Just five years ago, in 2007, Cadillac
had no sales in China. Last year, the brand sold some 30,000 vehicles in the Chinese market, despite punishing tariffs that the government places on imported cars.
That unit sales number represents a growth of over 70-percent from 2010, and GM’s global marketing officer, Joel Ewanick, only sees Chinese demand for Cadillac products increasing. The obvious solution to boost sales, then, is to begin building Cadillacs for the Chinese market in China, which circumvents the issue of tariffs.The Detroit News
reports that Cadillac will begin Chinese production of the full-size XTS sedan
, the upcoming ATS compact sedan
and the mid-size CTS sedan by the second quarter of next year. These models will join the Cadillac SLS, a long-wheelbase sedan already built in China by Shanghai General Motors.
Cadillac will continue to sell its Escalade and SRX models
in the Chinese market as well, but both will continue to be exported from North American manufacturing plants. To further brand growth in market, Cadillac will double its number of Chinese dealers in the next two years.
Based on extensive research and studies, GM believes that China will account for more than half of global luxury goods and services purchased by 2020. The balancing act for the automaker, then, becomes ramping up Cadillac sales without impacting sales of Buick, which has a long history of success in the Chinese market.
In 2011, Buick
sold some 645,537 vehicles in China, a growth of over 17-percent from the previous year. That’s over 21 times Cadillac’s sales volume, so its clear that GM’s luxury brand has work to do to increase its market share.
GM believes that the United States and China are the anchors for its global Cadillac brand strategy. That seems to be supported by Chines sales that jumped from 0 to 9,000 to 17,000 to 30,000 in successive years, but it doesn’t factor in that the Chinese market seems to be showing signs of cooling.
Strong luxury automobile sales in China are more or less dependent upon strong global demand for Chinese-manufactured goods. If global demand for Chinese goods is shrinking, as part of a struggling global economy, no one seems to be asking the obvious question: what happens when the Chinese stop buying luxury cars in record numbers?