Joe Egle is a classic car collector in Kansas City, and he is very upset with General Motors’ Cadillac Division. His 1976 Cadillac Seville started rusting about a year after purchase. A $15,000 automobile, advertised as “one of the finest production cars built anywhere in the world” and possessed of “zincrometal to help fight rust in key places,” shouldn’t do that, he says.
After going through the local dealer, the GM regional representative, and the president and chairman of General Motors (the latter two did not return his calls), Egle filed suit in July against GM for $100,000 in punitive damages and $10,000 in actual damages.
Two months earlier the large response he’d received from a tiny ad placed in the Kansas City Star persuaded him that his rusty Cadillac problem was not unique. The ad read: “Attention Cadillac Owners. Is your “Standard of the World”aging gracefully? As you discover unreasonable rust spreading under and around the vinyl roof on your late model Cadillac you may wish to join other owners with similar injury in seeking a just remedy. Write: Rusty Cadillacs, Box 904, Kansas City, Mo., 64112.”
GM, of course, denies that rust is a problem of their making, particularly for Cadillacs. But other problems with Cadillacs have been coming to our attention which raise questions about whether the price of the vehicle reflects more snob appeal than quality control.
Take Hershel L. Alpert, for example. As president of a chain of furniture warehouse showrooms, he likes to travel in style. His 1977 Cadillac sedan was delivered Oct. 21, 1976, and he said, “From that day forward my life has been a living hell as it relates to the car.” In a letter to Ed Kennard, president of Cadillac Division of GM, the Seekonk, Mass., businessman lists 24 items that had to be replaced. These included the cruise control (“the car accelerated without warning”), right front seat, windshield, radio, power antenna, clock, carburetor and transmission (“had to be completely rebuilt at 8,000 miles”).
From Miami Beach, Fla. , comes a complaint about a 15-hour-old 1978 Cadillac DeVille with 20 miles on it. The owner turned on the ignition and slightly applied his foot to the accelerator, says his lawyer. The vehicle shot forward and damaged eight parked cars until a tree stopped it.
Philadelphia dentist Stanford Dresnin found his 1978 Cadillac Seville had leaks, peeling paint, a door latch on the passenger side that was faulty and numerous other defects that he found as incredulous as the dealer and GM were unresponsive.
Dr. Orland Davies Jr. of Fresno, Calif., was driving one night in his two-year-old Cadillac Seville when he found that his “headlights were all pointing into the ground.” The dealer told him that this often happens every couple of years due to the breakage of the plastic washers attached to the adjustment screws for the headlights.
For years, close observers of the luxury car market have noted the higher percentage profit margins from the sale of those vehicles than from less expensive cars. The difference between a Cadillac and a Chevrolet Impala is much greater in price than in quality.
Production costs for Cadillacs, apart from extras, are less than a $1,000 more than for an Impala. But the price is about double to the buyer. People are paying for plusher synthetic upholstery and other “appointments” and for the brand name. The basic engineering between the two vehicle models is not all that different.
GM’s Cadillac Division is making record returns on investment compared to other GM car divisions. One reason GM so strongly resists any move by the government to require profit reporting by car division is that Cadillac profits would invite too many questions about shortchanged customers.
Marketing Prof. Peter C. Riesz of the University of Iowa has investigated the relationship between price and quality for more than 10,000 brands. He’s found that often the brand with the highest price is the lowest in quality for such items as soap and convenience foods. Other products showing negative correlation between price and quality are children’s clothing and frozen pizzas.
General Motors has just reported record profits for October. Maybe the auto giant can spare a few dollars and tell the public why the Cadillac is turning into an “elite lemon,” while its price continues to zoom upward.