Cadillac Looks East As Rivals Cash In On China Demand

Jim Vurpillat, Marketing Director, Says "Chinese Demand Is Off The Charts" For New SUVs, Crossovers The runaway success of American automakers like Ford and Buick in China, the world's largest auto market, is causing Cadillac to refocus its strategy for building Chinese market share and better competing with rivals like Audi and Mercedes-Benz. Cadillac, the high end marque of GM -- which also owns Buick -- is no stranger to China, with made-in-China Cadillacs appearing a few years after the formation of the Shanghai GM joint venture in 1997. As we've seen before, however, the made-in-China tag can, in the luxury segment, be something of a kiss of death, so Cadillac has focused its China efforts on aggressive marketing, active promotion of its 100+ year brand pedigree, celebrity endorsements, localization of design (previously on Jing Daily), and a unique strategy of importing their highest-end models from America while manufacturing other models in-country. It is a strategy that has made Cadillac a desirable brand in China, and which has helped Shanghai GM grow so quickly that the company's president of international operations has recently remarked that he expects GM's China sales to surpass those in the US within only a few years. However, GM's success doesn't directly translate to Cadillac dominating the high end market. Compared to the market share enjoyed by European rivals Audi, BMW and Mercedes-Benz in China, Cadillac still faces something of an uphill struggle. As an article in the Detroit Free Press points out today, however, the company's marketing director sees only opportunity in China, particularly as high-end auto buyers start to look beyond the usual Audi A8s and Mercedes C-class sedans driven by their friends and business acquaintances. This week, Cadillac announced its plans for increased sales in the next year, both in established markets like western Europe and emerging markets like China and Russia. As the article notes, though Europe is inarguably a critical market, China and Russia still have untapped potential that makes them particularly attractive to Cadillac execs: [Unlike the western European marketplace, neither China nor Russia] cares much about diesels, and both appreciate Cadillac's crossovers and SUVs. GM has handled Cadillac sales itself since launching the brand in China and Russia in 2004 and 2006, respectively. "Chinese demand is off the charts" for the new SRX crossover, Vurpillat said. "It'll be 40% to 50% of our sales there this year" and dealers are howling for more, he said. Chinese sales could almost double to 12,000 to 13,000 this year thanks to the SRX, he said. China eclipsed Canada to become Cadillac's largest non-U.S. market last year, and Vurpillat said it shows no sign of slowing down. Cadillac has 40 Chinese dealerships and plans to add about 10, with more to come as the brand moves beyond megacities like Shanghai and Beijing. Cadillac seems to be on the right track with its gradual growth strategy in China. Rather than using the "media onslaught" method of building brand awareness, Cadillac will position the brand as the "non-Mercedes," a pedigreed, sophisticated brand but one that doesn't have nor necessarily want the ubiquity of its European rivals in China. By expanding into second-tier cities where brand loyalties remain very much in flux, Cadillac can also leverage the "Cadillac Cafe" showrooms they have employed in top-tier cities in recent years to appeal to the desire of many wealthy second-tier buyers to "move up" in terms of sophistication. Though Cadillac sales will likely remain modest in comparison to Audi and BMW for years to come, it appears the company is not only aware of their somewhat niche status, they're actively promoting it.

Cadillac Looks East As Rivals Cash In On China Demand

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Published March 01, 2010

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Cadillac Looks East As Rivals Cash In On China Demand