Cadillac’s XLR: a Good Car with a Flawed Business Model

Aside from the standalone Escalade, for the last few decades, Cadillac might best be characterized by its pivot to targeting German luxury. Those efforts ultimately bore fruit in several generations of very capable sedans, but its halo effort with the hardtop convertible XLR suffered a much more abbreviated history.

When it comes to contextualizing Cadillac’s 2004-09 XLR roadster, comparing it with its Allanté predecessor is almost mandatory. But let’s cast new light on that discussion: All mass-produced cars need to generate a return on investment, no matter how limited said vehicle’s production is to its parent company. (At least that used to be true.) And, because an aspirational look and feel in a luxury product is crucial, creating a luxury vehicle is anything but cheap. Cost is where things got sideways with the Allanté, but, at least in part, it was Cadillac’s pivot in the other direction that did in the XLR.

The XLR had its path to success laid out, at least in theory: Mercedes-Benz’s SL roadster has walked this financial tightrope quite well for decades. The flagship Merc shares parts with cars of cheaper origins, but then again many Americans still consider Mercedes C-class-sourced switchgear more prestigious than the bits lifted from something like a Buick Ranier. The Allanté’s radical departure from traditional GM products proved financially unviable, so with that and the SL’s success in mind, GM elected to build the XLR at its Bowling Green Assembly Plant alongside the Chevrolet Corvette.

Perhaps “alongside” the Vette is a misleading term, as the XLR wasn’t made on an assembly line. GM instead created the requisite floor space at Bowling Green to park a “kit car” in a dedicated work station, then engineered a way to route all componentry to that area. This treatment is generally reserved for the likes of Bugatti, which theoretically makes the XLR’s origin story more bespoke than the Italian Allanté.

Recall that Italian coachbuilder Pininfarina utilized a traditional assembly line to partially assemble the Allanté before its final assembly in Hamtramck, MI. Instead of creating all this profit-sucking overhead for a low volume vehicle, the XLR did a great job intelligently leveraging GM resources. Perhaps the General learned from its mistakes, and the XLR will fare better than the star-crossed Allanté?

The XLR coulda been a contender, stretching Cadillac’s Art and Science garb across the C6 Corvette’s long wheelbase and wide doors. It was hot on the heels of the segment-busting success of the original Escalade, a fresh and appealing vehicle that brought some fresh energy to the brand. Lightning could strike twice for Cadillac, and this time it’ll come from Caddies assembled alongside Chevrolet vehicles.

The XLR had the performance pedigree of the Corvette’s well regarded Y-platform, but with a unique persona and rowdy sound thanks to its 32-valve Northstar V-8 with 320 horsepower routed to a 5-speed automatic transaxle at the rear. It cherry picked the best of the best from General Motors, wrapping it in unique coachwork first teased by the Cadillac Evoq concept.

The only telltale sign of Corvette DNA was the XLR’s central exit exhaust. Avoid fixating on those pipes and its power retractable hardtop comes into focus. The 2001 Mercedes SL (R230) set the precedent, making this a mandatory feature for luxury convertibles seeking to dethrone the king. Cadillac was ready, or so they thought.

Unfortunately the public was not terribly impressed with what hit the showrooms. Sales for the first two years of XLR production were 3,665 and 3,730 units, respectively. That number roughly halved in 2006, and dwindled to a mere 787 units in 2009, the XLR’s final year in production. The story should end there, but it doesn’t: Cadillac dealers sold the last 13 units of aged-out XLR inventory in 2011.

The figures look worse when considering the Mercedes SL-class never went below 4,000 units annually in the United States during the same production run. (Global SL sales hovered near 10,000 units annually.) People tend to vote with their wallets, and Mercedes-Benz won this endurance race.

Perhaps noted Italian fashion house Bulgari should have fashioned more than just the speedometer bezel? But GM already tried this with that other Italian design firm for its other roadster roughly two decades prior.

When Motorweek got their hands on the Cadillac XLR, they noted the size and weight advantages of its Corvette-inspired chassis over its competition. The folding top mechanism was sourced from the same vendor that made the Mercedes SL transform from coupe to convertible so effortlessly, and the car was priced $10,000 less. Performance times were class competitive, but Motorweek suggested the Northstar’s “sounds and sensations” lacked the polish of its competition.

Handling was stunning, with a ride superior to any Corvette, but Motorweek didn’t compare the XLR to the Mercedes in this metric. That’s unfortunate, as Cadillac wasn’t necessarily looking to steal buyers from the Bow Tie brand’s sports car. Motorweek also made a troubling assertion at the end, saying this “rookie roadster may not yet be the class leader, but right out of the gate it proved to us that it could easily trot with the front runners.”

Wordsmithing is fun, and we automotive journalists are darn good at casting doubt on a vehicle’s prospects without actually saying so.

We haven’t yet mentioned the V-series XLR, which sported a 443 horsepower supercharged Northstar, an extra forward gear, and bigger wheels/tires/brakes. Performance was similar (possibly superior in some metrics) to that of an AMG-fettled SL55, but overall XLR sales volume ensured this upgrade couldn’t alter the trajectory of this tragic hero.

The XLR had Germanic intentions on a Bowling Green budget, but a “rookie roadster” wasn’t going to have much time to prove itself. Its failure isn’t from a single cause, but value-based pricing in a market that covets snob-appeal is a major concern, and despite its efforts to learn from the Allanté, Cadillac didn’t quite find the right recipe for halo car success.

Perhaps the new Cadillac Celestiq being aimed at the ultra-wealthy is the right move, because the legacy of the XLR and Allanté suggest a business model that counts on competitive cost and ambitious sales numbers is invalid. Put another way, “Fool me twice, shame on me.”