Business Irish

Friday 30 September 2016

Cadillac accelerates its bid to capture Chinese market

Jake Spring

Published 29/03/2016 | 02:30

General Motors
General Motors

Cadillac, a favourite among America's older 'supper club set', is revving up sales to younger luxury buyers in China through smoother designs and localised production to keep prices accessible.

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The General Motors brand is softening some hard edges on its angular cars to appeal to Chinese buyers used to the smoother lines of luxury cars made by BMW, Audi and Mercedes-Benz that dominate high-end sales in the world's biggest car market. After a slow start in China, Cadillac is poised to overtake Japan's Lexus among the leading second-tier luxury brands, according to consultancy LMC Automotive.

The opening in January of its first dedicated factory in China should also help Cadillac make its cars more accessible to younger luxury buyers by avoiding a 25pc import tax.

Cadillac says the average age of a buyer of its cars in China is 34, little more than half the average age in the US.

"In China, young buyers already dominate the luxury market. Since Cadillac is a relative newcomer it was far easier to begin to cultivate the desired positioning for the brand from the get-go," Cadillac president Johan de Nysschen told Reuters.

Cadillac's China sales rose 17pc last year to nearly 80,000 cars, or a 4.1pc share of the luxury market, on the back of its ATS-L compact sedan and XTS large sedan.

This year, de Nysschen has set a 25pc growth target, to above 100,000 Cadillacs in China. The former BMW and Infiniti executive predicts China could overtake the United States as Cadillac's biggest market in five to ten years. Cadillac sold around 175,000 cars in the US last year.

While shopping for a car in Beijing, 26-year-old entrepreneur Ge Di said he preferred Cadillac over the more established German luxury brands.

"Mercedes, BMW, even Audi, skew more towards businessmen. The comfort level is a bit higher, but as a young person I care more about performance and design," he said.

China's luxury car market - seen rising 15pc this year even as slower economic growth saps overall demand - is breathing new life into brands seen as ageing or unfashionable in the United States.

Ford, for example, considered closing down its Lincoln brand, which with Cadillac dominated US luxury sales until the 1990s, but China has revived its fortunes. Buick, which GM had thought about discontinuing, saw record China sales last month. Among the relative newcomers to China's premium market, Cadillac is vying with Lincoln, Jaguar Land Rover, Nissan's Infiniti and Honda's Acura to unsettle the dominant German brands.

De Nysschen - whose efforts to revitalise Cadillac include moving its headquarters from Detroit to New York's trendy SoHo area - says the brand will produce a single model design for its cars rather than making different versions for the Chinese and US markets.

( Reuters)

Irish Independent

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