Escalade comes first for GM’s big SUVs
Large luxury SUVs are hot sellers now and when General Motors can only make so many of them priority goes to the Cadillac Escalade.
Escalade sales surged 144 percent to 3,237 in April from a year earlier. Now it’s true that production of the current generation of GM’s large SUVs was still ramping up a year ago. But sales of the other models produced there — Chevrolet Tahoe, Suburban and GMC Yukon — all fell in April.
The Arlington, Texas, assembly plant where all four models are built, is running at full throttle, with three shifts working nearly 24 hours a day six and sometimes seven days a week.
Earlier this week the Arlington City Council approved a $30 million package of financial incentives to pave the way for GM’s $1.2 billion expansion of the 60-year-old factory.
Along with pickup trucks, these large vehicles generate the largest profit margins of the company’s entire product line, and Escalade, which sells on average for more than $80,000, is the biggest profitmaker of them all, according to TrueCar.
A similar dynamic showed up in Ford’s sales report. Sales of the Lincoln Navigator rose 36% to 919 while the less expensive Ford Expedition dropped 18 percent to 3,082.
With gas prices staying below $3 a gallon for six months, consumers who need to haul children, golf clubs or whatever they need for longer trips are going big both in size and price.
As Willie Sutton replied when asked why he kept robbing banks, “That’s where the money is.”
With Wall Street clamoring for GM to reach and sustain an operating profit margin of 10 percent or more, putting most of Arlington’s muscle into Escalade makes perfect sense.