America’s appetite for Cadillacs is so low that General Motors is laying off some of its workers in Michigan. But at the same time, the company says sales of its luxury auto brand in China jumped 58 percent in the first 10 months of the year.
Thanks in part to Cadillac’s strong sales, the Detroit automaker said Friday that it topped 3 million vehicles in the world’s largest auto market one month earlier than it did last year.
“GM has experienced particularly strong growth in demand at the higher end of our lineup and in the SUV and MPV segments,” Matt Tsien, head of GM’s China operations, said in a statement.
China is still largely a country of poor people -- its per capita income is lower than Colombia’s, according to the World Bank. But about 110 million Chinese will earn between $40,000 and $1 million a year by 2020, according to Boston Consulting Group, providing a lucrative luxury car market in which the world’s top auto companies compete aggressively for market share.
GM is trying to turn Cadillac into a stand-alone luxury car brand to compete with German marques like Daimler’s Mercedes-Benz and Volkswagen’s Audi. The company recently announced Cadillac’s move from Detroit to lower Manhattan’s posh SoHo district, and earlier this year it poached division chief Johan de Nysschen from Nissan’s Infiniti as part of its makeover plans. GM wants Cadillac to grab some of the customers shopping for the BMW M3 or the Mercedes-Benz AMG.
Fueled by strong demand for the XTS full-size sedan and the SRX midsize crossover SUV, Cadillac has delivered 57,541 vehicles to Chinese consumers this year through October, a 57 percent increase from the same period last year. Both cars are manufactured in Shanghai through GM’s partnership with SAIC Motor, China’s largest car company.
Meanwhile, in the U.S., Cadillac sales are down nearly 10 percent, to 141,452 vehicles, despite the recently introduced third-generation redesign of the CTS midsize sedan and the all-new ATS compact. GM will lay off an entire shift of 350 workers at the company’s Lansing Grand River plant in Michigan where the two vehicles are made. De Nysschen has said he made the decision to address Cadillac’s high U.S. inventory and to create more “product exclusivity,” according to Automotive News.
Cadillac has been suffering in the U.S., the world’s second largest auto market, largely because it can’t lure wealthy consumers away from competing brands. It’s the only luxury car manufacturer whose U.S. sales were below industry average in the first half of the year. In China, however, GM has a price advantage compared with its comparable German rivals and benefits from the reach of its SAIC relationship.
In the first 10 months of the year, GM’s total sales from its numerous joint ventures were up 11 percent in China, to 2.87 million cars. On Friday, GM said the figure topped 3 million from the sale of more than 40 different models under seven brands, including Buick, Chevrolet, Baojun, Jiefgang and Opel. Last year GM topped 3 million for the first time, on Dec. 12. Though GM sales will hit another record in China this year, Volkswagen AG will maintain the lead it gained over GM in 2013 as China’s top foreign automaker.