Cadillac Escalade: How It Came to Be

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• The Cadillac Escalade was first launched in 1999.

• Although the Escalade is today the brand's most important model, it faced considerable internal headwinds on its journey to production.

• Former division general manager John Smith recounts that journey in his newly released book, Fin Tales: Saving Cadillac, America's Luxury Icon

John Smith became the head of Cadillac in early 1997, having previously led General Motors’s Allison Transmission division. At the time, Cadillac was in a sad state. As Smith recounts: “Unit sales and market share were half of what they were compared to the peak year of 1978, despite luxury segment growth of 50 percent! Once the luxury vehicle of choice, Cadillac was looking tired and irrelevant compared to the likes of Mercedes, BMW, and even newbie Lexus. Buff books and media observers were writing Cadillac off for dead. Cadillac dealers had suffered, too, and rated their franchise dead last in NADA’s annual survey of all franchised auto dealers in the U.S.”

EXCERPTED FROM FIN TALES

“It’s Mr. Smith.”

It was a sunny, warm August workday afternoon in 1997 when I picked up the phone in my office. Mr. Smith was Jack Smith, GM’s chairman and CEO. His full name was John F. Smith, Jr., and several times our mail would get mixed up, or folks would think his note or my note was from the other guy.

After some general catching up, Jack asked, “Don’t you need a truck?” I remember taking a deep breath and saying something to the effect, “Yes, but too few folks between me and you think so.”

He paused, and then said simply, “Let me work on that.”

Since joining Cadillac in February [1997], every conversation I had with dealers included questions about—if not demands for—a luxury truck. When meeting with the Cadillac team and key dealers across the country, it was clear that Cadillac was already losing loyal customers to luxury brands with trucks—and might soon as well to Lincoln, which would launch its Navigator in a few months. I, too, believed Cadillac needed an SUV, but at this early point in my tenure, I didn’t see a path forward. BrandScape expressly limited Cadillac to passenger cars.

BrandScape was a vehicle market and brand positioning assessment that had been adopted by the GM North American Strategy Board in 1996. It was certainly needed to resolve undue overlap between the divisions, make better use of GM resources, and hopefully produce more distinctive and profitable products. However, [it] was mostly about better separating GM’s 60-plus models and not so much about reducing the total to a more manageable and impactful level, and certainly not about eliminating any brand. That would only be addressed in GM’s bankruptcy proceeding of 2009 when the Pontiac, Saturn, Saab, and Hummer brands were either closed or sold.

BrandScape concluded that Cadillac would sell only luxury cars, period. With GMC already selling upmarket from similar Chevrolet products and seen to have even more upside in this regard, any luxury trucks GM might develop would be sold under the GMC brand. While there were many reasons to conclude GM would be leaving money on the table by limiting Cadillac to just passenger cars, BrandScape concluded otherwise—a decision that had nothing to do with the customer and everything to do with institutional reluctance to address a failed, multi-brand strategy.

Every overture regarding a Cadillac SUV that I had made to Ron [Zarrella, group VP, vehicle sales, service, and marketing] had gotten the cold shoulder, and that was on a good day! No doubt, even if he had ever expressed some openness to the idea, the other brand leaders could be expected to be critical of any deviation from this strategy.

That said, I resolved to bide my time, feeling sure there would come an opening to formally revisit the question of a Cadillac SUV—by my hand, or someone else’s. That phone call from the chairman proved to be the opening.