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Cadillac full speed ahead in China
Nation poised to become brand's biggest market
October 25, 2014
Automotive News

WUHAN, China - Despite slowing sales growth in China, General Motors is doubling down on the country with a bold expansion plan that could make it Cadillac's biggest market within six years.

The investment blitz channels $14 billion into China, the world's biggest car market, from 2014 through 2018 to open five new factories. It will boost GM's capacity to just under 5 million vehicles, or almost double the company's 2013 U.S. sales volume.

Indeed, China may supplant the U.S. as Cadillac's top market in just a few years, GM China President Matt Tsien predicted. "There's the potential by 2020, we could be the largest market worldwide," Tsien said in an interview at this month's Global Automotive Forum here. "We're poised to grow at a very rapid pace."

Total vehicle sales in China rose just 3 percent in September, their smallest gain in 19 months. For the first nine months of 2014, total sales rose 7 percent. That is well below the double-digit pace of past years; sales climbed 14 percent in 2013. But Cadillac is bucking the slowdown and ahead of schedule toward its China sales goal of 100,000 vehicles in 2015. This year, sales are on pace for 70,000, up from 50,005 last year and 17,366 in 2010. In September alone, sales jumped 51 percent. Those numbers are still modest compared with volume in the U.S., where Cadillac sold 182,543 last year. But the explosive pace is positioning China as central to Cadillac's future.

Cadillac, for instance, will launch nine new models in the next five years in China and add one locally built nameplate a year through 2016. Shanghai General Motors Co., a venture owned equally by GM and SAIC Motor Corp., is building a dedicated Cadillac plant in Shanghai to assemble as many as 160,000 vehicles a year. Production starts next year.

GM aims to replicate the success it had with Buick in China, which for years has been that brand's biggest market. In 2010, for example, just 10 percent of Cadillac's total global sales came from China. By last year, Cadillac was getting 20 percent of its sales from China.

Cadillac's China gambit gets an additional push from the arrival of new brand chief and China-acolyte Johan de Nysschen. In his prior role as head of Infiniti, de Nysschen positioned China as the key global market for Nissan's premium marque. A sign of the new boss' Far East focus: De Nysschen landed at GM only in August and has already been to China twice. "From a Cadillac standpoint, it's a real advantage," Tsien said. "He really is thinking about Cadillac more globally than ever before. He's paying a lot of attention to the Chinese market. We will see him quite regularly."

To be sure, Cadillac's sales are increasing with a rising tide. GM expects China to be the world's top luxury market in 2016. But Cadillac is counting on a larger slice of the growing pie. Today, Cadillac has less than 4 percent of China's luxury market. By 2020, the brand targets 10 percent.

Going forward, Tsien said, Cadillac will focus on improving the dealer experience to burnish the brand's luxury image. The challenge will be striking an independent personality that doesn't imitate the German premium competitors. "Cadillac needs to stand for Cadillac," Tsien said. "We're not going to hide from our American roots. What we want to make sure of is that Cadillac is recognized as a global luxury brand."

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Discussion Starter · #2 ·
Just one thing to clarify: On page 43 of the second document with the details of the meeting with investors earlier this month, provided by GM, says the Cadillac plant in China will open in 2016 and will have a capacity of 200,000 units per year.

Additionally, from WardsAuto:
The third leg in GM China’s expansion stool is the Cadillac brand, which is forecast to sell 70,000 units this year but targeted to climb to 150,000 by 2016 before quadrupling from today’s levels to 300,000 per year in 2020. That task is one Tsien shares with Johan de Nysschen, who heads a now-independent Cadillac global operation.
There's something that does not fit for me... If next year will be able to sell 100,000 units, the vast majority produced in existing plants (XTS, ATS-L and an additional model to be announced in early 2015) and in 2016 will begin operating a plant with capacity of 200,000 additional units; why expect to reach 300,000 units sold as late as 2020?

Add to that the forecast of 500,000 units worldwide by 2020 also, which basically mean that sales in the United States would remain flat below 200,000/year despite the arrival of new models like the next SRX and the two new CUV...

While there may be several arguments (including a modest estimate), I think that this only has a expliación: XTS's death is imminent. That also explains why Johan de Nysschen said the brand would go "from 5 to 10 models by the end of the decade", when actually has 6: Escalade, CTS, SRX, XTS, ATS and ELR.
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