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Why General Motors' Cadillac Will Soon Advertise a Car You Can't Buy

Imagine you're in charge of a luxury-car brand that saw its U.S. sales fall by 10% last year. You need some new products would turn that around. Those products are on the way, but they won't start arriving for at least another year.

What do you do in the meantime?

That's the situation facing Uwe Ellinghaus, the marketing chief for General Motors '(NYSE: GM) Cadillac. As he sees it, the lack of new products coming to market in 2017 offers Cadillac a big opportunity to work on something else that could pay big dividends in the long run.

And in an interesting twist, that work will include some new ads featuring a Cadillac show car that isn't for sale.

Boosting Cadillac's profitability requires more than great products

"I say that 2017 is a great year of elevation and a unique time for me in marketing because I don't have to launch a new car," Ellinghaus told me in a recent interview. "I have the great creative degree of freedom to ask myself, in calendar year 2017, what can I do to build appeal and desirability for the brand without tying it toward a certain new car that I have to make people familiar with?"

Cadillac marketing chief Uwe Ellinghaus with the XT5, the luxury brand's sole crossover model. Image source: General Motors.

That may sound like a weak effort to make lemonade out of lemons, but hang on. Cadillac does have a slew of new products in development, including two all-new crossover SUVs and revamped versions of its ATS and CTS sedans. Those products will require significant efforts to launch between 2018 and 2020 -- so, in a sense, 2017 is the calm before the product storm.

Ellinghaus plans to use the time working on the Cadillac brand. That's a big deal: Compared to its well-established German rivals, Cadillac is at a disadvantage in terms of brand perception. Decades of substandard products left the once-proud brand in dire straits not long ago, with products that were improving -- but a still-tarnished brand that forced GM to resort to profit-crushing discounts.

That situation has been improving for a few years now, but many luxury-car buyers still don't rank Cadillac as a brand on par with the likes of BMW or Mercedes-Benz -- even though the latest Cadillacs compare very well with their German counterparts in comparison tests. Elevating the status of the Cadillac brand is key to being able to charge higher prices -- or put another way, to deliver luxury-like profits to GM.

Improving the cars, it turns out, was the easy (or at least relatively quick) part of turning Cadillac into a top-notch global luxury brand. Now comes the hard part: improving the brand itself. That's Ellinghaus' job, and it's why he sees the lack of new products for Cadillac in 2017 as a valuable opportunity to do a different kind of work.

Why Cadillac ads will feature a car you can't buy

"Unlike previous campaigns, like "Dare Greatly" when we first teased then launched the CT6, I can now look at *brand* topics, not just cars, that I can feature to show the future of Cadillac," Ellinghaus said.

Ellinghaus said that Cadillac's striking Escala show car will be prominently featured in the brand's advertising and communications this year. There's some obvious risk inherent in featuring a car that isn't for sale in Cadillac's advertising, but Ellinghaus sees it as serving a larger goal.

The Cadillac Escala show car is a preview of the styling of future Cadillac models. The brand plans to use it in advertising this year. Image source: General Motors.

"It's not something that's easily appreciated," he said, noting that it took some convincing to get Cadillac's dealers on board with the idea of featuring the Escala in ads. "We need the brand to be even more desirable to also generate sales for our existing portfolio -- and I don't think we have anything more sexy and exciting than the Escala," which is intended as a preview of Cadillac's upcoming new styling direction.

There are other efforts underway during the "launch pause," as Ellinghaus calls it. Cadillac is rolling out a new look for its dealer showrooms, one that will eventually be the same all around the world. It's a part of Ellinghaus' effort to make sure that Cadillac's customers receive the same experience and communications no matter where they are in the world.

Another view of the Cadillac Escala show car. Image source: General Motors.

That's critical for a true luxury brand, he said. "Luxury brands have cosmopolitan customers. They travel the world, and when they suddenly see that the dealership looks different, the product is different, or the communication is completely different, they say: wait a minute, is that a global brand?"

Ultimately, Cadillac needs great new products we can buy -- and they're coming

"There's no denying we need more SUVs," Ellinghaus said. Crossover SUVs are a white-hot product segment around the world, but at the moment, Cadillac has just one, the XT5 introduced last year. Ellinghaus said new Cadillac crossovers above and below the midsize XT5 are on the way. "But this will all come from 2018 onwards," he said. "So for me, 2017 is a great year of creative freedom. It's by no means a brand pause."

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John Rosevear owns shares of General Motors. The Motley Fool recommends BMW and General Motors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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