Guest Post by Eric Peters
GM is worried – because Lincoln is showing signs of making a comeback.
It hasn’t been much noticed, but it is happening.
The new Continental, Lincoln’s flagship luxury sedan, is selling well – unlike Cadillac’s sedans – and now there is panic at Diversity Central (whoops, GM headquarters) about the 2018 Navigator.
With good reason.
It was the Navigator that launched the full-size luxury SUV craze, back in the ’90s. Ford’s idea first. Take an Expedition – a mere Ford – and pimp it out.
Price it out, too.
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Manna rained. The profit margins were crack-like.
Cadillac saw it was Good – and copied it. On the strength of sales of the Escalade, Cadillac was able to rebuild its brand. People forget, sometimes, that Cadillac in the ’90s was like LaSalle in the mid-1930s or Buick is today.
That is to say, the new car for old people.
Cadillac bounced back and became hip.
Hip-hop, actually. 
But the Escalade is getting old. Literally and figuratively. The current model dates to 2015 – and three years is a geological epoch in the luxury vehicle business. When you spend $70k-plus on a ride, you don’t want it to look the same as last year’s ride.
Or three years ago’s ride.
The wheel may have turned. The current Escalade is becoming as dated in style and attitude as MC Hammer and parachute pants.
It gets . . . old.
Meanwhile, there has been a Rocky III-like resurgence over at Lincoln, which began with the new Connie – which emphasized style and gracefulness and luxury rather than the gnomesayin’ ethos Cadillac has come to embody. 
It has found buyers – and the tables are gradually turning. Cadillac is now dead in the water. Its sedans are unwanted; the Escalade is old and outre. It is the 4×4 equivalent of underwear down and showing your ass crack.
Heck, it has even got 4×4.
The current Escalade is all-wheel-drive. No Low range gearing and thus no of-road capability. Its main ability is drawing attention to itself, which may also be getting old – at last.
Thus, GM just announced it will deeply discount sales of its rebadged Tahoe by $5,000 – which will only accelerate the tailspin. 
Discounting is the death rattle for any vehicle, car or truck. It means you can’t sell the thing on the merits.
Tesla, for example.
You might as well hang a “kick me” sign on the trunk. It not only means you have to bribe people to buy your ride – bad enough – it means you’ve just poured gasoline on the depreciation rate of the thing. If you’re giving away the new ones, what does that do to the residual value – i.e., the depreciation rates of last year’s already-bought Escalades?
In effect, GM just sent every current Escalade owner a very large bill. To be redeemed come trade-in time.
This will make leasing new Escalades more expensive, too. Because residual value/depreciation rates dramatically affect how much a lease costs.
Which will probably make it harder to get people to lease them.
The vortex spins faster. 
Those holding GM stock might want to ponder the Significance as well. Resorting to finance flam-flam (the specialty of GM’s new CEO Mary Barra) rather than solid product is not Good News – if you have a stake in GM. One recalls – or probably ought to – Mitsubishi’s hit-the-iceberg policy of offering “buyers” the opportunity to drive away in a brand-new car having put no money down and not having to sweat a single payment for one full year.
Many “buyers” took that deal.
And exactly one year later, many of those defaulted on the deal. Leaving Mitsu to deal with the financial and reputational wreckage of all those thoroughly trashed year-old cars it had to try to sell again at a very deep discount. The brand has not recovered to this day.
We will see about GM.
Has anyone shopped for a new car lately? Damn those things are expensive. What can’t anyone make a no frills cheap car that will last 300k miles. In the range of $8,000. Can’t that be done? If not, I have no idea how millions of young people are going to get around.
$8,000: Not with all the safety and environmental FATWA’s.
Move to a different country.
It could be done there’s just no money in it. This is why we need recessions to come in and knock these companies down a peg so they will stay competitive. Right now there is no real competition. They all just bloat up together and force everyone to pay an extra 100-200% for useless addon crap.
I actually just bought a dodge ram 1500 this week. Leased actually. They actually discount the thing by 11 grand if you lease. Payment is 306 a month by 39 months, with less than 500 up front. The price ended up just over 31500 to lease vs 42k and change to buy it outright. Residual under 23k. So lease it now, and buy it out later at a lower price than writing a check for the thing, which was my original intention. Its the crew cab express model without all the bullshit like backup camera navacrap power adjustable anything. Doesnt even have a cd player. I am in heaven w my 5.7 hemi. Last of the v8’s biches. Giving away the non luxury versions. For the big horns and loaded out 60k machines the discounts were less than half. And check this out, dodge offers a 1500 dollar rebate if your credit is sub 620. Can you believe that shit? Piss poor credit with no chance of paying us? We got you!
You don’t own something when you lease it, you have to either buy it at the end of the lease or give it back.
Leasing only really makes sense when you are in a position to write it off as a business expense for the full amount paid as you pay it without having to depreciate it over the length of ownership and pay the taxes on any remaining value when you sell it. (FWIW, if you are in that position there’s a nice little tax dodge available by setting up an independent corporation -that you own but which does not make a profit- to own all your equipment and lease it to yourself so you can both own and lease at the same time for tax deductions on both sides of the deal).
Mostly, leasing as it is currently being pushed, is just a way to get people to “buy” vehicles they can’t afford by making the monthly payments more affordable to them. The tax deduction and profit advantages of this go to the lessor in this case.
Other Anonymous, he said he was going to buy it at the end of the lease, so he will own it in the end.
Doing it that way gets him a Yuge discount and saves on financing the larger amount at the beginning.
You got it brother. Lease, then buy it out, or we buy outright, depending on the deal they give us. I was driving an ’01.
Interesting tidbit brings me back to comment. Look up burdick drivers village. Its north of syracuse. Many car lines. Many makes. While talking to the finance manager, i asked how many all electric vehicles they sold. He said one. This year i ask. No, one electric ever. And it was out of their ford dealership, and they had only taken it because if they did they would get a raptor. Wildly unpopular. You cant sell them he told me. So google map that fucker and see how damn gigantic it is. Ford is ten miles up the road. One all electric, ever. Across ten lines maybe. Didnt count.
Look at what gets sold in eastern and southern Europe; look at the Kei-cars in Japan. These things are produced, and are sold profitably.
I’d buy a Piaggio Porter long bed diesel pickup tomorrow if I could buy them here. I’m not paying $60k for a pickup truck or a SUV. That is literally insane.
Sure! The Thais have lots of them in Bangkok. They have 3 wheels and a sort of bench seat in the back, a driver’s seat up front, and some form of signal lighting, if you’re lucky, and something like a lawnmower engine. They’re great! Or perhaps an Indian knockoff of a Toyota pickup, like the Deer.
No problem, GM can just roll out 10 year financing. The kneegrows will be on that shit like white on rice. GM will probably quadruple their money on each one if the loans are paid. They won’t be but that makes it a tax write off and the inventory will be cleared out so it’s a win/win for GM. There’s always a good chance that they’ll be bailed out if shit goes sideways as well so………..Meh!
I will keep driving my 04 CRV with 101k on it, paid off over 10 years ago and still runs like new & the insurance is cheap as hell for a 51 year old. GM can suck my dogs fat hog!
Yes, that’s the sensible thing to do. Good on you.
Mine is a 2002 Toyota Sienna with 235,000 on it…still starts..runs…gets me where I want to go. Plus…the 800 dollar a month payment goes into “investments”……So the Car Dealers can BLOW ME!
I have a ’00 civic with 248,000 miles on it. My son said, you have an old car, you shouldn’t spend big money on it for parts, just get the cheap stuff at Autozone. My buddy says it should make it to 350,000 miles.
I told the guy at Walmart that the $20 oil special sounded like a better deal than the $39.95 hi mileage service. I’ll just change the oil every 2 months to make up for the small amount of oil it’s burning and it should be fine, I said.
The clearcoat went first in the desert sun, the paint is looking terrible. That’ll keep the gold-diggers at bay. My wife wont ride in it, great, it’s all mine, no need for the scent strip to cover the flatulence.
EC
Haha, that’s gold.
Aaah, marriage: a life – long romance…
Met a retired gringo NBA player one time back about 10-12 years ago and noticed that he was driving a lowly Ford Expedition. I gave him a little bit of shit about not driving an Escalade, and with an absolute deadpan serious retort he said “What, do you think I’m one of those fucking morons who blows through all their money in a year?”
We recently purchased a vehicle and while shopping I was amazed at the overstock of some vehicle lines. A local Dodge Jeep dealer has so many grand Cherokee and wranglers they are parked in a field ON FUCKING GRASS. Worst thing for any vehicle as grass hold moisture and will grow up under the vehicle.
Must have been 300 of each…….
The mall where we shop is packed with generic four door shit boxes from some dealer. Prolly 2to 300 of them. GM’s and nissans i think. So frikkin similar its hard to tell.
I’ve been a GM loyalist for 30 years. Not anymore. Why?
Because recently I just needed as big as possible V8 RWD-only sedan, as little frills as possible. Just a highway cruiser for my needs.
I went to look at the nice new Caddy CT6 because it is RWD based, and while no V8, a 3.0TT V6 is pretty comparable. But my dealer who I like alot, says ‘sorry, you can’t get that engine in RWD only, or even in the lower trim” how dumb, and easy to do, but I guess it doesn’t fit into some computer model that says the ‘take rate’ would be low.
GM has always played shenanigans with making you buy the uptrim model to get the larger engine. They still do it, even in trucks.
So it was hard to do, because I never have, went to see the Chrysler 300. “Can I get RWD only V8 with no sunroof and not in your highest trim?” Sure. Done deal. Like it alot.
That is some sad shit. I bought a GM in 2000 and had it BUILT to my specs. I waited 10 weeks to get the truck. Now they just say nope.
One more sign.
As was said above. Recessions used to correct this arrogance, and put power back in customers hands. Now, with QE and free Fed money, they don’t give a damn about making a profit, just as long as they can keep getting debt financed, all is good.
You should have found yourself a Chevy SS sedan. Just stopped producing them 2 weeks ago (Australia)
Big V-8, no turbos, superchargers, Cylinder de-activation or direct injection to cause problems down the road.
Just a 300K mile small block V-8, rebuildable and repairable forever. Sunroof an option.
In fact even a manual transmission was an option.
In fact, if you wanted a no frills trim level, the same car is police only Caprice, stripped down with a 6″ longer wheelbase, for even less money. Lots of dealers sell them with 1K miles on them to get past the regulatory/marketing restrictions as being a Police only Model.
https://www.autotrader.com/cars-for-sale/vehicledetails.xhtml?listingId=470696786&zip=06810&referrer=%2Fcars-for-sale%2Fsearchresults.xhtml%3Fzip%3D06810%26startYear%3D1981%26sortBy%3DderivedpriceDESC%26incremental%3Dall%26firstRecord%3D0%26endYear%3D2018%26modelCodeList%3DCAP%26makeCodeList%3DCHEV%26searchRadius%3D0&startYear=1981&numRecords=25&firstRecord=0&endYear=2018&modelCodeList=CAP&makeCodeList=CHEV&searchRadius=0&makeCode1=CHEV&modelCode1=CAP
Local dealer has the little escalade at 91k…..that’s their price with the no haggle bullshit.
And fried chicken Shanequa is buying a new one every other year.
same thing happening with Harley-Davidson
What you can do is lease what you want and short GM stock. Might have free ride.
Also, know that at the end of a lease taken on now, there will be a freaking flood of used cars from repossessions, as well as unsold new cars, so the price you pay for your leased vehicle will be competitive (much cheaper than what the residual was figured to be by the leasor).
I agree with you 1980XLS. The Chevy SS was on my list but there were none new to be had around here anymore. So I even considered used, and found a few, and went to drive them. Unfortunately, their suspensions were a little to ‘sporty’ for me. Roads are very bad around here. I know they went to mag-ride on later models, but none to be found.
My preference was the longer wheelbase PPV version, which us mere mortals aren’t supposed to be able to buy, so again I looked for used, like you said, but any that I found were hammered. So off the the 300 dealer I went, and I like what I found. Same as you said “Big V-8, no turbos, superchargers, Cylinder de-activation or direct injection to cause problems down the road.” except the cylinder deactivation thing which I do not like. The sport mode button takes care of that pretty easily. And lets it shift right, like any car guy wants it to shift anyway.