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GM to Boost Cadillac Showrooms in China to Challenge Audi

December 18, 2012

GM to Boost Cadillac Showrooms in China by 25% to Challenge Audi

A Cadillac ELR car is displayed during the 2012 Beijing International Automotive Exhibition in Beijing, China. The automaker sold 27,073 Cadillacs in China in the first 11 months, compared with 370,559 units for industry leader Audi. Photographer: Lintao Zhang/Getty Images

General Motors Co. (GM:US), the largest foreign automaker in China, will increase the number of Cadillac dealerships in the country by about 25 percent as it competes against German luxury automakers led by Volkswagen AG (VOW)’s Audi.

The Detroit-based company will add about 40 dealers for its upscale Cadillac brand next year, up from about 160 currently, Bob Socia, GM’s China president, said in an interview yesterday. The automaker plans to open 400 more showrooms across its brands in 2013 in China, bringing its total to about 4,200 in the world’s largest vehicle market.

Chief Executive Officer Dan Akerson is championing a worldwide expansion of the Cadillac brand as part of efforts to raise profit margins and to hedge against the risk of declining sales of high-profit trucks. The automaker has said it plans to add a new Cadillac model annually in China through 2016.

“We’ve struggled in the past, there’s been a new commitment so to speak, from General Motors about what we want to do with the Cadillac brand,” Socia, 58, said in an interview at GM’s offices in Shanghai. “It’s a journey, you’re not going to do this in a year or two, but you’ve got to come up with product that unequivocally can compete.”

GM is committed and prepared to spend to market Cadillac in China, Socia said, declining to give specific spending or sales targets. Robert Ferguson, the GM executive leading the Cadillac brand globally, has visited dealers in China, Socia said.

Cadillac Sales

The automaker sold 27,073 Cadillacs in China in the first 11 months, compared with 370,559 units for industry leader Audi. Bayerische Motoren Werke AG’s BMW sold 295,974 while Daimler AG’s Mercedes-Benz delivered 177,301 in the same period.

“The Chinese consumer has a very high regard for European luxury brands, they would put the Europeans at the top and probably the Germans amongst the Europeans first,” said Steve Man, a Hong Kong-based analyst at Nomura Holdings Inc. “So the Americans do have a place in the Chinese market because the pie is still growing, but they need to do some work to penetrate the market.”

GM will also focus on the sport utility vehicle market next year, Socia said. The Buick Encore crossover introduced in October will be one of the key products for the automaker in the segment, he said.

SUV Sales

SUVs are the fastest-growing segment in China this year. In the first 11 months of the year, deliveries climbed 26 percent to 1.79 million units, surpassing the 7.1 percent gain to 14 million for total passenger vehicle sales, according to China Association of Automobile Manufacturers.

China’s total vehicle sales may reach 21 million units next year, representing an annual growth rate of five to eight percent, said Socia, who reiterated a goal for GM to outpace the industry.

Socia, who also oversees operations for GM in India and Southeast Asia, said the automaker will probably sell 75,000 units in Thailand this year.

Next year, the automaker will introduce the Chevrolet Spin in Thailand and the Chevrolet Enjoy -- a version of a top- selling Chinese minivan -- in India.

Socia was GM’s vice president of global purchasing before he took over the China portfolio on Oct. 1 from Kevin Wale, who retired.

To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai at aho113@bloomberg.net

To contact the editor responsible for this story: Chua Kong Ho at kchua6@bloomberg.net


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