GM's Cadillac XT5 Looks to Capitalize on U.S. Crossover Boom
General Motors' (GM) - Get Report Cadillac division, hoping to leverage strong consumer demand for crossovers, is debuting its XT5 replacement for the Cadillac SRX at the Los Angeles Auto Show.
GM, which is trying to expand Cadillac's global reach beyond the U.S. and China, showed the car for the first time last week at an auto show in Dubai. SRX currently is the strongest selling of Cadillac's models, only trailing Lexus's RX350 in its class. The current model debuted in 2009.
The new model will be 278 pounds lighter than its predecessor, though it has been designed to be more roomy, GM said. The engine is an improved version of its 3.6-liter six-cylinder, with a 2.0-liter turbo available in China. It is the first of four new crossovers that Cadillac will introduce over the next few year, a lineup that is led by its very popular full-size Escalade.
"The SRX has been selling very well, given how late in the lifecycle it is," Dave Sullivan, an analyst for AutoPacific, told Autoblog. "It outsold Lincoln's all-new MKX last month. This is the volume model for Cadillac and dealers need this to be a grand slam, not just a home run."
Karl Brauer of KBB.com said: "Styling stays remarkably true to the current SRX, so much so people may not realize it's an all-new vehicle. But it's exactly what Cadillac needs right now to grow sales and compete in the luxury SUV space."
GM, the No. 1 carmaker in the U.S., has been riding a wave of strong sales and pricing that is on track to culminate in the industry's best year since 2000. GM shares are trading flat in 2015. But in the past month, they're up 6% against a Dow Jones Industrial Average that's been flat.
XT5 is set to arrive at Cadillac showrooms in the spring, just after the brand's CT6 flagship sedan. Johan DeNysschen, the brand's global manager, who formerly ran Audi in the U.S., is leading Cadillac's $12 billion makeover.
DeNysschen's goal is for XT5 to sell more like BMW's X5 crossover that starts at about $54,000 or Audi's $42,000.
Part of DeNysschen's mission has been to solidify pricing of Cadillac vehicles by ensuring that they're not being built in too great a number in relation to market demand. In the case of SRX, which retails starting at about $39,000, strong sales in unit terms have been driven lately by discounts, as high as $7,000, according to TrueCar.
"The new XT5 is long overdue," said Matt DeLorenzo of KBB.com. "Even though the SRX has held up well, the segment is becoming more competitive and critical to success among luxury brands. It's a good first step, but the key vehicle in the lineup will be the crossover SUV slotted between the XT5 and the Escalade -- a true Lexus RX/BMW X5 fighter."
Cadillac sales are down 1.7% in unit terms this year, compared with a U.S. market that is up 5%.
The new model will feature Apple Car Play and Android Auto, formats that allow smartphone users to see some of their apps on a dashboard screen instead of Cadillac's CUE system. GM has decided to embrace Apple and Android to entice buyers who value easy-to-use connectivity as much or more than a powerful engine.
Doron Levin is host of "In the Driver Seat" on SiriusXM Insight 121, Saturday at noon, encore Sunday at 9 a.m.
The writer has no financial interest in the aforementioned companies.