General Motors’ Cadillac luxury car division, founded in Motown and named for the city’s founder, is moving 650 miles east to New York’s SoHo neighborhood. Cadillac, which has been steadily losing sales to its foreign rivals, is hoping that a trendy New York address will give its products an image boost. GM said in a news release that Cadillac needed to be in “a city renown for establishing trends and setting standards for the global luxury market.”
Cadillac will become a separate business unit and about 50 jobs will be moved to New York. However, most design and product engineering will remain in Detroit. Cadillacs will continue to be manufactured in plants in Michigan, Texas, Mexico and China. Johann de Nysschen, who became Cadillac’s new president in August, is no stranger to corporate moves. He was chief of Audi’s U.S. division when it moved its U.S. headquarters from metro Detroit to Virginia in 2007. And, he took over Nissan’s luxury Infiniti brand when it had just moved its headquarters from Japan to Hong Kong.
There has not been a shortage of critics to the proposed move. Some critics have compared Cadillac’s proposed relocation to Ford’s decision in 1999 to relocate Lincoln-Mercury to southern California. That move yielded no observable advantage and didn’t last very long. Similarly, Infiniti struggled immediately after the move to Hong Kong. Other critics have pointed out that a trendier brand may not lead to increased sales but rather investments in the product itself over decades.
Will Cadillac’s move to the Big Apple pay off? Only time will tell.