China is quickly becoming among the most important global markets for future growth, perhaps especially for carmakers who count themselves among the luxury segment. To see how Cadillac is shaping up to play in the maturing Chinese market, The Wall Street Journal reached out to General Motors Chief Financial Officer Chuck Stevens.
The CFO told the publication that the single most important part of getting set up to operate effectively in China is “positioning the Cadillac brand appropriately there.” Cadillac President Johan de Nysschen and CMO Uwe Ellinghaus are leading the charge on that front. As Mr. Stevens puts it: “You’re starting from scratch. No baggage, no legacy. So you’ve got to build it up.”
In simple terms, the phrase “the Cadillac of [insert non-car items here]” does not exist in China.
But Chuck Stevens is optimistic about Cadillac’s future in the Asian marketplace, despite underwhelming performance in terms of sales thus far. He expects sales this year to nearly double those of last year, “and [we] would expect to do that again over the next couple of years and be at 100,000 units reasonably quickly from zero to 100,000 units.”
Along the way, Stevens acknowledges the tough competition that will be leveled by marques like BMW, Mercedes, and most importantly, Audi. However, he doesn’t necessarily see those brands’ performance as a hurdle: “If you want to think about the possibilities for Cadillac, pull out Volkwagen’s financial statement and see how much they earn from the Audi brand globally. It’s astounding, in the context of overall Volkswagen earnings. And that’s the opportunity for Cadillac, over a long period of time, if we execute that.”
One thing that isn’t on the CFO’s mind? Oil prices. “We expect there’s always going to be volatility in oil prices and gas prices but we expect the trend to continue where it’s at,” he told TWSJ. “You can’t let short-term volatility change your long-term strategy.”
“We’re a long-cycle business. We’re making decisions now on portfolio entries and technologies that will be in the market, four, five, six years from now.”