Cadillacs for the masses: Here’s how China became the largest market for the American marque

General Motors plans to add 50 show rooms every year in China through 2020, to appeal to up-and-coming buyers in its largest global sales market.

PUBLISHED : Monday, 29 January, 2018, 5:18pm
UPDATED : Tuesday, 03 July, 2018, 8:22pm

General Motors says it plans to expand the presence of its Cadillac branded vehicles to China’s lower-tier cities with the opening of 100 new dealerships before 2020, as it seeks to close the gap with front-running German car manufacturers.

Andreas Schaaf, Cadillac’s China chief, said the brand will also launch the compact sport-utility vehicle (SUV) XT4 in late 2018, in an effort to appeal to young customers in the world’s largest auto market.

“We are building up the network step by step,” he said. “This year, we are planning to add 50 new [showroom] locations.”

Cadillac, which opened its first dedicated factory on the mainland in 2016, plans to have 300 dealerships across the mainland by 2020.

China became its largest market for the first time last year, recording sales of 175,489 vehicles, up 50.8 per cent from 2016.

Sales in the US by the Cadillac marquee dropped 8 per cent to 156,440 units last year.

The new retail stores will be mainly established in the country’s smaller cities, as Cadillac hopes to make inroads with new consumers.

“We are pretty strong in tier-one and tier-two cities,” Schaaf said. “We still have big opportunities to grow in tier-three to tier-five cities.”

He added that stores in lower tier cities would “contribute the strongest part of sales” to Cadillac’s expected market share in China by 2025.

General Motors upbeat on luxury vehicle sales in China

Foreign carmakers enjoyed booming sales during the past five years, driven by affluent Chinese consumers who prefer high-performance vehicles offered by foreign brands.

German brands Audi, BMW and Mercedes-Benz have a combined 75 per cent share of the Chinese market for luxury vehicles.

Cadillac moved to the No 4 spot in 2017, rising from sixth in 2015, with a 6.5 per cent share of China’s luxury car market.

“We certainly have strong momentum in China,” said Schaaf. “We are perceived as a young brand in China. People fall in love with American luxury represented by our Cadillac brand.”

Johan de Nysschen, the president of Cadillac, said earlier that he expects sales of 200,000 units in China this year.

The test versions of the XT4 compact SUV are being built at Cadillac’s assembly plant in the US. The model is expected to take on Audi’s Q3 and BMW’s X1 models.

“The luxury segment is expected to continue to grow faster than other segments in China driven by the consumer’s penchant for cars with roominess, higher performance and brand awareness,” said Yale Zhang, the managing director of consultancy Automotive Foresight. “The market will continue to see expansion by global brands.”