If you’re looking for one of the biggest, baddest luxury utes on the market, Cadillac is hoping to lure you into one of its U.S. showrooms. Aiming to shore itself up against an assault by Lincoln’s newly updated Navigator SUV, Caddy is firing back with discounts of up to $10,000 on its own Escalade model.
GM has traditionally dominated the full-size SUV segment, both mainstream and luxury, and it gained significant traction when it introduced an all-new version of the ‘Slade for the 2014 model-year. But that’s a lifetime ago in today’s hotly competitive market and Lincoln has been building momentum fast with the all-new version of the Navigator it launched last year.
While the two models don’t generate a lot of volume they serve up substantial profits for their respective manufacturers, providing plenty of room to load up the incentives. The question is whether Lincoln will now fire back with big givebacks of its own.
Lincoln is generally given credit for creating the full-size luxury SUV market, the original Navigator debuting in the 1998 model-year. The Cadillac Escalade a year later. Though the original version wasn’t well received, Caddy rolled out a quick series of updates and, by early in the new millennium, dominated the segment. But, in the wake of the Great Recession and rapidly rising fuel prices, sales of both models all but collapsed, and the two brands came close to culling the big SUVs from their line-ups.
Caddy thought twice, and delivered an all-new version of the Escalade in 2014, just as the utility vehicle market started to explode. Sales soared and the revised model quickly became the brand’s biggest profit generator. According to Morgan Stanley analyst Adam Jonas, the ‘Slade, as it’s known to fans, generates about $1 billion in annual profits for Caddy, helping fund the brand’s broader model proliferation plans.
(Cadillac Exposed! Click Here for a deep dive on the brand’s dramatic product and technology plans.)
Lincoln all but forgot Navigator, continuing to produce the full-size model largely only because its tooling had been paid off years ago. When Mark Fields, former CEO of parent Ford Motor Co., announced his five-in-five product strategy early in the decade, a new Navigator wasn’t even in the plan. But the automaker finally read the tea leaves and realized that full-size utes were quickly overtaking large sedans as the vehicles of choice for premium buyers.
Officially introduced at the 2017 New York International Auto Show and rolled into showroom last autumn, the 2018 Lincoln Navigator marked the first complete overhaul of the full-size luxury ute in more than a decade. It quickly generated strong reviews and gained even more momentum when it was named North American Utility Vehicle of the Year by a panel of 60 U.S. and Canadian journalists in January.
(Navigator named North American Utility Vehicle of the Year. Click Here for more.)
Escalade continues to outsell its rival, in part by offering a variety of different models. That includes the standard-length version and the stretched Escalade ESV. For March, total sales came to 3,263, a 14% year-over-year increase.
But Navigator is gaining ground, Lincoln delivering 1,711 last month, a 90.7% increase over March 2017. For the first three months of 2018, the increase was 63.3%, largely constrained by the typical new model production ramp-up.
“This is a particular battle that GM doesn’t want to lose ground in,” Jeff Schuster, a senior analyst with LMC Automotive, told the Bloomberg news service.
By various estimates, Caddy earns about $20,000 for every Escalade it sells. That gives it wiggle room to try to slow Lincoln’s assault. Even as the new Navigator was just rolling into showrooms, GM’s luxury brand offered up $5,000 cash incentives to Lincoln owners trading in anything on a new Escalade.
With Navigator continuing to make inroads, Cadillac now is dangling $7,500 in bonus cash for those willing to lease select Escalade models. And current owners who stay with the brand can get as much as $10,000 if they buy a new Escalade.
But what may actually help Cadillac most is the challenge Ford is facing at its factories. It simply can’t build Navigators fast enough. In an industry where cars and trucks normally languish on dealer lots an average 60 to 65 days, the so-called “time-to-turn” is barely 10 days for the big Lincoln ute, And for top-line models, it’s as low as six days, according to the automaker’s sales chief Mark LaNeve.
Even a base Navigator starts at $72,055, while a fully loaded Black Label edition easily tops $100,000. According to LaNeve, the average transaction price on the Navigator is now running $82,500, up by $25,600 a year ago.
That puts the two models in roughly the same ballpark, which is why their battle for dominance is likely to continue escalating.
(Lincoln hopes to take wing with the new Aviator. Click Here to check it out.)