Cadillac in particular continued to benefit from their legacy appeal among young, wealthy Chinese drivers, becoming a brand for millennials looking to express their individuality and stand out from buyers of German cars.
Positioning themselves as affordable luxury brands, Lincoln and Buick are focusing in on China’s increasing demand for high-end SUVs. With record sales figures for all three companies, their brand messaging appears to be working, but can they really be considered luxury?
2017 marked the first year that Cadillac sold more vehicles in China than the United States, selling 175,000 cars, a 50 percent increase from the year prior. Unlike in the US and Europe where the average age of Cadillac buyers is 50 years-old, Chinese Cadillac buyers tend to be young, averaging around 33 years-old.
In China, Cadillac portrays itself as an alternative to the German brands Audi, Mercedes and BMW who together control 75 percent of the luxury car market. In an interview with Reuters, Cadillac’s China chief Andreas Schaaf explained, “A lot of younger people in China are looking for something different to stand out of the crowd.”
Currently Cadillac is in fourth place behind the three German giants with six percent of the luxury market. At the Automotive News World Congress, president of Cadillac Johan de Nysschen made it clear that the China market is crucial to the success of Project Pinnacle, the $12 billion investment and 10-year journey to convert Cadillac into a global luxury player.
So far, the brand has seen a lot of success promoting their luxury image through marketing campaigns centered around their global messaging of a “pioneering spirit”, which have been localized to speak to the desires of young Chinese consumers. They’ve also partnered with Chinese celebrities such as actor Zhang Han (Weibo @张翰) and created numerous product placements in popular Chinese TV shows and movies.
Maybe most importantly, Cadillac plays up its reputation in China as the car for U.S. presidents. It is an American status symbol.
Wealthy Chinese millennial and car enthusiast Zhang Pan said, “Cadillac is definitely considered luxury in China. Cadillac and Lincoln were brands that my generation grew up with. They were in all the TV shows and movies and presidents and businessmen drove them. They were popular in the ’90s, then they left China for a while and other brands took over. Now they’re back and they have that legacy to go on.”
Like Cadillac, Lincoln is trying to win China by appealing to wealthy young consumers, partnering with celebrities and sharing marketing content promoting creativity and adventure.
The brand, which has experienced poor sales performance in many parts of the world, set new company records in China in 2017 with a 66 percent jump to 54,124 vehicles sold. Their top-seller was the Lincoln MKC, an SUV. Reportedly Lincoln’s record performance is due to stronger differentiation and the appeal of its luxury line-up, but Zhang Pan disagrees. “Lincoln isn’t really considered luxury in China. It looks more high-end than a regular car, but at best it could be classified as accessible luxury.”
Another classic GM brand, Buick, also celebrated its best year ever in China last year with 8.4 percent annual growth. The brand is trying its luck at the luxury segment after seeing Cadillac’s success, heavily promoting their new Avenir line. According to Buick, Avenir represents the best of Buick’s attainable luxury ethos, meaning that their vehicles are designed to be thoughtful and practical, with a sense of well-being and modern simplicity.
While the models from the Avenir line seem to be selling well, the brand has a long way to go before they will be seen as luxury by Chinese consumers.
“Buick has a really good reputation in China but not in the luxury category,” explained Zhang Pan. “I think they will continue to sell well and middle-class people will buy them, but it will be hard for them to position themselves as a luxury vehicle. Chinese people associate Buicks with reliability. I don’t know any wealthy people that would choose a Buick.”
Growth of the SUV market
All three brands can contribute much of their success to the growing demand for SUVs from China’s middle-class and wealthy consumers.
Luxury SUVs were a main attraction of last year’s Shanghai auto show. Cadillac has seen several of their SUV models do well in China and are set to release their new XT4 compact SUV by the fourth quarter of 2018, a model which they hope will rival the BMW X3 and Audi Q5. Lincoln’s MKC SUV was their top-seller in 2017, and Early response has been strong for Buick’s new 2018 Enclave.
It’s expected that in 2018 SUVs will start outselling sedans in China, and as of last year, China now has the highest sales penetration of SUVs globally, surpassing the US.
When asked where the appeal for SUVs among Chinese consumers comes from, Zhang Pan replied, “With all the traffic in China, many drivers feel more in control when they’re higher up in an SUV, and probably due to marketing they have a misperception that SUVs are always safer than sedans.”