Cadillac will target wealthy consumers in smaller Chinese cities to boost sales

Article by Anita Panait, on April 24, 2013

General Motors is planning for sales of its luxury Cadillac brand in China to more than triple by 2015 by targeting wealthy consumers in smaller Chinese cities. Bob Socia, GM’s China chief, remarked that GM will introduce Cadillac’s global portfolio to China and add one domestically built model a year through 2016.

GM, a member of the Detroit 3, plans to increase the number of Cadillac dealerships in China to 200 this year, from just around 70 retailers in 2011. Kevin Chen, general director of the Cadillac division at Shanghai GM, told Bloomberg News that at the moment, the tier-one cities’ market is large but is getting saturated. He noted that there is high potential for growth at tier-two and tier-three cities’ markets.

GM chief executive Dan Akerson wants Cadillac, its highly prized luxury brand, to rival BMW and Volkswagen Group’s Audi. To achieve that goal, Cadillac first needs to close the sales gap with the German luxury brands in China, where luxury vehicles sales will more than double to three million by 2020 from 2012 as forecasted by McKinsey & Co. Cadillac only sold 30,010 vehicles in China in 2012, heavily losing to Audi (405,838 vehicles), BMW (327,341 vehicles) and Mercedes-Benz (196,211 vehicles).

To better entice Chinese consumers to shift to Cadillac, GM signed up Hollywood actor Brad Pitt to help promote the brand. According to Socia, GM is aiming to sell 100,000 Cadillac units annually in China in 2015, accounting for 10 percent of the luxury market.

Socia disclosed on April 20 that most of the Cadillacs sold in China would be produced in the country to reduce costs and protect earnings from  currency fluctuation. Carmakers pay a 25 percent tariff on imported vehicles, making them less competitive against domestically produced vehicles.

Topics: cadillac, china

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