No Cadillacs for old men in China

Thu Mar 24, 2016 4:51am EDT
 
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By Jake Spring

BEIJING (Reuters) - Cadillac, a favorite among America's older 'supper club set', is revving up sales to younger luxury buyers in China through smoother designs and localized production to keep prices accessible.

The General Motors (GM.N: Quote) brand is softening some hard edges on its angular cars to appeal to Chinese buyers used to the smoother lines of luxury cars made by BMW (BMWG.DE: Quote), Audi (NSUG.DE: Quote) and Mercedes-Benz (DAIGn.DE: Quote) that dominate high-end sales in the world's biggest car market.

After a slow start in China, Cadillac is poised to overtake Japan's Lexus (7203.T: Quote) among the leading second-tier luxury brands, according to consultancy LMC Automotive.

The opening in January of its first dedicated factory in China should also help Cadillac make its cars more accessible to younger luxury buyers by avoiding a 25 percent import tax.

Cadillac says the average age of a buyer of its cars in China is 34, little more than half the average age in the U.S.

"In China, young buyers already dominate the luxury market. Since Cadillac is a relative newcomer ... it was far easier to begin to cultivate the desired positioning for the brand from the get-go," Cadillac President Johan de Nysschen told Reuters.

Cadillac's China sales rose 17 percent last year to nearly 80,000 cars, or a 4.1 percent share of the luxury market, on the back of its ATS-L compact sedan and XTS large sedan. This year, de Nysschen has set a 25 percent growth target, to above 100,000 Cadillacs in China.

The former BMW and Infiniti executive predicts China could overtake the United States as Cadillac's biggest market in 5-10 years. Cadillac sold around 175,000 cars in the U.S. last year.   Continued...

 
Visitors look around Cadillac cars at its dealership in Beijing, China, March 14, 2016. REUTERS/Kim Kyung-Hoon