2017 Cadillac EscaladeEnlarge Photo
Ford Motor Company [NYSE: F] can't keep up with Lincoln Navigator demand, and the automaker already announced production increases for the hot-selling full-size SUV. Rival Cadillac likely won't have a new Escalade for a couple more years, but General Motors' luxury brand is putting some cash on the hood for some exclusive clientele.
In an effort to keep luxury buyers in the family, Cadillac will offer $10,000 off a new Escalade to current lessees of 2016 Escalade models. For owners of 2016 models, it's $7,500—still a substantial incentive. Bloomberg obtained a copy of the incentive memo from GM and reported on Monday that the automaker verified the sales tactic. A spokesperson called it an "exclusive private offer" to hold onto current Escalade drivers.
2018 Lincoln Navigator L in Black Label Destination trimEnlarge Photo
As Cadillac works to build its portfolio, the Escalade has been a money maker. According to an analyst cited in the report, the Escalade hauls in an estimated $1 billion in annual profit. GM can make around $20,000 per Escalade sold, thus allowing room to offer such generous incentives.
Lincoln's Navigator hasn't outsold the Escalade, but Cadillac clearly wants to fend off any challenge from the rival SUV. On average, Navigators spend just 10 days at the dealership before they're sold, and opulent Black Label models get into six-figure territory like high-end Escalades.
The Escalade isn't hurting. Sales are up 17 percent this year and the average transaction price continues to grow.
Ford's luxury division clearly sees an opportunity to grow still. The Navigator's transaction prices rose a whopping $25,600 year-over-year in March and deliveries have surged 63 percent year to date. In a February announcement, Ford said it was boosting Navigator production targets by 25 percent to meet demand.
May the best big-dollar SUV win.