Cadillac Defends Big Price Hikes

General Motors Co.'s Cadillac unit will stick with its higher-price strategy, even though it will mean years of lower sales volume, the brand's new chief Johan de Nysschen tells Automotive News.

Cadillac sales in the U.S. are down 5% so far this year in a luxury market that expanded 8% in the first eight months. AN says one reason is hefty hikes that have boosted the price of some redesigned models by more than $10,000.

De Nysschen is betting that new and updated models, coupled with a better owner experience, will justify higher prices and eventually attract buyers who currently consider only Germany luxury brands. In the meantime, he says, "We are leaving behind our traditional customer base."

He also assumes that Cadillac must either accept that higher prices will mean lower volume or keep prices lower for the sake of higher volume but less cache. His conclusion: "It's better to build off a very sold base in terms of credibility, charge a fair price for the car and realize you have to wait until the volume comes."

AN says GM President Dan Ammann has given de Nysschen considerable latitude in charting Cadillac's future.