General Motors Co. has opened a pavilion in Beijing, China, that features a scale model of the U.S. presidential limousine. GM isn’t interested in selling the magic of presidential celebrity to affluent Chinese citizens, however. The president rides in a uniquely outfitted Cadillac, and GM is looking to sell China on the merits of the Cadillac brand over Audi, its primary competition for sales.
A 110-year heritage
General Motors is banking on Cadillac’s 110-year history of success – buoyed in no small part by its role as the brand of choice for presidential limousines – to sell the luxury brand among the Chinese. Currently, Cadillac’s sales are merely a 10th of what Volkswagen AG and other German luxury brands achieve in China’s premium automotive market. GM’s best-selling models in China are Chevrolet, Buick and Wuling.
By introducing new products, increasing local production and expanding sales outlets, Cadillac hopes to boost sales in China at least fivefold by 2020. That would match U.S. delivery totals. By cutting into Audi’s lead over Cadillac, General Motors would be able to maintain a comfortable global sales lead over Volkswagen. By mid-decade, GM would like Cadillac sales in China to equal that of the U.S.
“Chinese may or may not like America, but they definitely like the power that’s associated with America,” said Michael Dunne, author and automotive industry analyst. “They admire, respect and like power, and America is the world’s leading superpower, so owning an American car offers an opportunity to be part of that.”
The profit margin push
GM CEO Dan Akerson hopes that Cadillac’s increased exposure in China will help GM raise profit margins and guard against the impact of declining high-profit truck sales. Each year until 2016, GM plans to introduce a new Cadillac model in China, Akerson told press at the Beijing Auto Show.
Even a 73 percent increase in Chinese sales for Cadillac was not enough to keep the brand from losing ground to Audi in 2011. China’s luxury car leader, Audi sold 308,808 for the year, according to LMC Automotive. The total helped VW vault Toyota in global sales last year, placing it behind only General Motors.
A paragon of its kind
Kevin Chen, general manager of Cadillac in China, spoke of the significance of the Cadillac pavilion in Beijing.
“We want to create a whole story and tell customers and people here that Cadillac is different,” Chen said. “We own the asset; nobody can replicate Cadillac’s history.”
Part of the exhibit is a 1927 Webster’s dictionary, left open to the entry for Cadillac. Curiously, the dictionary definition reads: “Something that is the most outstanding or prestigious of its kind.”
Akerson told Chinese media at the pavilion unveiling that General Motors plans to make the new Cadillac XTS sedan in the country. Production is slated to begin in late 2012, and by the first half of 2013, the Cadillac ATS compact will also be assembled in China. A redesign of the CTS for Chinese production is also under considering, noted a source close to GM.
An expanded Cadillac dealership is also coming for China. Currently, there are 69 Cadillac dealerships in the country, and GM hopes to double that number over the next year.