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Cadillac eyes China, Russia

Cadillac eyes China, Russia

2 are prime candidates for brand’s growth, exec says



Cadillac made headlines this week with its new plan for western European sales, but the real news lies elsewhere: China and Russia.

The rapidly growing markets already account for far more Cadillac sales than western Europe does, and the brand is primed for more growth this year. Cadillac plans to eventually boost sales outside the United States to 30% of its total volume, double today’s level.

Cadillac sold 128,727 vehicles around the world last year. That’s about one-eighth the total for luxury-car leader Mercedes-Benz. Cadillac has no aspirations to million-plus sales, but it must grow dramatically to compete with global powers like Audi, BMW, Mercedes and Lexus.

Cadillac’s model line and brand position make Russia and China the best candidates for growth over the next few years, global marketing director Jim Vurpillat said. The Mideast, where Cadillac has been strong for decades, is its other main market outside North America.

Sales in China and Russia are small now — 7,265 and 1,529 in 2009, respectively. However, each already exceeds western Europe, where German brands’ large sales networks, model lineups and strong images give them a huge advantage. Cadillac sold 1,128 vehicles in western Europe last year. Its sales never approached the ambitious 20,000-a-year sales goal Dutch distributor Kroymans set when it became Cadillac’s European distributor in 2003.

Cadillac’s aspirations were crippled by a model line badly out of sync with European tastes. The lack of first-rate diesel engines effectively shut it out of half the market, while its SUVs left buyers cold.

None of that applies in China and Russia.

Neither country cares much about diesels, and both appreciate Cadillac’s crossovers and SUVs. GM has handled Cadillac sales itself since launching the brand in China and Russia in 2004 and 2006, respectively.

"Chinese demand is off the charts" for the new SRX crossover, Vurpillat said. "It’ll be 40% to 50% of our sales there this year" and dealers are howling for more, he said. Chinese sales could almost double to 12,000 to 13,000 this year thanks to the SRX, he said.

China eclipsed Canada to become Cadillac’s largest non-U.S. market last year, and Vurpillat said it shows no sign of slowing down. Cadillac has 40 Chinese dealerships and plans to add about 10, with more to come as the brand moves beyond megacities like Shanghai and Beijing.

The Escalade large SUV is Cadillac’s best seller in Russia, where buyers appreciate its size and security. The smaller SRX is off to a strong start there, too.

"We expect Russian sales to be up by at least double-digit percentage points this year on the strength of the SRX," Vurpillat said. Cadillac has 26 Russian dealers.

Unlike the brash approach that previously failed in Europe, Cadillac now aims for gradual, consistent growth, Vurpillat said.

"We’ll do it in a measured fashion," he said. "We don’t want to pursue growth at the expense of the brand."

While China and Russia should provide most sales growth, Cadillac’s new European initiative will focus on the brand’s prestigious, high-performance V-series models. The stylish CTS sport wagon should also appeal to European buyers, who love wagons nearly as much as they do diesels. Cadillac will cut back from a Kroymans-fueled high of 165 European dealers to 35 or 40 in key markets like Germany, Switzerland, Italy and luxury-oriented cities like Paris.

"These things require time and patience, especially in the luxury market," Vurpillat said. "We’re going to do it the right way."

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