GM Discovers China Luxury Market — Finally 通用汽车在华投产凯迪拉克 亡羊补牢犹未为晚
As China’s mainstream car market shows increasing signs of little or no growth this year, General Motors (NYSE: GM), one of the industry’s top players, is finally noticing the luxury segment still has plenty of growth potential by making a very late move into the space with its upscale Cadillac brand. Now the big question will be whether luxury sales are still so strong in the year or 2 it will take GM to start making Cadillacs in China, especially as Beijing takes moves to restrict luxury car buying by government organizations. (previous post) The luxury segment’s big potential has been quite obvious for a while now, as brands like BMW (Frankfurt: BMW) and Volkswagen’s (Frankfurt: VOWG) Audi have seen strong double-digit sales gains of 30 percent or more for the last year, even as the broader market contracted 3.4 percent in the first quarter of this year. That reality is what’s driving GM to finally make a serious initiative for Cadillac, with plans to start manufacturing 3 models in China within a year, according to a foreign media report, adding GM will announce more details at the Beijing Auto Show next month. (English article) GM has sold Cadillacs in China for a while now, but all have been imported, meaning they carry large import taxes and thus are far less competitive than models from the German brands that have all invested heavily in China factories. GM’s latest move looks like a smart one, even though it’s a bit late, since Cadillac already enjoys a relatively strong reputation as a solid luxury brand among average Chinese consumers. That’s an important factor, since the Cadillac brand in GM’s home US market has always been handicapped by its image as a brand for older people. As an American living in China, I have been surprised how GM has built Buick — also considered an older, stodgier brand in the US — into its top selling nameplate in China, where the brand enjoys a very mainstream, quality reputation. There’s no reason GM can’t take advantage of its extensive sales and distribution networks and marketing muscle to do the same for Cadillac, quickly building it into a competitive major luxury brand for the China market. Of course the big risk is that the luxury market will also slow down by the time GM starts mass producing Cadillacs in China, though there should still be plenty of room for growth. Meantime, foreign media are reporting that France’s Renault (Paris: RENA) is also finally discovering China, with plans to form a joint venture with domestic car maker Dongfeng (HKEx: 489). (English article) Apparently the 2 sides are racing to finalize their deal before a deadline that will make such new investments more difficult. I suppose I should commend Renault for finally discovering China and rushing to invest there before the looming deadline. Still, I have to wonder why such a large global brand has taken so long to discover China, which passed the US a couple of years ago to become the world’s largest auto market, and would say the brand’s late arrival will severely limit its chances for success.
Bottom line: GM’s plan to produce Cadillacs in China looks like a smart move to tap the booming luxury car market, drawing on its existing networks to quickly catch up to established German rivals.
Related postings 相关文章:
◙ China Puts the Brakes on Luxury Cars 中国公务车拟告别豪华车
◙ Luxury Cars Zoom, But Who Profits?
◙ Cars: US, Germany Clobber Japan, Domestic Rivals 美德汽车在华完胜日本和中国车商
