right.

Clean diesel remains the best near term technology available for reducing our dependance on foreign oil and CO2 emissions (the major cause of global warming), yet no one in Washington seems interested.  It seems that “diesel” is literally a dirty word.

There is no doubt that Americans harbor a negative perception of diesel based on experience and inadequate information.  If our government really wanted to serve the citizens, it would consider the facts of modern diesel technology and help dispel the myths. Modern diesel is as clean as gasoline, offers 25-30% better MPG and emits less CO2.  While we’re waiting for the infrastructure to develop and the financials to make sense for EV technology, Americans could be driving diesels and making a difference in oil consumption and global warming.

Diesel in America is a marketing problem.  We have to change Americans’ perception of diesel so that consumers can make the best choices.  I don’t want our government picking the technologies that will succeed, but I would like it to have a balanced perspective and ensure that the facts are available so that Americans can make the decisions that make the most sense to them.

It seems to me that being open minded about diesel technology should be easy for our politicians….

If they’d like to take on something hard, then they should consider abolishing the CAFE standards and putting in place a Federal tax on gasoline which has always been the key to getting Americans to drive smaller more fuel efficient and cleaner vehicles.

It was ironic that virtually every manufacturer was talking about EVs in one form or another, yet the much less fashionable technology…diesel…took home the Green Car of the Year prize.

Don’t get me wrong, I think some of the electric cars and concepts are fascinating.

Chevrolet showed us a production version of the Volt and spoke about the fact that there would be no “range anxiety” because of the small motor that would generate electricity to charge the batteries. Audi showed the E-tron, an electric version of the R8 with an electric motor poweringeach wheel and delivering supercar performance. BMW’s “Vision” concept demonstrated where “Efficient Dynamics” might take the brand. Mini has been testing electric cars on America’s roads and had an example at their stand.

EVs are being talked about as if they will solve global warming, reduce our fossil fuel consumption to zero and generally save the planet. EVs are the messiah of automotive technologies.

Here’s the problem, electric cars are expected to represent maybe 10% of sales by 2020. At that sales rate it’s hard to imagine the technology as a game changer from a fuel consumption or global warming perspective.

At least we have the folks responsible for selecting the “Green Car of the Year” to provide a reality check. For the second consecutive year, a diesel-powered vehicle was selected as green car of the year. Why? Clean diesel is a practical and “green” approach to transportation. It offers 25-30% better mileage, it emits less CO2 and particulate emission is now comparable to gasoline-powered technology. Today’s clean diesels meet the most stringent pollution standards and are sold in all fifty states.

The Audi A3 TDI is a terrific example of the modern clean diesel and a worthy “Green Car of the Year.”

Modern clean diesels are readily available, offer the possibility of reducing fuel consumption by a third and emit less C02 than gasoline engines. Maybe after we’re done talking about technology that won’t make a difference for another 20 years, we’ll start to talk about one that can make a difference tomorrow.

I know it’s not fashionable, but we need to change Americans’ perception of diesel because it makes sense.

The Phaeton failed miserably, with only a few thousand sold.

Many of us thought that VW had simply overstepped, and that the VW brand could not stretch that far up market.  Not unreasonable considering that many of the baby boomers still remember the original beetle and VW’s positioning as an inexpensive, small alternative to the behemoths Detroit was producing in the 50′s and 60′s.  In fact the “inexpensive” portion of the brand’s original positioning haunted VW for years as the cars became more expensive than consumers expected Volkswagens to be.  The Phaeton stretched everyones’ perception of what a Volkswagen could or should be. Most importantly the brand lacked the cachet, the prestige necessary to compete successfully in the Import High Group.  Luxury segment consumers were not interested in sporting the VW badge.

Within the last few months the trades have been reporting that Volkswagen AG and Volkswagen of America are more than likely going to bring the Phaeton back to the US market in MY2010.  Already industry pundits are incredulous that VW would try the Phaeton again.

I think the pundits are wrong.  I think the return of Phaeton will be a success.

The recession has altered Americans’ perception of luxury.  The Wall Street Journal reporter Matthew Dolan was interviewed and commented that Americans have moved from “conspicuous to careful consumption.”  He went on to say that “the luxury of the past is not the luxury of the future.”  Americans are behaving differently after the market tumbled and the recession changed our sensibilities. Everyone has a friend who traded in his BMW or Mercedes-Benz and bought a Jetta diesel or a Prius instead.  This new sensibility, the desire to be “responsible” not ostentatious creates an obvious opportunity for VW’s Phaeton.  Last time around Phaeton didn’t have the “prestige” to compete in the luxury segment…what was a weakness is now a strength.

Add to this new sensibility the fact that we are on the cusp of a new generation of luxury segment participants.   Young men and women who grew up with “Drivers Wanted,” people for whom VW has never been known as inexpensive.  Matt Dolan spoke about this group when he said that the “under 35 crowd’s definition of luxury experience is changing.”  I think it is likely that this generation of luxury segment participants will look beyond the luxury brands of their parents and give different brands a chance.   This group will look at Phaeton and see it as the flagship of a brand that they know well and think is very cool.

There’s going to be  a changing of the guard in the luxury segment as more “careful” boomers buy their last couple of cars  and a new generation enters their high earning years.

I think the new Volkswagen Phaeton with its diesel motor could become emblematic of “new luxury.”

Audi of America has stepped up and taken on America’s negative perception of diesel technology.

Take a look at this video:

Then the commercial:

Changing American’s perception of diesel is a monumental task but one that will yield remarkable benefits.  Diesel offers the opportunity to immediately reduce our consumption of oil, reduce emission of CO2 and get better mileage.  Diesel can help manufacturers satisfy the new CAFE standards.  All this from a proven technology that is well understood and available today.

Diesel needs to be part of the energy solution of our country.    I know that it is far more fashionable in Washington to discuss plug in electric vehicles but those technologies are years away from broad-scale commercial viability.

Clean diesel is here today and can contribute immediately to   reducing our dependance on foreign oil, reducing one of the major gasses that cause global warming, give consumers 20-30% better milage and a motor that will last longer!

Diesel is a “win-win” for the consumer, the automobile manufacturers and our country.  All we need to do is update America’s perception of the technology.

Good for Audi of America for trying to change our perception of diesel.  I hope they succeed, that would be good for all of us.

Amid all the blather from Washington about hybrids, plug-in electrics and other green technologies is an engine technology that is clean, fully developed and ready to make a difference…clean diesel.  For the life of me, I can’t understand why we are not having a more meaningful conversation in our country about the advantages of clean diesel.

Actually, I do understand.  Diesel is a much misunderstood technology in America.  We all remember those diesel Rabbits with black stuff all over the hatchback and a steady stream of vile smoke out the back.  Mercedes Benz has been marketing diesels in this country for decades and there are still many smoky, noisy 300D’s on our roads today.  Unfortunately this image is the impression most Americans have of diesel technology.  Diesels are dirty, slow, noisy pollution machines.

America, the world of diesel has changed.  Now we have ultra low sulfur diesel fuel available in our country and the European manufacturers have introduced 50 state emission compliant “Clean Diesel” models (Volkswagen, Mercedes Benz, Audi and BMW all offer clean diesels now).  So here’s the deal, now you can buy a diesel that is at parity with gasoline from an emissions perspective (in fact it puts out less CO2) and gets 30% better mileage.  Diesel engines also last far longer than their gasoline counterparts.  People regularly put half a million miles on diesel engines.  The new clean diesels are quiet and offer terrific performance.

What’s the downside you ask?  Diesel fuel prices are bit higher than they need be which reflects limited refining capacity and high levels of global demand.  Right now diesel is priced in between regular and premium gasoline.  New refining capacity will come on line in the next couple of years and that will help diesel fuel prices.  The other issue is that the initial price of diesel automobiles is a little higher than their gasoline counterparts.

When I run the numbers, I still have a compelling case for diesel.  A car that will last longer, be environmentally responsible and reduce our dependance on foreign oil.  Here’s the best part, all of this available today, using well understood and proven technologies.

While I’m sure there’s a plug in electric somewhere in our future, diesel offers us a way to reduce our oil consumption in an environmentally responsible way, today!  Diesel may not be the long term answer to our automotive and energy issues, but it is a darn good step on the path to energy independence.

Diesel is part of the solution.  Our colleagues in Washington need to embrace it as an option, even if it isn’t as politically fashionable as hybrids and electrics.