Editors’ Note

James Taylor was appointed to his current post in September 2004. He was previously the Vehicle Line Executive for General Motor’s rear- and all-wheel-drive SIGMA architecture. Prior to this, Taylor progressed through various production and purchasing positions with the company, including management positions at Saturn, Adam Opel, Worldwide Purchasing, and General Motors (GM) Truck. Taylor began his GM career in 1980 with GM of Canada Limited in Oshawa, Ontario, as an industrial engineer. Taylor graduated from McMaster University, Ontario, Canada, in 1980 with a bachelor of science degree in mechanical engineering. He is active in children’s charities, including the Band of Angels Foundation for Down syndrome.

Company Brief

General Motors Corp. (www.gm.com; NYSE: GM), the world’s largest automaker, has been the annual global industry sales leader for 77 years. Founded in 1908, GM today employs about 266,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall, and Wuling.

When you look back at Cadillac’s focus on repositioning, from both strategy and product points of view, can you give an overview of how that rebranding has progressed and evolved over the past 10 years to where you are today?

When you start down a 10-year track of a serious brand makeover, what you first need is commitment and conviction from the CEO and President. Then you go about filling in the blanks as to what kinds of products you need in your portfolio, remembering that this is a car business – it’s all about product. So we had to go through and completely refresh and reengineer our current lineup and, more importantly, add in several new entries that would bolster our entire product offering and portfolio. For the past seven or eight years, that’s exactly what we’ve been doing. In some cases, like the Escalade, we refreshed the current entries two or three times to continue to upgrade them and ensure that they’re actually the top drawer of the luxury offerings.

Was it important, as you created new products, that you include some of the tradition and history of the brand, or did you look toward complete change?

That was a big question in our minds because, looking at other brand makeovers, that is a choice. You can reach back in and take a retro approach through which you try to ride your historical equity, or you can almost ignore the past, as others have done. Our sales weren’t going down without a reason. We had become less relevant to the consumers. Things that Cadillac had been very successful at – that built its strength and its volume – were no longer as interesting as many of the Euro-performing, quick-steering, fast-acceleration, ride-and-handling-oriented cars. On the other hand, from a styling standpoint, one of the key elements of our brand was it was pretty avant-garde. At the time, our Cadillacs stood out – they were distinctive, but in a tasteful way. So that was what we gave all of our designers as a challenge: How are we going to look distinctive, but still look like a Cadillac? We don’t want to be a copycat of anyone else. The brand itself has an enormous well of support, much more than the cars themselves. Our challenge is to elevate the vehicles up to the same level as the brand and have a good match. That’s what we have done. The CTS now is the Cadillac of sedans, and the Escalade is the Cadillac of full-sized luxury sport utilities.

When you look at the rebranding and how it has evolved, do you think the target market has changed at all? How do you define that market? Is it more of a niche, or do you see it as being much broader?

One of the reasons for the decline of our volume was that our customer base in the late ’90s was on the older side. So for us to make sure we were going to be a viable long-term entity and brand, we had to have a stronger appeal to a much younger age group. To do that, we have to have cars that appeal to younger people, and those are the ones that are much more ride-and-handling focused, quick-accelerating, and smaller in size. In updating our portfolio, we added cars that appeal to a much younger age group, both mentally young and physically young. The average age of our customers has dropped five or six years since we started this. We still sell a lot of our large sedan, the DTS, primarily to older and very loyal customers. We certainly don’t want to turn up our nose at those customers and lose them while we are making efforts to appeal to a younger age group. From a brand challenge standpoint, it’s tough to be two things at once while you’re trying to change. But we’ve been fortunate to be able to hold our large volume of existing buyers, while simultaneously bringing new ones on, primarily with the Escalade and the CTS, from which our younger buyers come. Over time, as the DTS volume continues to drop, the math will start to switch in favor of our high-volume CTS and Escalade buyers, which will continue to drop the average age of our customers across our portfolio.

From an internal point of view, as the rebranding progressed, did your people come onboard quickly to understand this change? How have you engaged them in the process and made them understand where the brand was going?

The closer to death you get, the easier it is to create change. In 1996 and 1997, we were looking at our portfolio and watching our sales slide, and it wasn’t too tough to convince people that change was necessary. What’s much harder is persuading people to run marathons, rather than sprints. Our society is not set up to worry about 10 years – it’s set up to worry about 10 days. So keeping people passionately engaged for 10 years is more the challenge, and we do a lot of over-communication internally to make sure that it’s working.

In the luxury automotive market, great products win the battle. The product guys are kind of like a football team. They’re extremely motivated to win, and they like nothing more than a challenge. So 10 years later, it’s very satisfying for them to see the reports on our product, in which we’re either the best or tied for first and winning a lot of awards.

It seems a lot of similar designs are out there today. Is it challenging to differentiate in the marketplace?

It is. If you take a side view of 80 percent of the luxury sedans with four wheels and four doors and clip off the front grille, I guarantee you can’t name what brand of car it is. There are some really good engineering reasons why that is. Everybody starts with the same block of clay, and then we have to try to differentiate with surfaces. So the space that we’ve carved out with our vertical headlamps, oversized grille, and tailored edges was calculated and premeditated to feed that point.

Do you look at the growth for the brand from a geographic point of view? If so, is the U.S. market still where that growth primarily is, or do you see it more in some emerging international markets?

The luxury market in the United States is growing, but it’s at a slow pace. What we are seeing are a lot of move-ups from non-luxury to luxury brands, so even though the total vehicle population might not be increasing overall, luxury continues to increase. And the expectations of those purchasers continue to grow; what used to be OK in a 7-Series is now in a 5-Series, and what used to be OK in a 5-Series is now the price of entry for a 3-Series. The demands on entry-luxury vehicles are getting extremely high from a customer standpoint. The other, more traditional longer-term segments are actually shrinking a bit. It’s more segment-based in the United States, but at the overall level there’s a slight increase. We’re putting a lot of effort into China and Russia and some of the new areas where we’re on a level playing field. To go into Europe, which has an established luxury base, and try to make inroads is like going straight into Fort Knox. It’s tough, but we need to do it, and we are, but we are not getting nearly as good a return on the marketing capital in Europe that we are getting from the Middle East, China, Russia, and other areas.

The word “luxury” is used so often by some players who don’t have the history and tradition of Cadillac. Is it an overused word, and is it harder to define what true luxury is today?

You’re right. Some define luxury purely on price point. Others say the company is predetermining it by calling their brands luxury. There’s a blending of non-nameplate-recognized luxury with price-point luxury. The individual appointments that have historically been reserved for only luxury brands have cycled down into all kinds of non-luxury brands, and it has increased to the point where that becomes the price of entry into those brands. Technologies like navigation screens, which have historically been a luxury, are now in a lot of non-luxury vehicles. In our case, XM satellite radios and OnStar systems moved down into non-luxury vehicles. So the trick is to keep raising the bar in luxury to keep the vehicle in a true luxury space so buyers can be proud of it. We are continuing to focus on the design and the level of treatment of what we call jewelry: the look of the headlamps, the precision of the gaps, the quality of the paint, and the gleam of the chrome. Not one of them is a deal-breaker, but when you add them all up, they have to look very luxurious. Our interiors feature handcraftsmanship and have hand-sewn leather instrument and door panels. Handcrafted interiors are not offered in non-luxury brands, and they do help rationalize the added expense for a customer.

How challenging is it for you to budget and focus your time? How do you define your role in leading the brand?

I have 20 years in the product business, and I’m very biased toward the amount of time that the leader of the company should spend in product, because that’s your lifeblood. When I spend time with the dealers, the first thing they ask is, “What’s the next product? What does it look like? Will we have enough of it?” That’s their future. So I spend a lot of my time in that arena. One of the themes we talk about is communication. In our business, we’re kind of living in a fishbowl; because we’re the auto industry, we get a lot of attention. And we’re big and we’re GM, so we get even more attention. We do a lot of communicating with the press because, in our case, it can help us get our story out and can help the communication to our own people and our consumers. The dealers are all private businesspeople who have a choice to invest in us or any other brand, and can sell or continue to reinvest in us. So I spend a lot of time with dealers to make sure they’re aware of what’s coming, answer their questions, keep them confident, and ensure that they continue to invest in us by building new facilities or by continuing to invest in their salespeople. We have a lot of internally focused attention. But at the end of the day, when a car goes over the curb, it goes over the curb at a dealership – not at a plant and not at GM headquarters. If our dealers aren’t totally all over their game, it jams up the rest of the system. If they don’t sell our product, it doesn’t matter how great it is or how well we market it.

You have made such an impact with new products. The strategy has worked. Do you ever take the time to appreciate that success, or are you always looking ahead to the next challenge and the next model?

We have people rallies and dealer rallies, because it is important to smell the roses once in awhile. Celebrating motivates the troops and the senior folks to go at it again and to recharge. We have people meetings two or three times a year to get the entire team together. We just had a meeting when we won our Motor Trend Car of the Year award for the new CTS. We got the engineering team together, and Motor Trend was there to present the trophy. We gave some presentations, made a big deal out of it, and had the plant connected via satellite so that everybody got a chance to really understand the gravity of the situation and what kind of achievement we just accomplished. Beating the Mercedes-Benz C-Class and other top vehicles from around the world is incredible. We shared that with everybody. We go like basketball players; we really don’t stop until the end of the game. But in our case, our game doesn’t end. We stop, high-five, cheer for a second, and then sprint right back, because they’re coming at us. That’s what we do every day.

When you look at technology and all the ways your people can reach you, how challenging is it for you to turn it off? Have you been able to find that balance and to get away from it?

You’re absolutely right – technology is a killer. On the one hand, it’s fabulous because you’re in moment-by-moment contact. The downside is that it’s almost impossible to untether yourself and walk away, because you’re so well connected. It’s a bit of a feeding system, because everybody is used to answering quickly, and everybody expects you to answer quickly. Truly checking out is a serious challenge for anybody in executive life these days.