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Cadillac gets warm welcome in China

GM sees big future in huge new market
June 8, 2004


BEIJING -- China got an official introduction to the icon of American capitalism Monday, as General Motors Corp. launched the Cadillac luxury brand in a ceremony worthy of Hollywood.

GM and joint-venture partner Shanghai Automotive Industry Corp. plan to begin selling the CTS luxury sedan, SRX crossover and Corvette-based XLR luxury roadster within a year in the world's most populous nation and fastest-growing auto market.

This was not a moment to pass unnoticed or unheralded. The automakers marked the occasion at the imperial Tai Temple of the Forbidden City -- now the Labor People Palace of Culture -- in an elaborate presentation staged by filmmaker Ang Lee.

Introducing the esteemed brand to China is "another critical piece in the Cadillac renaissance," said Mark LaNeve, the brand's general manager. The first step, he said, was re-establishing the brand in the United States, where in May it enjoyed its best retail month in 15 years. Second was carrying that momentum through the Middle East, Europe and now China, so that it is "truly seen and shopped as one of the premier brands in the world."

Once a paragon of style, power and technology, Cadillac had lost its place in the pantheon of luxury brands, before edgy styling and German-tested performance again earned it a place among the top-selling luxury marques BMW, Mercedes-Benz and Lexus.

Aside from China's incredible growth, Cadillac has two advantages in coming to China now, said Stuart Pierce, the Cadillac brand director for Shanghai GM. One is that a new generation of young entrepreneurs is "not afraid to flaunt their success" with a bold-looking car. The other is that while Chinese know of Cadillac's rich history as a car favored by U.S. presidents and the king of rock and roll, Elvis Presley, they never had to bear witness to underpowered or uninspired Caddies, such as the Catera.

Cadillac is not expected to be a big money-maker in China right away. The brand is being launched in China with only 11 dealers, who were chosen for their high sales and customer satisfaction.

Phil Murtaugh, chairman and chief executive officer of the General Motors China Group, noted that he has no sales goals or projections -- even within the company -- for this year.

"We're focused on building a brand right this year," he said in a news conference.

The aim is to position Cadillac favorably against BMW and Mercedes, so it can be strong in a few years, when GM believes China will surpass Japan and become the world's second-biggest auto market. Murtaugh and others expect more vehicles to be sold in China than in the United States by about 2025.

"By 2010, China could represent 15 to 20 percent of our total volume," LaNeve said Monday night.

The first CTS and SRX models will be imported from GM's Lansing Grand River plant later this year. Soon after, some models will be shipped over as kits and assembled by Shanghai GM -- the first Cadillacs to be built outside North America. The XLR, slated to go on sale early next year, will be built at the Bowling Green, Ky., plant that makes the Corvette.

The idea is for Cadillac to round out a modern, Chinese version of former GM Chairman Alfred Sloan's "car for every purse and purpose" strategy.

At the low end of the market, GM will offer the Spark minicar from Chevrolet, the volume brand Murtaugh said will be expanded in the next year or two. The Spark is based on the Matiz from South Korea's Daewoo. Buick is the upper-middle-class car, positioned much higher in China than it is in the United States.

Like Volkswagen AG's Audi, Buick tends to be seen as a conservative government-style car for people who are as likely to have a driver as they are to drive themselves. The Chinese Buick Regal, for instance, is often sold with three DVD screens, including one on the back of each headrest. (The driver's screen automatically goes dark when the car is in gear.) Cadillac, of course, sits at the top.

The scene was set Monday night with a 1948 Cadillac and a 1,000-horsepower Cadillac Sixteen concept car, where models, journalists and VIPs stopped to have their pictures taken.

Then the ceremony began with Murtaugh taking the stage while Richard Strauss' "Also Sprach Zarathustra" (better known as the theme from "2001: A Space Odyssey") played and the Cadillac logo shone on the temple where emperors' monks used to be ordained.

The production, conceived by Lee, the director of "Crouching Tiger, Hidden Dragon," peaked with a brief ballet followed by models in elaborate silver costumes with capes or giant headgear that presented a new take on Cadillac's Art & Science design language.

Separately, GM executives clarified that the $3 billion in planned investment in China over the next three years would include reinvested profits of its joint venture partners, as well as its own profits in China. The scope of the investments, including previously announced expansions, had been announced Monday morning in China, which was Sunday night in the United States.

The investments to establish a financing joint venture, expand a joint venture technical center, broaden its vehicle lineup and invest in assembly and powertrain plants should give GM the ability to make 1.3 million vehicles a year by 2007, approaching the 1.6 million vehicle capacity of Volkswagen AG, the foreign-owned automaker with the largest operations in China.

Contact JAMIE BUTTERS at 313-222-8775 or [email protected].
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