Cadillac confirms it will build the XTS in China.
Cadillac isn’t content largely sitting on the sidelines in what is rapidly becoming the world’s largest luxury car market. But until recently, it was a relatively insignificant player in China, the Asian nation’s high-line consumers focusing primarily on European products from the likes of BMW, Mercedes-Benz and Bentley.
Already struggling to regain its role as a leader in the U.S., Caddy has some aggressive plans to gain ground in China – and it certainly doesn’t hurt that its parent, General Motors, is the booming Asian market’s number one manufacturer.
Among the key steps Cadillac has planned, it will soon begin producing several key products in China including the all-new XTS flagship, a move that will sidestep tariffs China recently raised on U.S.-made luxury vehicles. But the maker also plans to ramp up the pace of new model introductions and some of those products could very well be designed specifically with China in mind – much as sibling GM brand Buick has been heavily influenced by its large presence in China.
“Any successful auto company must have a successful luxury brand that competes around the world,” said GM Chief Executive Dan Akerson during the Cadillac news conference at the Beijing Motor Show, this week. And having that brand succeed in China is equally essential Akerson made clear during a subsequent meeting with reporters.
There have been some problems in the Chinese automotive market in recent months. Overall sales slipped slightly during a first quarter after years of double-digit growth – though most experts forecast demand will rise between 6 and 10% for the year overall. Meanwhile, increased competition has forced some makers to cut prices on high-line models – as much as 25% on select Mercedes-Benz S-Class offerings.
Nonetheless, luxury makers are racing to increase their presence. And for apparently good reason. Bentley is just one of several brands for whom China is now their number one global market.
GM sold more cars in China than the U.S., last year, but Caddy has been overshadowed by Buick, Chevrolet and other brands in the maker’s Chinese portfolio. Cadillac generated just 28,000 sales in China in 2011, a meager 3% of the luxury market – and almost exactly one-quarter of its 152,389 sales in the States.
Nonetheless, “China is the second-largest market for Cadillac, and of course is one of the largest and strongest markets in the world for luxury cars, so it is a core part of our vision as a brand,” said Don Butler, Cadillac vice president of marketing. “
For his part, analyst Joe Phillippi, of AutoTrends Consulting, warned it won’t be easy. “Hitting those numbers will be tough,” he cautioned during a discussion at the GM auto show stand. But Phillippi added that “It’s a huge market,” and growth in overall Chinese luxury demand alone should buoy Cadillac sales — if not its market share.
Expanding XTS production to China should favorably impact pricing and better entice local buyers, GM is betting, the maker predicting at least a doubling of the brand’s near-term volume. Also helping will be a plant to add at least five to six more models to the Chinese portfolio.
That will include the upcoming ELR, a high-end version of the Chevrolet Volt plug-in hybrid, as well as Caddy’s new ATS entry-luxury sedan.
But there could also be products specifically targeting China, and it was no surprise to “informed sources” to see the Ciel concept vehicle on display during the annual auto show – officially known as Auto China 2012. The show car, first unveiled during the Pebble Beach Concours d’Elegance last summer was at least partially crafted with potential Chinese consumers in mind, GM design chief Ed Welburn has told TheDetroitBureau.com. And the maker is apparently giving very serious consideration to a production spin-off.
To get the message across that Caddy isn’t a second-tier brand, GM set up a special pavilion during the auto show to grab potential customers who might otherwise consider a BMW, Audi or even a Lexus. Notably on display was a 1927 dictionary open to the entry for Cadillac, which was defined as, “Something that is the most outstanding or prestigious of its kind.”
Ironically, that term is still in common use, even if fewer motorists now equate the term with the Cadillac brand itself. But GM is having to reconnect them as it pushes to position Caddy as one of the luxury leaders in China.