Cadillac disavows GM to avoid bankruptcy stigma

Southfield, Michigan: Cadillac, the luxury brand General Motors Co acquired in 1909, is distancing itself from the Detroit-based carmaker to avoid the stigma of the parent company's $50 billion (Dh183.6 billion) US-backed bankruptcy last year.

Cadillac is erasing the GM name from its marketing and dealerships, changing e-mail addresses to @cadillac.com from @gm.com and exiting companywide promotions such as the Red Tag Event, said Nick Twork, a spokesman. The separation strategy was "absolutely" driven by GM's restructuring, he said.

"Cadillac, which has really turned itself around with new levels of quality and exemplary products, doesn't want to be associated with something that will drag it down," said John Grace, president of marketing consultant BrandTaxi LLC. "With GM's bankruptcy comes lower credibility in the ability to build quality products."

Bolstering Cadillac is central to Chief Executive Officer Ed Whitacre's effort to revive GM, which is shedding half its US brands as part of a post-Chapter 11 plan. Cadillacs such as the SRX sport wagon start at $33,330, a 47 per cent premium over the Chevrolet Equinox, according to researcher Edmunds.com.

The recession and GM's slide into bankruptcy helped cut Cadillac's 2009 US sales by 32 per cent, compared with the drop of 30 per cent for the biggest US carmaker. Cadillac's 14 per cent gain this year is the worst among GM's four remaining brands and less than half of the 31 per cent companywide jump.

Reversing approach

Disavowing the parent company reverses the approach the carmaker took five years ago when it began affixing a silver GM badge on all its models. "Our own studies show that consumers place a tangible value on the General Motors name," GM said at the time.

Now, company officials are telling dealers the separation strategy is aimed at avoiding the "negative connotations with GM because of the bankruptcy", said David Butler, general manager of Suburban Cadillac in Ann Arbor and Troy, Michigan.

Butler said, "As Cadillac dealers, we didn't like being lumped in with the other GM brands, especially when they threw us into the Red Tag sale. We felt it cheapened the brand."