GM sees Cadillac's China sales rising at least 40% in '14

SRX likely candidate to be built in world's biggest auto market, exec says

Photo credit: BLOOMBERG

UPDATED: 7/6/14 10:35 am ET

SHANGHAI (Reuters) -- General Motors expects Cadillac sales in China to rise by at least 40 percent this year, as the company steps up local production in a market key to transforming Cadillac into a global luxury brand, a senior executive said.

Cadillac sales in China surged 72 percent during the first half, outpacing roughly 32 percent growth in China's premium vehicle market, the company reported on Friday.

GM China Vice President John Stadwick forecast full-year sales of 70,000 vehicles.

"If you want to be a global brand, you have to have presence in the largest (auto) market, so there's complete focus from leadership to ensure that we do it and we do it right (in China)," Stadwick, who's in charge of vehicle sales, service and marketing, said in an interview in Shanghai.

China may overtake the United States as the world's biggest market for premium cars, consultancy McKinsey & Co has forecast.

To accelerate growth in China, GM will announce a second Cadillac model next month to be locally made, and a third one early next year, Stadwick said, declining to give details.

But Stadwick told The Wall Street Journal GM likely would add output of the next generation SRX crossover in China, bidding for a larger slice of the country's fast-growing SUV and crossover segments.

"SRX really puts the Cadillac on the map," Stadwick told the paper. "Sales of SRX are exceeding our expectations globally, not just in China."

The SRX went on sale in China in 2009. Sales of the crossover climbed 23 percent in China to 14,496 units in the first half of the year from the year before, representing more than 40 percent of Cadillac deliveries in the country, the Journal said.

Stadwick told the paper the GM board has approved an expansion plan for SRX, which it now assembles in Mexico. But he said GM will "very possibly" manufacture the next generation of SRX in China to make it more price competitive. He declined to give a time frame, the Journal said.

The strategy of local production, which helps skirt high import duties, would enable Cadillac to be priced more competitively in a luxury car market currently dominated by German brands BMW, Audi and Mercedes-Benz, all of which operate substantial factory operations in China.

"We believe in building where you sell ... so going forward, you will see fewer and fewer Cadillacs imported and more and more built in China," Stadwick said, adding that the strategy gives Cadillac an edge over rivals such as Lexus who don't make cars in China.

Lexus, the premium brand of Toyota Motor Corp., which sold 70,400 vehicles in China last year, according to consultancy LMC Automotive, has no plans to make cars there due to its emphasis on quality, Lexus head Tokuo Fukuichi said in April.

Another newcomer, Ford Motor Co.'s Lincoln premium brand, will hit showrooms in China later this year, but Ford hasn't disclosed any plans to produce it locally.

GM, which also sells Chevrolet and Buick in China, is counting on Cadillac to triple its share of the country's luxury car market to 10 percent.

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