The importance GM places on getting Cadillac right is high, since China's car market has returned to a healthy growth rate of 24.5% in the first eight months of this year, including strong demand in the luxury segment. By 2010, demand for high-end passenger sedans in China is expected to reach nearly 300,000 units a year, according to GM estimates.
Manufactured by Shanghai GM, its flagship joint venture with Shanghai Automotive Industry Corp. (SAIC), the new models--the 2.8-liter Base, 2.8-liter Upper, 3.6-liter Prestigious and 4.6-liter Flagship--will hit dealer showrooms early next year. With high-end features like a leather, wood-trimmed dashboard and a Bose surround-sound entertainment system, the cars range in price from $63,600 to $95,400 (500,000-750,000 RMB).
“We have to keep changing with the times, to keep up with what customers’ needs are,” said Karen Rafferty, who joined Shanghai GM as Cadillac brand director earlier this year.
The SLS is “fantastic,” she said. “In tons of research, we’ve found especially in China there is a great need for this size of luxury sedan.”
With leather seating and luxury appointments like a seat-massaging feature, DVD screens in the headrests, navigation features, the SLS “is a business leader’s vehicle, with everything he would want, whether he’s the driver or the passenger. It’s also a fun car to drive.”
To market the SLS, Shanghai GM is running a brand campaign in TV, print and outdoor media called “Crest,” adapted from the U.S. The ads focus on the Cadillac brand and the car’s craftsmanship, and in particular on the design cues that Cadillac is known for, like the grill and the jeweled headlights.
A more localized campaign created for the Chinese market will break early next year, just before Chinese New Year, according to Jacky Yang, group brand director at Leo Burnett, Shanghai, GM’s creative agency for Cadillac in China. The ads will reinforce the prestige and premium image of Cadillac by bringing up the heritage and craftsmanship of this brand.
Even though the U.S. auto giant became the largest car marketer in China this year, with strong sales for its Buick and Chevrolet cars in China, GM has not found success in the mainland’s luxury car market. In the first six months of last year, GM sold just over 1,200 vehicles, a very disappointing start in the world’s fastest-growing car market.
While the brand’s heritage is less familiar to Chinese than that of brands like Mercedes or BMW, the real reason for Cadillac’s lackluster debut is the fact that GM and SAIC misjudged the marketplace.
The first models sold in China included a pared-down entry-level sedan and a two-door roadster that were too small for rich Chinese, who use big, plush cars packed with extras to show off their new wealth. The smaller cars also didn’t easily accommodate the chauffeurs commonly employed by rich car owners, for convenience as well as status.
“Something our consumers really said is that they needed a larger sedan. There are lot of new entries in that segment,” said Ms. Rafferty in Shanghai.
Over the past year, while the SLS was in production, Cadillac focused on raising the brand’s profile and establishing a national dealer network.
For example, it co-sponsored lifestyle events in showrooms with other luxury brands, such as tastings with Scotch whisky maker Macallan and fashion shows with Ermenegildo Zegna, an upscale Italian men’s fashion house. Such events attracted entrepreneurs flush with new cash and eager to learn about the heritage of western brands, particularly in second-tier cities.
With the SLS debut coming up in January as well as the launch of the Escalade, a full-size SUV model that ships to dealer showrooms across China this month, Cadillac finally has models in the market with the right size and style to capitalize on the brand-building efforts of the past year.
"[The SLS is a] key product for building the Cadillac brand and driving it into China's mainstream luxury segment,” said Ding Lei, president of Shanghai GM. “Its launch is a sign that Cadillac's product lineup is growing and becoming more competitive. We are confident that SLS will help Cadillac reach the fast lane in China.”
The launch of the Cadillac SLS coincided with a visit to China by Rick Wagoner, just ahead of the influential Beijing Auto Show, which starts Nov. 18, to announce that Shanghai GM will start production of a fuel-efficient hybrid car in 2008.
GM’s chairman-CEO took a high-profile spin with Shanghai Mayor Han Zheng in the U.S. auto giant’s Chevrolet Sequel, marking the first time the new hydrogen-powered fuel cell vehicle was test driven on a public road in Asia/Pacific. It was only the car’s second appearance worldwide, following an inaugural test drive in California in September.
GM is showcasing its advanced technology solutions to government, academic, business and media leaders, and China is an obvious country to benefit from an environmentally-friendly car. It has 16 of the world's 20 most polluted cities, according to the Worldwatch Institute in Washington D.C.. And the situation will only get worse as more cars flood into the market every year.