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Luxury car brands scrambling to avoid a blue Christmas

DETROIT — When financial markets surge to new records, sales of luxury cars usually rise, too. Instead, October U.S. auto sales reports on Wednesday showed that a collapse in sales of luxury sedans is accelerating. Consumers have gradually shifted over to luxury sport utility vehicles from sedans in the past decade, but the trend — which has occurred in both the non-luxury and luxury sedan segments of the auto market — was particularly pronounced in October. Sales of Daimler AG's Mercedes-Benz S-Class, long a global benchmark for large, premium sedans, plunged 49 percent in October, and are down 24.8 percent for the year to date. General Motors' Cadillac brand said it sold just 779 of its CTS sedans in October. Demand for that car, designed to compete with German luxury sedans, is down nearly 33 percent for the year. "There's still a significant portion of the market that wants a car, but I'm sure there were people who preferred a horse to a car at one point." Cadillac's best-selling model this year is the XT5 compact SUV, which has more than doubled sales from a year ago. The shift within the luxury vehicle market away from sedans toward SUVs of all sizes is forcing some of the most prestigious brands to scramble to add SUV models to their lineups or boost SUV production to meet demand. "In the short term, there will be pressure to add (consumer) incentives, cut production or both," said Cox Automotive analyst Michelle Krebs. "And we just don't see an end in sight to this trend." The Dow Jones Industrial Average has been trading at all-time highs, usually a good sign for luxury sedans, but as major automakers reported new U.S. vehicle sales for October on Wednesday, sales for passenger cars continued their slide while luxury SUV and crossover sales rose again. According to Kelley Blue Book data, in 2007 luxury sedans made up 7.6 percent of U.S. new vehicle sales, while luxury SUVs made up 4.2 percent. Through September this year, luxury SUVs made up just over 7 percent of the market, compared with 4.9 percent for luxury sedans. In the short term, luxury brands could use holiday season sales promotions to clear slow-selling sedans off dealer lots, analysts said. Toyota's Lexus brand said on Wednesday it will launch its "December to Remember" year-end sales promotion for the 18th straight year.

Next Cadillac Escalade's interior spied for the first time

Update: Now that new spy photos of another large GM SUV have surfaced, we believe these shots show us a GMC Yukon interior, not a Cadillac Escalade. You can see the new spy shots here that depict a much more upscale vehicle interior compared to the fuzzy center stack shown in the shots of the Yukon. The new Cadillac Escalade has a lot of work to do in order to properly compete with Lincoln's wonderfully luxurious Navigator. These interior spy photos are our first look at what Cadillac is working with on the inside of its new luxury truck. We won't make final judgements, as this vehicle is still a prototype and subject to change. However, a few key bits are noticeable from the fuzzy photos. As expected, Cadillac's CUE infotainment and center stack is nowhere to be seen. Replacing it is a new interior design language, with a tablet-like screen that seems to rise out of the sloped stack on top. Below the screen is a strip of stitched leather and a couple prominently placed air vents. To the left of this area is what appears to be a push-button gear shifting system, replacing the column-mounted shifter currently in use. Below all that on a lower level of the center stack are all the climate controls, along with what look like physical buttons for what could be audio-related controls. Does it look as luxurious as the Lincoln? Not with all the coverings and shrouding it doesn't, which means we'll have to wait until we get the full picture. One thing that's clear is that the interior design is definitely going to be wildly different than the current Escalade. That center stack flows downward as one sloping piece into the high and bulky center console area. This design looks like it brings the center console further downward, and also uses a multi-tiered look. It's tough to read what's on the screen, but the software looks like the same stuff we got a preview of on the new Cadillac CT5 and CT4 sedans. As for the exterior shots, there's almost nothing that we haven't already gotten a taste of in previous spy photos. The independent rear suspension is a go, as are what appear to be massive headlight and LED DRL fixtures. If you look through the wrapping, you can make out how far up and down the lighting fixtures stretch ... or perhaps they're separate units altogether. It's tough to tell at this point.

GM Cadillac chief: New CT5 will replace 3 sedans; EVs coming

DETROIT - The head of General Motors' Cadillac luxury division said on Thursday the brand will shrink its lineup of sedans and expand its offerings of sport utility vehicles and hybrid and electric vehicles in response to market shifts. Expanding Cadillac's global sales is central to GM's overall profit strategy, and Cadillac has reported a 27 percent increase in worldwide sales through the first half of the year. However, in the United States, now the brand's second largest market behind China, Cadillac sales are down 1.6 percent and combined sales of the brand's four sedan models have plummeted 16.3 percent through the first half of the year. That has forced GM to order layoffs at two Michigan factories that build Cadillac cars, and raised questions about the long term future of the plants. "We have to rebalance our sedan portfolio," Johan de Nysschen told Reuters in interview, offering new details about the strategy. Cadillac will not directly replace the current XTS, CTS or ATS sedans when they end their life cycles in 2019, he said. Instead, Cadillac will use a single new car called the CT5 to appeal to consumers shopping for sedans priced between $35,000 and $45,000. New versions of the CT6 sedan will be offered to customers who want a larger car starting at $50,000. Sources had told Reuters last week that GM was considering ending production on six cars including the CT6 and XTS and models from Chevrolet and Buick. That report now appears only half-right as far as Cadillac is concerned. The new CT5 will be built at a factory near Lansing, Michigan, that currently builds the slow-selling Cadillac ATS and CTS models. A small luxury sedan to compete with the Audi A3 will be built in the same plant, de Nysschen said. Cadillac will offer more SUVs, starting with a compact model called XT4, followed by a larger SUV with three rows of seats due by 2019 to compete with vehicles such as Volvo's current XC90 model. Volvo, owned by China's Zhejiang Geely Holding Group, scored a public relations coup by announcing plans earlier this month to power all its vehicles with either hybrid or all-electric technology starting in 2019. The move challenges Tesla, which has eclipsed more established brands with tech savvy luxury buyers. Cadillac has plans "not dissimilar to what Volvo has announced," with more electrified vehicles launching in the second half of the next decade, de Nysschen said.