Cadillac Plans To Raise Prices & Prestige

October 29, 2012

If you were hoping to land a great deal on a Cadillac, you might want to act sooner rather than later: according to an article in AutoNews, Cadillac is planning to boost prices in the coming years.

The increase isn't due to rising costs of labor, parts, raw materials, regulation, or other factors you might expect. No, the increase is purely meant to boost Cadillac's luxury credentials by making its lineup as pricey as European rivals from BWM and Mercedes-Benz.

As an example, Cadillac's vice president of marketing, Don Butler, cites the Cadillac CTS, which is currently priced $8,000 below its BMW rival, the 5-Series. To mass-market shoppers, that makes the CTS sound like a bargain, but to luxury consumers, the word "bargain" sounds a lot like "common". Butler suggests that the price difference between the two models will shrink in the coming years.

In marketing, it's a given that for something to be luxurious, it has to be exclusive. Call it the "Emperor's New Clothes" effect: even when a product's deluxe touches are minimal or ludicrous -- like those of a diamond-encrusted cell phone -- charging a premium price makes things less attainable and, simultaneously, more desirable.

So, as long as Cadillacs retain their luxury elements, upping base prices could help draw in a few status-conscious shoppers who might otherwise turn to competing high-end brands. (And that, in turn, could boost GM's profits, which is no small matter.)

The trick, of course, is finding the sweet spot--the balance between exclusive price and premium quality that will allow Cadillac sales to grow. To that end, Butler says that Cadillacs will always remain slightly more affordable than their European counterparts. 

How do you think Cadillac stacks up against other luxury brands? How high do you think Cadillac's prices can go while remaining competitive? Drop us a line, or leave a note in the comments below.

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