Cadillac Book Is a Concierge Service That Will Disrupt the Rental Car, Dealer Industries
GM's luxury unit is poised to define mobility from a manufacturer standpoint—they may even disrupt themselves.
If you want to raise money, lose money, buy a company, sell a company, or hide the fact that you don't have a viable business plan in the transportation sector, add the word mobility. Mobility is the dumbest word in Silicon Valley, Detroit, and anywhere cars are built or software is written. What is mobility? While everyone hemorrhages cash trying to figure it out, one old-school automaker has unexpectedly put a stake in the ground which shows genuine courage: Cadillac.
The product is called Cadillac Book. It’s a $1,500-per-month subscription service that gives users access to almost any Cadillac—including halo models like the excellent CTS-V—via the Book app. Throw in white-glove delivery service, insurance, registration, taxes, maintenance, unlimited mileage, no long-term commitment, and up to eighteen vehicle swaps per year, and you have what appears to be an overpriced, long-term car rental.
But it’s much more than that. To understand why Book is so brave and potentially revolutionary, we must define what mobility is, and will be.
What is Mobility?
Mobility isn’t any one transportation solution, it’s a continuum. From walking, biking, riding, driving, pooling, hailing, sharing and renting to subways, trains and planes, we're already highly mobile, but we often experience gaps in our access to these verticals, inefficiencies within them, and the friction of switching between them. This is where Silicon Valley has owned the personal transportation sector. Remember when you couldn’t get a cab in the rain? Uber solved that. What’s the most efficient combination of walking, buses, and trains to get from A to B? Behold, Google Maps.
Because mobility is composed of so many fractured elements, from cars and bikes we own to trains and planes we never will, there are few economies of scale for users requiring more than one mode to get from A to B on a daily basis. You can buy a discounted, unlimited monthly NYC Metrocard, but if you live outside the city and drive to a train station you don’t get a discount for bearing the cost of a car, gas and insurance.
Before Uber and Chinese competitor Didi, everyone in mobility was highly specialized, at least to the end user. Cars? Ford made them; dealers sold them; taxi companies charged for them; Hertz rented them. Trains? Bombardier made them and transit agencies operated them. Planes? Boeing or Airbus, then Jetblue or Delta, probably booked through Expedia or Orbitz.
When Uber talks about mobility, they’re talking not only about replacing taxis with ride hailing, but public transportation itself. If they weren’t, they wouldn’t be lobbying cities to reduce the amount of parking, or to replace bus lines they claim are inefficient. Uber’s mobility plan isn’t merely to annihilate and re-create taxis and pooling, but to move into neighboring mobility verticals as well.
The dream is Mobility-as-a-Service (MaaS), a single point of contact, payment and access for multiple modes of transportation like the MultiPass from The Fifth Element. The dream is to turn mobility into a business like health insurance.
MaaS is the logical evolution of mobility. People don’t need (or necessarily want) new ways to get from A to B. Until self-driving and -flying cars arrive—and even then—the only metrics that matter are access and cost-per-mile. Combine verticals, simplify access, reduce friction, and cut pricing, and you have where Uber plans to go, and traditional automakers need to.
MaaS is Uber’s dream and everyone else’s nightmare. Uber’s plan is everyone else’s backup plan, which is why “mobility” is simultaneously everywhere and nowhere. It’s why self-driving cars, the clearest subset of technologies spanning the mobility continuum, get so much attention. It’s why car manufacturers are reluctantly and desperately investing in any and every vertical on the continuum, hoping to glue them together while Uber and Didi figure it out, or go broke trying.
Cadillac parent General Motors is as guilty as anyone of taking a shotgun approach to MaaS. GM has acquired both Cruise Automation (self-driving cars) and Sidecar (ridesharing/delivery), launched Maven (a car sharing app/service), and invested $500M in Uber competitor Lyft (ride hailing/pooling). GM is offering discounted short-term leases to Lyft drivers and giving them first dibs on the new Chevy Bolt EV, while Maven partnered with Uber to rent them Chevys.
Confused? I’m sure GM CEO Mary Barra is, too. I was confused researching that paragraph, which means the average consumer is probably clueless. Daimler’s mobility strategy is equally messy. Ditto Ford, BMW and VW. That’s why you don’t see nice, clean charts explaining the state of the mobility sector. Doing everything means doing no one thing well. Focus matters.
And then you have Cadillac Book.
Cadillac’s Trojan Horse
What are the minimum requirements for a MaaS provider? You need cars, and you need an app that is the entry point for two or more mobility verticals. If you don’t have a direct relationship with the end user, if you don’t have their credit card, if you don’t control pricing, then you’re at the mercy of someone else who does. Premium MaaS can charge more for a better product or service. Budget Maas must save the customer money over alternatives.
Cadillac Book meets all those requirements, starting with the ownership/leasing and sharing verticals.
For the right customer, Book’s $1,500 monthly fee makes sense. A 36-month, zero-money-down lease of Cadillac’s fantastic CTS-V sedan runs about $1000. If your insurance is $4,000 a year, your monthly expenses will run $1,333, not including maintenance. Now add, at no additional charge, the option of swapping out to an Escalade SUV or XT5 crossover for a weekend, or for the entire winter. How else could you do that? Renting a Platinum edition Escalade for the weekend even once will cost you at least $350, not including the hassle of pickup and return. Lease or buy one, and your monthly cost for two such vehicles is well over $2,000, not including parking for the second one.
What about Turo, my favorite car-sharing service? CTS-Vs run $2,100 to $2,700 per month, not including their premium insurance.
If you need two different luxury vehicles in one year, Book is a bargain.
If $1,500 a month works for Book, it’s easy to picture Ford, Chevy, and the Japanese at less than half that, Porsche coming in higher, and the Germans offering tiered pricing.
“Have an accident?” said Thornton Hughes, Cadillac’s Director of Strategy & Advanced Analytics, “we’ll bring you another one.”
Try that with Hertz or Avis, or your local car dealer. Even a luxury car dealer. Once Cadillac expands Book beyond its Manhattan test, premium MaaS becomes a reality. Why? Because your subscription is portable to other cities. Vacation? Work? It doesn't matter. You and your employer both save, and rental, in a sense, becomes Cadillac's third vertical. Goodbye, Hertz and Avis; hello, curbside pickup and dropoff. If Book works, car rental companies have a big, big problem.
But now, the real Trojan Horse.
What’s the biggest problem in the car industry? Manufacturers and end users are separated by Stone Age dealer networks and the franchise agreements that protect them. Nearly 75 percent of consumers would prefer to buy online. Dealer associations have waged war to stop Tesla’s direct-sales model, and those dealer agreements hinder manufacturers efforts to duplicate Tesla’s wireless over-the-air (OTA) updates. OTA updates are at the core of Tesla’s massive lead in deploying and improving their Autopilot technology.
Remove dealers as a point of entry to mobility, and all these problems are solved. Behold, Cadillac Book.
I asked Hughes whether this was Cadillac’s plan, and where Book’s cars would come from.
“For the [New York] pilot, they will come from the factory. We want to scale fast. Using the dealer network would be a great way to do that.”
I bet it would, but pulling cars from dealer stock still removes the dealer from the point of sale, and as an entry point to mobility. If Book succeeds, dealers become parking lots and service depots. Dealers that adapt may thrive. The others will become wards of GM. Either way, consumers win.
When pressed, Hughes deflected my Trojan Horse theory.
“We’re trying to attract people to the brand who would not otherwise have considered it. We’re trying to take the pain out of ownership and leasing. No commitment. This could end up being totally synergistic with dealers.”
I’m sure that’s true, but if all Cadillac Book does is attract new buyers, it will have fallen far short of what it might be. I’ve given GM a hard time for too many reasons to list here, but Book is the first potentially revolutionary mobility play to come from a traditional manufacturer. Combine Book with the self-driving tech to come out of GM’s Cruise acquisition, and Mary Barra’s plan to “disrupt ourselves” will come true.
Or maybe GM just wants to sell cars the old-fashioned way. I hope not.
Alex Roy is Editor-at-Large for The Drive, author of The Driver, and set the 2007 Transcontinental “Cannonball Run” Record in 31 hours & 4 minutes. You can follow him on Facebook, Twitter and Instagram.
- RELATEDThe 2017 Cadillac CT6 Platinum AWD Sets a New Benchmark for American LuxuryWith 34 speakers, 20-way adjustable seats, 12-mode massagers, and 404 horses, you won't mind the $87,000 price tag.READ NOW
- RELATEDThe 2017 Cadillac CTS-V Is the United States’s Best Sport SedanA solid argument that America is pretty great already.READ NOW
- RELATEDCadillac Sales Decline in the US, Continue to Surge in ChinaAfter Cadillac's billion-dollar makeover, it finally discovers a market in mainland China.READ NOW
- RELATEDCadillac! Hey, Cadillac! Get Off Your Ass!Seriously, guys. Get it together.READ NOW
- RELATEDCruise Automation Is Testing a Ride-Hailing App for Self-Driving CarsCruise's second video shows the self-driving car company's technology—including the app being tested by employees—could be close to public trials.READ NOW