At a time when you can buy a car that can drive and/or park for you, order a cab from your phone in a matter of minutes, and charge a car in your home using solar panels, the way we lease and rent automobiles is surprisingly unchanged and difficult. General Motors’ long-time luxury brand Cadillac has a plan to revolutionize this.
The new program, called “BOOK by Cadillac”, will allow users to select any car within Cadillac’s range, on any given day. That’s right, you can drive a full-size Escalade SUV one day and a 2-door ATS-V Sport Coupe the next. Unsurprisingly, given the nature of today’s technology, you can order the cars via your mobile phone. Sound good? It gets better. The vehicles require no financing, no down payment, and have no mileage limits. The luxury vehicles are fully insured and fully maintained, and when you order your desired Cadillac it will arrive via concierge delivery. While it costs a flat $1,500 a month, users can opt out at any time. There is no long-term commitment.
$1,500 a month is certainly not cheap, and potential users will have to take this into account. The Escalade leases at $849 per month for 39 months with $4,699 down payment. Cadillac’s highest performance car, the CTS-V Sedan leases at $829 per month for 36 months with $4,919 due at signing. The Escalade comes out to be $969 per month over the lease period and the CTS-V comes out to be $966 per month, both of which are cheaper than a membership with BOOK. So where’s the appeal? Well, the inclusion of the CTS-V in this program is crucial to BOOK’s success and I’ll explain why.
While these figures make BOOK seem like a bad deal, one must understand that they are appealing to a very specific market. BOOK will debut in New York City later this year, and will be available soon after in other major markets around the country. The obvious user of this program, one would presume, is a wealthier, older businessperson that has financial stability and an interest in the brand. However, in the long-term, I think Cadillac is trying to solve a different problem. Cadillac wants to draw in young people, particularly millennials, to drive more, and given their actions over the past several years, it is reasonable to suspect this.
When people think of Cadillac, they usually think of older or wealthier folks driving rather boring and subtle cars. In 2004, Cadillac decided they wanted to alter their image with the introduction of the first-generation CTS-V (pictured above). For those unaware, the CTS has been the long-time benchmark sedan for Cadillac, and has always appealed to their standard two customer categories (wealthier and older). In 2004, however, Cadillac gave their traditional car 180 more horsepower, added 2 extra cylinders, and slapped a V on the back. This was a significant new addition to their lineup; Cadillac was now trying to convince young people to start buying their cars. The result? Not great. The 2004 CTS-V never sold very well, seen as a clunky and awkward. In 2016, they unveiled the new CTS-V (pictured below), with a much sleeker design and improved luxury. In short, the new car is appealing to younger drivers who want a sports car, and it still looks like a Cadillac. Come 2017, they have expanded the V-Series performance cars to 3 models, the aforementioned CTS-V, the ATS-V, and the ATS-V Coupe.
In 2013, the American Public Transportation Association released a report that found people aged 16-34 drove 23% less in 2009 than in 2001, the sharpest reduction for any age group. While many have tried to solve this issue, young people seem to be multimodal, meaning they choose the best form of transportation based on where they are going. Leasing a car is a long-term commitment, and doesn’t take into effect insurance and maintenance costs that people will encounter over such a long period. This deters young people from wanting to be tied down by a lease.
Cadillac’s new program will try to provide a solution to the multimodal mindset that young people have, by allowing users to select a different car each day if they want to. If it’s snowing, you can select an all-wheel-drive SUV. If you want to have a road trip with friends on a windy road, you can select a sports car. Whatever your daily need is, BOOK will have an answer to it. Additionally, while car leases are difficult to get out of, BOOK can be cancelled at any time. Should someone run into financial trouble, such as a divorce or job loss, they can easily cancel the program without hesitation. This is significantly more advantageous than a traditional car lease.
Because Cadillac has expanded their sports car lineup, and because it is no surprise that younger people are driving less, it becomes clear that in the long-term, Cadillac’s BOOK program will hope to provide an answer to this program. As of right now, we have no idea if BOOK will work out. It is new, and so far, no other car brand has any program similar. The program will raise a lot of auto-manufacturers’ eyebrows, and any car enthusiast will be waiting to see how it does. In the short-term, I see BOOK being successful, appealing to businesspeople within the small target market. The long-term is up in the air, and we will all be waiting to see if BOOK can get younger people to start driving.