Risking Irrelevance, NYC’s Cadillac House to Close in SoHo

Cadillac has now completed its pullback from New York City: Cadillac House is closing, completely. Last fall General Motors announced it was returning its Cadillac corporate operations from Cadillac House in NYC’s hyper-hip SoHo section. Now Cadillac said it’s also closing the co-located showcase/experiential center. GM felt there were more synergies and efficiencies having its people all in the Michigan time zone. Plus, Cadillac plans a new vehicle every six months through 2021 and being together is important.

Cadillac moved to New York City in 2014. The reason then was: Cadillac wanted to be an international auto company regarded as an equal to Audi, BMW, and Mercedes-Benz, not just to Lincoln. Cadillac was getting closer each year. It wanted to put distance between Cadillac and the GM mothership.

The reason behind the pullback apparently was that SoHo is a been-there, done-that kind of place. Time to do something else. Never mind that Taylor Swift, Matt Damon, Trevor Noah, Jon Bon Jovi, Justin Timberlake Jessica Biel, and Howard Schultz (ex Starbucks CEO, maybe presidential candidate) all moved in next door, figuratively speaking. SoHo is vibrant if you’re hip and have money. To wit, Cadillac’s kind of market.

In other words, by returning to Detroit, Cadillac risks thinking of the competition once again as Lincoln instead of the world’s best. Sure, Lincoln is improving. But right now it’s Cadillac that has the best chance among US automakers of being the Cadillac of motorcars, back when that meant something.

Digital rainbow flag on the Cadillac House colonnades.

Cadillac House closes for good April 1. Cadillac’s new chief marketing officer, Deborah Wahl, told Automotive News last month:

Some of the challenges in New York are if you’re in one place in New York, you get one crowd. What I’m looking at is, we want to have a presence in New York, but it’s been four years of Cadillac House in SoHo on Hudson Street. Where else do we go? Where else do we engage?

As for bringing the troops home to Michigan, Cadillac last fall said in a statement, “The move will place the Cadillac brand team closer to those responsible for the new Cadillacs, including design, engineering, purchasing, and manufacturing, ensuring full integration of Cadillac’s global growth strategy.”

The move to New York apparently originated with non-GM lifers — non-Americans with backgrounds at the car companies Cadillac seeks to compete against. The previous CMO before Wahl, Uwe Ellinghaus, previously spent two decades at BMW and held its top global marketing position in charge of brand strategy and marketing operations. Ellinghaus spent a year at Montblanc International and then moved to Cadillac. Shortly afterward, Cadillac announced plans to hang its hat in the Big Apple.

With Cadillac’s flag planted in Manhattan, advertising reflected big-city style. Here, the compact Cadillac XT5, on cobblestone streets your town lacks and a NYC loft apartment you can’t afford.

Cadillac then brought in Johan de Nysschen as Cadillac president after stints leading Infiniti (US), Audi (US), and VW of America. Under his watch, Cadillac got going on the new-cars-twice-a-year kick and the sedans — CT6, CTS-V — were good, but Cadillac was slow to move on SUVs, especially mid-to-large SUVs outside of the long-running Escalade. Only now are the new SUVs arriving, including the compact XT4 and the midsize XT6.

Why This Matters to You, the Car Buyer

Does any of this location-location-location stuff matter to people who want to buy and drive great cars, or is it just one more inside-baseball story dumping on Detroit and Michigan? The difference matters if you believe it’s no coincidence Audi, BMW, Mercedes-Benz, and Porsche are all headquartered within a half-day’s drive of the twisty roads of the Alps. That yields vehicles that drive capably and comfortably on all kinds of roads. The entire state of Michigan has only 1,400 feet of elevation change; even New York has 5,400 feet of elevation change. Longtime journalist Brock Yates once opined that Ford and GM execs thought the only kind of vacations people took were on straight, pothole-free roads leading to the Upper Peninsula of Michigan. (Yates wrote this a long time ago.)

Charlie Puth performs on the keyboard while singing Cadillac House “The Accelerator” series.

The knock on Michigan from those who live outside the Wolverine state is that Michigan’s car market is distorted by all the friends-and-family discounts that keeps people buying the best deal, not the best car. GM builds to compete with Ford and vice-versa more than with, say Toyota. When GM builds a better sedan than the Camry or Corolla, it kills the Impala and Cruze. The auto execs in Grosse Pointe Shore aren’t likely to hear neighbors tell them how an Audi, Lexus, or Benz allegedly outdoes their Cadillac or Lincoln on handling or tasteful interior designs because the neighbors are unlikely to be driving foreign cars.

Eighty percent of Michigan cars are domestics, and residents are 1.5 times as likely to drive a domestic car as people in the average state, says Insurify.com. Fifty-five percent of US cars are domestics, and the rest of the top 10 areas for domestic dominance are heartland states. (This includes US brands built in Canada and Mexico, but not international brands with US factories.)

In comparison, the states with the highest international-car penetration are all coastal. New York is No. 7 with 61 percent international cars; No. 1 is Massachusetts with 70 percent international cars. If Cadillac stayed in New York, it would be in, next to, or one state over from most of the states with high international penetration. The exceptions are California, Florida, and Hawaii.

The upshot: With Cadillac back in Michigan, it’s possible Cadillac continues to grow, improve its cars, and be globally competitive. It’s also possible that a parochial influence creeps in and Cadillac slips into believing its mission is to match or improve on Lincoln, and the job is done. Cadillac could have left the top people in New York, the production-focused people in Michigan, used state-of-the-art video conferencing and backed it up with a plain business jet at Teterboro (NJ) to shuttle the top people back and forth quickly without the dropoff and TSA hassles of commercial aviation.

Exit Cadillac, enter Lexus: The Intersect by Lexus design space opened last fall on 12th Street in New York City, also in the heart of SoHo.

Meanwhile, as Cadillac was moving to shutter its New York City presence, Intersect by Lexus moved in two blocks down from Cadillac House, on 12th Street. It’s an experiential center, cafe, restaurant and cocktail lounge, exhibition space, meeting space, and sometimes even has a car on the first floor. (Cadillac House had room for several.) Lexus, like every high-end automaker, wants its brand to be associated with great cities, better hotels, fine clothing and luggage, travel, and the like. There are other Intersects in Tokyo and in Dubai.

Lexus LF1 prototype at Intersect by Lexus last month.

Before Cadillac House and Intersect by Lexus, upper Park Avenue was home to automobile showrooms that generally showed but didn’t sell cars. BMW has had one for years. Mercedes-Benz was in a Park Avenue (at 56th Street) Frank Lloyd Wright theatrical showroom from 1957 to 2012; it was demolished in 2013. Now most automakers have dealerships on 11th Avenue in the Hell’s Kitchen area of New York City that both showcase and sell cars. Several are owned by the US importer, including BMW and Mercedes, meaning there’s one place in America where customers can see themselves being treated the way the factory expects them to be treated. Tesla showrooms are also Tesla-owned, and EV start-up Byton is eyeing direct sales.

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