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Cadillac Eyes Smaller Chinese Cities for Luxury Market Share

Cadillac Targets Smaller Chinese Cities for Luxury Market Share
General Motors Co. Cadillac CTS, left, and SRX vehicles are displayed at a dealership in Shanghai. The Detroit-based automaker plans to expand the number of dealerships for the brand in China to 200 this year, up from 70 outlets in 2011. Photographer: Tomohiro Ohsumi/Bloomberg

April 22 (Bloomberg) -- General Motors Co. plans to more than triple sales of its luxury Cadillac brand in China by 2015 by targeting affluent buyers in smaller cities as competition intensifies in the world’s largest auto market.

GM will introduce Cadillac’s global portfolio to China and add one locally produced model a year through 2016, according to Bob Socia, GM’s China head. The Detroit-based automaker plans to expand the number of dealerships for the brand in China to 200 this year, up from 70 outlets in 2011.

“At the moment, tier-one cities’ market is large but the market is getting saturated,” Kevin Chen, general director of the Cadillac division at Shanghai GM, said yesterday in an interview at the Shanghai Auto Show. “But tier-two and tier-three, there’s high potential for growth.”

GM Chief Executive Officer Dan Akerson has set a goal for the luxury brand to be competitive with Bayerische Motoren Werke AG’s BMW and Volkswagen AG’s Audi. To achieve that, Cadillac has to close the gap with the German luxury marques in China, where McKinsey & Co. forecasts luxury auto sales will more than double to three million by 2020 from last year.

GM sold 30,010 Cadillacs in China last year, trailing Audi’s 405,838, BMW’s 327,341 and Daimler AG’s Mercedes-Benz at 196,211 units, according to company figures.

To help attract Chinese consumers, GM signed up actor Brad Pitt to help promote Cadillac. The automaker is targeting to sell 100,000 units a year in the country in 2015, and account for 10 percent of the luxury market in 2020, according to Socia.

Cadillac had 2.4 percent share of the luxury market last year, said Dayna Hart, a Shanghai-based GM spokeswoman.

Most of the Cadillacs sold in China would be built in the country to lower costs and protect against currency fluctuation, Socia told reporters on April 20. Companies pay a 25 percent tariff on imported vehicles, making them less competitive against locally made autos.

To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai at aho113@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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