General Motors is preparing to make Cadillac the next big status symbol in China. According to GM CFO, Dan Ammann, the market for Cadillac in China is growing larger than GM can support by imports only. GM started manufacturing the Cadillac XTS luxury sedan in China with their joint venture partner Shanghai General Motors,last fall. Ammann expects that China will be the world’s largest market for luxury cars by 2020 (an estimated annual sales in China of 3 million luxury cars of all brands, out of a 30 million total in the world).
Cadillac is a newer GM introduction to China after its great success with its Buick brand which has enjoyed larger sales than in the United States. Buick’s success in China is said to have been a large factor in GM keeping the brand is it dumped others including Pontiac, Saturn, Saab, and Hummer in its 2009 restructuring. In September, GM and its Chinese joint ventures sold a record 277,645 cars in China which included 70,000 Buicks, versus 16,000 in China. September sales for Cadillac in China was 4,500. Cadillac expects to add a new model in China every year until 2016, and achieve a 10 percent share in China’s luxury car market by 2020 with 300,000 cars, about double of the number of Cadillacs sold in the US in 2012.
Sophia’s blog on the demand for Cadillacs in China is highly interesting. Cadillac is a seriously American brand that does good business but has generally been out-performed by foreign companies such as Mercedes-Benz, BMW and Audi. It is interesting that Cadillac now has the opportunity to have 10 percent share in China’s luxury car market. I have always found Cadillac’s intriguing because of their American Identity although it has underperformed in the US. Now it has a promising market developing in China.
Kit’s point regarding how Cadillac is a distinctly American styled car highlights the changing tastes and preferences of the Chinese consumer. For many years, Buick, which was the car that facilitated the GM-SAIC partnership, was a best-selling brand in China. The car had nostalgia value. Although viewed as a car for older consumers in America, in China, consumers remembered the last emperor and the aristocracy leading up to the communist era. As the Chinese demographic shifts away from consumers who feel this nostalgia, it is not surprising that Cadillac, a modern luxury car, would increasingly be gaining market share. The increasingly global Chinese consumer with modern taste, will be inclined to choose a globally recognized luxury vehicle over a brand recognized for its appeal to the elderly.
The shifting consumer preference in China will be interesting to follow. As more and more consumers in China begin to desire private transportation, demand will increase and Chinese auto manufacturers will need to pay careful attention to the progress in the industry with regards to product and technology. The domestic Chinese brand names in the industry have had little success to date, but as more and more foreign brands such as Cadillac move into the domestic industry, there will be increasing opportunity for joint ventures and for the home companies to learn from the success of the foreign brands.
When I was in Qingdao in 2010, I traveled an hour out into the country to an enormous exposition center, where in a large parking lot, Cadillac brought in foreign stunt drivers for a show. New Cadillac buyers were invited to ride shotgun for some stunts. There were testimonials from new Cadillac buyers to the performance of their vehicles, exhibits featuring the history of the brand, memorabilia, and a few concept cars. The brand is certainly being pushed hard.