NEW YORK (TheStreet) -- If any doubt remained that General Motors' (GM) top brass is committed to renovating its Cadillac luxury brand -- with all the difficulty and cost that will entail -- it vanished this week with the layoffs of 450 workers at its Cadillac plant in Lansing, Mich.
The layoff reduces to two shifts from one the work force building Cadillac ATS and CTS models in a move to shrink the output of those models, whose inventory has been swollen due to slow sales. With less output, GM's revenue surely will take a hit, but the longer-term objective is to strengthen Cadillac’s pricing by reducing the discounts that once were GM's preferred method for shrinking inventory.
It's reasonable to assume that turning Cadillac back into the prestige product it once was, as well as transforming it into a true global brand, could do wonders for the ho-hum performance of GM's common stock, which is down nearly 20% for the year to date.
GM's latest strategy to strengthen Cadillac coincides with the recent arrival of Johan De Nysschen, a former Audi and Infiniti executive, who is bluntly and openly advocating for greater production discipline by GM so as to avoid oversupply of a product whose luxury status “must be measured by its relative scarcity."
"It has everything to do with creating an awesome car company," said De Nysschen, GM’s global head of Cadillac, in a post on Facebook. "We must develop corporate processes, policies, mindsets, behaviors, attitudes, which are right sized for Cadillac, focusing on and responding to what it takes to win in the premium segment."
DeNysschen also raised hackles in Detroit by announcing the opening of a Cadillac brand office in Manhattan’s SoHo neighborhood. He said he wanted his marketing staff in touch with high-end luxury products and services of all varieties.
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