GM Getting Ready to Build Small Cadillac SUV

General Motors Company is gearing up one of its car plants to build a new Cadillac crossover with hopes of reversing the luxury brand’s sales slump in the United States (US) according to people familiar with the matter.

The automaker has begun building test versions of the Cadillac XT4 at its assembly plant in Kansas City, said the people, who asked not to be named because the company hasn’t yet announced production plans. Tom Wickham, a GM spokesman, declined to comment.

The XT4 will have a dual mission for GM. The first is to give SUV-loving luxury buyers more options in Cadillac showrooms. The second is to make better use of the automaker’s Fairfax assembly plant in Kansas at a time when auto companies are laying off workers who make passenger cars and contemplating whether to keep making their slowest-selling models.

For Cadillac, GM needs more sport utility vehicles to help sales in the U.S., which fell 8 percent last year. The brand’s sales are booming in China but have struggled at home because dealers only have two SUVs to sell -- the XT5 crossover and the full-size Escalade.

According to Bloomberg, the XT4 will be smaller than the XT5 and give GM a competitor to vehicles like the BMW X3 and Audi Q3. In the U.S., the XT5 was one of only two models in the Cadillac line-up to see sales increase last year, with deliveries surging 73 per cent.

“It’s a new architecture for us, and it is up to the task,” Johan de Nysschen, the president of Cadillac, said in an email. “It’s the right size, dynamics and sophistication to attain what I believe is worthy of a Cadillac in this segment.”

The XT4 will be built using similar underpinnings as the Chevrolet Malibu sedan also made at GM’s Fairfax assembly plant, which will help defray the costs of parts for each vehicle. Building the SUV with shared parts is a welcome plan for workers at the factory, where GM cut a third shift last year as Malibu sales plunged 18 percent.

To keep passenger cars profitable, automakers are looking to build them alongside more profitable SUVs. Detroit’s three carmakers build few SUVs and cars on the same assembly lines, while rivals Honda Motor Co. and Toyota Motor Corp. have done it for decades.

GM shares climbed 0.5 percent to $44.22 at the close Monday. The stock jumped 18 percent last year.