GM's Cadillac brand saw sales of around 30,000 units in China in 2012, according to IHS Automotive data. By 2015, the automaker is aiming for Cadillac sales in China to hit 100,000 units and to capture 10% of the luxury market in the country by 2020. Under IHS Automotive definitions, the brand is a premium player in China, competing with 21 other brands. In order to achieve its targets, GM has received permission from the National Development and Reform Commission (NDRC) to begin construction of a new plant in Shanghai's Jinqiao suburb for Cadillac models. The plant, which is owned by the Shanghai GM (SGM) joint-venture, will have a total investment of at least 8 billion yuan (USD1.3 billion), according to spokesperson Dayna Hart in an email to IHS Automotive. Construction will begin in June 2013 and will be completed in 2015 when production will begin. The plant will have a total annual capacity to produce 150,000 units.
China's luxury buyer
GM is delving deep into the psyche of the Chinese car-buyer, aiming to attract the young, affluent, luxury car-buyers, who often favour sport utility vehicles (SUVs) and trendy sedans. Speaking at the Shanghai Motor Show, GM's president for China stated that the luxury segment is a major focus for the automaker, along with the fast-growing SUV segment in China.
"Luxury buyers [in China] share many of the same preferences with their global counterparts, but there are key differences," said Bob Socia, president of GM China. "For example, the average luxury buyer in China is just 35 to 40 years old – that's about 10 years younger than buyers in the US." There is also an increase in female players in the Chinese market. "We also know that women are playing an increasingly important role. They're buying and influencing car purchases more than ever before," he said.
Cadillac products for China
Cadillac currently only produces the XTS sedan in China, which replaced the STS. The brand has also added the "refreshed" SRX SUV to its lineup of imported Cadillac models available to Chinese buyers. In the near term, Cadillac will see a host of models introduced to the country, both with increased localisation and more imports. "We are bringing Cadillac's global portfolio to China," Socia said, adding that the brand will introduce at least one new model per year through to 2016. "With more new models, local manufacturing, plus a growing dealer network, we expect to increase Cadillac sales from 30,000 units last year to 100,000 units in 2015. Our longer-term goal is to take Cadillac's share of the luxury car market to 10% by 2020," he said.
Outlook and implications
Cadillac has high hopes of making its luxury brand a symbol of young affluence in China. However, the brand is less well-known than German competitors Audi, BMW, and Mercedes-Benz, which have had volume production in China, with a range of models locally produced and imported.
In 2012, for example, China's premium passenger vehicle market saw total sales of 1,312,721 units. Of this, Cadillac held a 2.29% stake in the segment. Audi saw sales of 412,862 units, giving it a 31.45% stake; BMW sold 313,856 units, giving it a 23.9% stake; and Mercedes-Benz saw sales of 230,960 units with a 17.5% stake in the segment, according to our data. By 2020, our data forecast that the premium segment to grow to 2.7 million units, with Cadillac having a 3% stake.
GM is aiming to increase penetration in the country by ramping up dealerships, with special emphasis on the smaller-tier cities in China.
