General Motors’ prestige-luxury brand, Cadillac expects to increase its sales in China by 25 percent this year to over 100,000 units, Cadillac President Johan de Nysschen shared in a recent interview with Reuters.
In January, Cadillac commenced production of its CT6 full-size flagship sedan at a new factory in China. The CT6 joins the XTS and long-wheelbase ATS (called ATS-L) as the third Cadillac produced in China for sale in the local Chinese market.
“China is a very important part of the globalization of Cadillac, and we actually seek to establish China as a substantial second volume hub for the brand,” de Nysschen said.
de Nysschen believes that the possibility of China overtaking the U.S. as Cadillac’s top sales market is “a long way off”, possibly five to 10 years. That’s understandable, given that Cadillac sold 175,267 new vehicles in the United States in 2015, nearly twice the amount it plans to sell in China this year.
In China, Cadillac faces stiff competition from well-established luxury brands from Germany — BMW, Mercedes-Benz, and Audi. Together, these brands account for the overwhelming majority of sales and, by association, market share.
Next Up: 2017 Cadillac XT5
Following the introduction of the 2016 Cadillac CT6, Cadillac will introduce the 2017 XT5 midsize crossover. Like the CT6, the XT5 will be built locally in China for the Chinese market. The brand plans to launch four additional models in China by 2020, thereby doubling its locally-produced product offerings, said de Nysschen.
Post-CT6 And XT5
Going forward, de Nysschen explains, Cadillac plans to expand its product portfolio and “aggressively’ localize production. The new production facility, which currently only builds the CT6, can be expanded to produce 150,000 vehicles a year.
Importing Not A (Viable) Strategy
In China, Cadillac vehicles are manufactured and sold through a joint venture with Shanghai Automotive Industry Corp. (SAIC). Chinese commerce regulations require foreign automaker to form joint ventures with local automotive firms to produce vehicles inside the country. By contrast, importing vehicles into China results in high tariffs.
GM has been importing the majority of Cadillac vehicles into China since commencing operations in the country, resulting in higher prices for the vehicles compared to the competition, sometimes by as much as 50 percent. The circumstance priced the vehicles out of the range that most Chinese luxury car buyers were willing to pay, thereby pushing them to Cadillac’s rivals from Germany.