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GM sees China as ripe for Cadillacs

Goal to reach US sales levels by ’16

Nelsion Ching/Bloomberg

General Motors Co.’s Cadillac logo is displayed on a wall in Beijing. The Cadillac push in China is part of an effort to raise profit margins and develop Cadillac as a top global brand.

As General Motors Co. executives celebrated the opening Monday of a special pavilion in Beijing to woo luxury customers away from Audi, a subtle message about the brand stood on display: a scale model of Cadillac’s US presidential limousine.

GM is betting Cadillac’s 110-year heritage, including its role as the president’s car, can help sell the brand in China, where sales are a 10th of market leader Volkswagen AG’s Audi and German luxury brands dominate the premium segment.

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The US automaker, a year after reclaiming global sales leadership, is preparing a renewed Cadillac push in China with plans to introduce new products, increase local production, and expand sales outlets as it aims to boost sales in the country at least fivefold to match US deliveries by 2020. Narrowing the gap against Audi can help keep GM ahead of VW.

“Chinese may or may not like America, but they definitely like the power that’s associated with America,’’ said Michael Dunne, a Jakarta-based industry analyst and author. “They admire, respect, and like power and America is the world’s leading superpower, so owning an American car offers an opportunity to be part of that.’’

The Cadillac push in China, where the automaker mostly sells Chevrolet, Buick, and Wuling models, is part of GM chief executive officer Dan Akerson’s effort to raise profit margins and develop Cadillac as a top global brand to hedge against the risk of declining sales of high-profit trucks.

GM plans to bring a new Cadillac model to China each year through 2016, Akerson said Monday at the Beijing auto show. The goal is for Cadillac sales in China to reach US levels by mid-decade, he said.

While Cadillac’s China sales rose 73 percent last year to 30,000, Audi increased sales by more than Cadillac’s total. Audi’s full-year tally of 308,808 made it the country’s luxury leader, according to LMC Automotive, and helped propel VW ahead of Toyota in 2011 global sales to trail only Detroit-based GM.

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“Talk luxury cars in China and you’re really talking about German domination,’’ Dunne said. The three German high-end brands dominate China’s upscale auto market, with a combined share of more than 75 percent last year, according to figures by industry analyst LMC Automotive.

Cadillac’s pavilion in Beijing, erected in connection with the city’s auto show that begins this week, is intended to highlight the brand’s uniqueness. Influential guests will be invited to see art, such as works by pop icon Andy Warhol and contemporary Chinese artist Yue Minjun, displayed around classic and modern Cadillac cars.

“We want to create a whole story and tell customers and people here that Cadillac is different,’’ Kevin Chen, general manager of the Cadillac brand in China, said during an April 21 interview at the monthlong exhibit’s opening for local media. “We own the asset; nobody can replicate’’ Cadillac’s history, he said.

At the pavilion, GM displayed a 1927 Webster’s dictionary, opened to the entry for Cadillac: “Something that is the most outstanding or prestigious of its kind.’’

Cadillac has lost some of its luster as the world’s luxury car market has grown more competitive. Akerson wants to restore the brand and push Cadillac into the top tier globally along with German competitors Bayerische Motoren Werke AG’s BMW brand and Daimler AG’s Mercedes-Benz. He aims to overtake Toyota Motor Corp.’s Lexus to become the fourth-best selling premium brand, people familiar with the plans have said.

Part of the reason is to make up for less profits on trucks. GM acknowledges that planned tougher US mileage standards, known as corporate average fuel economy, or CAFE, may hurt sales of large pickups.

While GM benefits from high-margin, high-volume pickup sales, “Volkswagen has luxury,’’ Steve Girsky, GM vice chairman, said of the competitor’s Audi brand. “And if you believe the truck business, because of CAFE or whatever reason, is at risk of going down, globalizing Cadillac and getting more out of your luxury brands is a priority, and it’s a priority for us.’’

Akerson is making his push to restore Cadillac first in the United States and in China, where the luxury auto market may grow 15 percent this year, according to LMC.

By 2020, GM anticipates half of the world’s luxury goods to be consumed in China, Don Butler, vice president of Cadillac marketing, said in an interview this month in Warren, Mich. He spent time with Chinese luxury consumers in December and said the brand is highly esteemed, in part because its models have been used to shuttle US presidents from Woodrow Wilson to Ronald Reagan, Bill Clinton, and Barack Obama.

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