Cadillac Sees China Luxury Segment Growth Outpace Overall Market

  • China luxury auto segment seen to grow as much as 11% in 2017
  • Share of premium auto brands seen to expand to 15% in 10 years

Cadillac, which saw China overtake the U.S. as its largest market, sees the country’s luxury segment outpacing the overall auto market as more young consumers consider a premium brand for their first car.

The industrywide luxury auto sales will grow as much as 11 percent this year, outpacing the overall auto market, Andreas Schaaf, vice president of Cadillac China, said in Shanghai on Tuesday. The average age of Cadillac customers in China is 32 years, and 40 percent of them are first time car buyers, he said.

China surpassed the U.S. as Cadillac’s biggest market in the first quarter as deliveries almost doubled from a year ago, while sales in its home market fell.

Sales of General Motors Co.’s premium brand also exceeded Jaguar Land Rover and has outpaced the growth of BMW AG and Daimler AG’s Mercedes Benz in China.

Cadillac’s first-quarter sales in the U.S. declined to 33,982 units, while deliveries surged to 39,414 vehicles in China. More than a third of the brand’s sales in China last month came from its XT5 SUV priced from 359,900 yuan ($52,235). The company began selling the locally produced XT5 last April and the ATS-L sedan in 2015, cutting the sticker price as imported cars attract a 25 percent import tax.

China will probably overtake the European Union to become the biggest luxury auto market by 2020, Schaaf said. The share of luxury cars in China will expand to 15 percent of total in 10 years, up from about 9 percent now, he said.

Even as Cadillac seeks to catch up with the market leaders of the German marques, the American brand may face increasing competition from upscale nameplates being introduced by Chinese automakers. Great Wall Motor Co., China’s largest SUV maker, has created a premium brand called WEY and is set to start sales of the first model. Geely Automobile Holdings Ltd. will start selling the first SUV model under its new upscale Lynk & Co. brand from the fourth quarter, using the same platform adopted by affiliate Volvo Cars.

“Knowing the overall Chinese market and the Chinese competitors, how strong they are, how fast they are growing and how quick they are in launching products, I would never make the mistake of not taking anybody seriously,” Schaaf said.

— With assistance by Yan Zhang

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