Cadillac is looking for big gains in China. The luxury maker has seen big gains in the country in recent years, including the new ATS.
Cadillac is counting big on China to give it some much-needed momentum, and the booming Asian market could soon be delivering volume matching that of the U.S., senior Cadillac officials indicate.
General Motors’ flagship brand is launching some of the most significant changes in its 112-year history, and expanding its presence abroad will be critical, new Cadillac chief Johan de Nysschen told TheDetroitBureau.com. But to fully meet the expectations of picky Chinese buyers, Cadillac will also have to deliver more products that are less focused on the demands of the American market.
Only recently having launched production in Shanghai, China is already expected to see sales of about 70,000 vehicles for all of 2014, a 40% year-over-year increase. “And we could very well hit 100,000 next year,” said de Nysschen.
By comparison, U.S. sales are down about 5% this year, even though the overall luxury market has posted a double-digit gain.
And de Nysschen is warning that, for the short-term, Cadillac may actually continue losing volume at home. That’s because he wants to restructure the brand’s marketing strategy, moving away from depending on heavy incentives “in the trunk” to lure in buyers. He is aiming to put the pricing of Cadillac products on a par with key German rivals, such as Mercedes-Benz, BMW and Audi, even if that means losing some customers. In the long-run, however, he believes the strategy will enhance sales – as well as residual, or trade-in, values.
The Cadillac ATS makes its Chinese debut.
Cadillac is a relative late-comer to China and was, until recently, a niche player. That’s because it only began building its big XTS model there. American imports have been hit with heavy import tariffs that have hurt demand.
German players dominate the Chinese market, notably Audi, the luxury arm of Volkswagen AG. VW itself now is the Asian country’s sales leader, squeaking past GM last year and steadily gaining ground in recent months. Improving Cadillac’s position is critical if GM hopes to regain the sales crown, according to industry analysts.
The Detroit maker’s overall sales are up slightly more than the overall Chinese market so far this year, said Matt Tsien, who runs those operations out of Shanghai. Analysts expect China’s car sales to rise between 8% and 10% for all of 2014.
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The good news is that the overall Chinese luxury car market is growing fast and soon expected to become the world’s largest – pushing past the U.S. Already, it has become the largest national market for Audi and some other luxury auto brands.
“We believe the luxury market here in 2016 will be the largest luxury market in the world,” Tsien said.
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“Because Cadillac has been so U.S.-centric, it hasn’t been able to appeal to buyers in Europe and other markets, especially China,” said de Nysschen, who was until recently heading Nissan’s Infiniti luxury brand which several years ago moved its headquarters to Hong Kong.
The executive said Cadillac “absolutely has to” start expanding its line-up to broaden its appeal worldwide. He disclosed during a lengthy interview with TheDetroitBureau plans to add a new entry-luxury line, a flagship model aimed at the likes of the Mercedes S-Class, a super-premium model, and a variety of other coupes, convertibles, performance cars and crossover-utility vehicles.
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One of the key differences between the U.S. and Chinese market – especially in luxury segments – is that buyers there tend to prefer being chauffeured. Sitting in the back seat, they expect more legroom and many of the accoutrements found up front, including separate climate and infotainment controls.
That has led a growing number of manufacturers to launch long-wheelbase models for China, even for compact product lines, such as the BMW 3-Series. Some of those stretched lines are, in turn, set to be sold in the U.S. Volvo expects to become the first to export cars from its Chinese plant – the S60L – to the U.S. next year. So far, GM and Cadillac have not announced plans to bring Chinese-made vehicles to the States.