General Motors (NYSE:GM) to shift Headquarters

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By Jessica Schultz on September 25, 2014 Us News

The American based multinational automaker General Motors Co.’s (NYSE:GM) has experienced faltering sales for quite a while now in its luxury segment. Hence its Cadillac unit has decided to move headquarters to New York office. Even though the overall problem of sales will not be solved, the company still thinks relocating and changing a division into an independent one will help the company somewhat.

It has been having heavy competition from Mercedes, BMW, Audi (NASDAQ:AUDC) and Lexus for a while now and Ford Motors (NYSE:F) went through a tough time trying to gain back market share from these competitors. The company broke away from its Lincoln Division which stands alone as Lincoln Motor Company now. General Motors (NYSE:GM) reported its strategic realignment in order to save Cadillac and make it a flourishing business unit of its own. The automaker also stated that the new organization aims to incorporate a global headquarters by 2015 and in time expand in NYC.

GM (NYSE:GM) shows how Cadillac is a flagship unit with vital significance in the company’s strategy. The company thinks that by creating a separate unit, there may be reachable heights that the company may achieve by targeting the luxury automotive. With precise detail and focus, GM (NYSE:GM) thinks opportunities are growing for it in the market. With this desire to move forward, the company thinks shifting headquarters will be a big deal for the future prospects of the company and give Cadillac a fresh start.

GM (NYSE:GM) did not consider the problem that Cadillac does not have many models to compete with in the luxury industry. The automaker made an announcement that it may release a high-end vehicle soon, however the announcement wasn’t clear as to what type of car it would be exactly. This car aims to compete with the following: Mercedes S-Class, BMW 7 Series, Lexus LS and Audi A8. However, the problem is that with such a choice available in luxury cars, Cadillac is totally blocked out of the market. The competition is tough with so many models that consumers opt for bigger and better brands in the top end market.

Comparing Cadillac to other companies: Mercedes sold 28,958 cars in August which was up by 10.7% over last year. BMW (FRA: BMW) was able to sell 27,214 vehicles which were up 11% from last year and Audi (NASDAQ:AUDC) was up by 22.1% by selling 17,101 vehicles. Cadillac has had decreasing sales as it sold around 16,650 vehicles but it was down by 17.8% compared to last year. Even though the sales of the Escalade SUV went up, the overall sales declined which was bad news for GM (NYSE:GM).

If the company thinks that moving Cadillac to NYC will help the company in altering its results then why not. But the basic aim at this stage in time for the company should be innovation. It should boost its R&D so that consumers in the market will accept a new luxury car model with better features since preferences are always changing.