Truck

Chevrolet Silverado's Future Depends on Success of Cadillac

It's all about where GM chooses to invest its profits.

As popular as they are in the US, full-size pickup trucks aren’t the most profitable for automakers as a whole. No joke. Take into account growing emissions standards, the fact some buyers are downsizing, and that full-size trucks aren’t popular outside of North America. More specifically, those fuel-economy standards are forcing automakers to innovate, which isn’t cheap to do. Take Ford’s massive investment in aluminum for its new F-150. It’s a huge financial gamble that Ford believes will pay off later down the road.

But those innovations can make trucks more expensive and it’s bad business to pass those costs down to consumers. To help avoid that, Ford is urging customers to spend more on options for their new F-150. Ever wonder why a "Technology Package" is so expensive? Now you know. GM, however, is taking a somewhat different approach to its full-size truck's continued success. It needs Cadillac to succeed on a global level. According to Cadillac President Johan de Nysschen, "The global luxury market accounts for, depending on you define the luxury market, 10% to 12% of the total auto business globally, but generates about half the profit." Bottom line: GM needs Cadillac to help offset the costs of its more fuel-efficient pickups.

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