GM prepares way for Caddy in China

By Published on .

[Shanghai] General Motors Corp. is targeting its Cadillac brand to China's elite consumers with a futuristic, high-tech TV spot, even as auto sales slide precipitously in the market.

After surging 76% to 2.1 million units last year, car sales in China rose only 1.1% in July compared to July 2003.

The main factor responsible is China's efforts to rein in its overheated economy by restricting credit growth of all kinds. Today, just 10% of car purchases are financed with loans, down from last year's 35%. GM, Volkswagen and others reacted by coming up with automobile loans on their own, a move that only recently became available to foreign car makers through China's entry into the World Trade Organization.

But it's still too soon to tell if the slowdown represents long-term problems. The last time auto sales slumped was back in 2000, and the market rebounded in just three months.

Believing this, too, a temporary condition, GM is leaping ahead with its Cadillac program. Its strategy is to draw to China's high-flying entrepreneurs, the only market segment that can afford Cadillac's hefty $63,000 price tag, with advertising that appeals to their pioneering spirit. Called "Dare to be First," the campaign has two objectives, according to Shanghai-based Stuart Pierce, Shanghai GM's Cadillac brand director.

"First, we want to make sure we differentiate Cadillac from the top German brands like Mercedes and BMW. We want to position the brand as something different and very bold, [a car for Chinese] who want to make a statement and express self-confidence," he said. "The second objective is to present Cadillac as a top-tier luxury car." Although Cadillac already has high awareness in China as a vehicle driven by presidents and movie stars, "people don't know much about it."

The campaign is steered by a 60-second TV spot featuring three Cadillac models charging down a dry lakebed, leaving a giant dust cloud in their wake. A fighter jet flown by a female pilot swoops down to investigate the source of the dust storm, but she cannot find the cause and flies off. The ad ends with a voice-over, "Bold design, innovative technology, undetectably new."

GM considers China its most important market after the U.S., said Donald Chan, managing director, Leo Burnett, Shanghai, which developed the campaign with media planning and buying assistance from Publicis' ZenithOptimedia. The spot is supported by print and outdoor ads in the 11 Chinese cities where Cadillac sedans initially will be available.

Cadillacs have been available on a limited basis in key cities like Beijing and Shanghai for several years, but the Detroit-based carmaker is now taking orders for locally-made sedans assembled by Shanghai GM, its joint venture with Shanghai Automotive Industry Corp. The venture will start production at the end of this year, and begin delivery of Chinese-made Cadillacs in the first quarter of 2005.

long-term approach

Although car sales have dropped substantially in the past eight months, Mr. Pierce is confident China has long-term growth potential. "If we could select a point and time to launch Cadillac in China, we could have found a better one," admitted Mr. Pierce, "but we're not overly concerned [about falling sales growth]. If I were launching a high-volume brand, I'd be more worried, but we're really focused on establishing our brand and dealer network correctly."

Mr. Pierce added that GM believes slowing car sales are a "short-term adjustment in the market. We ... believe car sales will grow significantly over the next three to four years."

At present, there are only eight cars per 1,000 people in China, compared with 940 per 1,000 in the U.S., but China is expected to surpass Japan and become the world's second largest auto market by 2011, with annual sales of 5 million cars.

In this article:
Most Popular