GM Has Big Plans for Cadillac in China

DETROIT ( TheStreet) -- If Buick can be among the hottest brands in China, why can't Cadillac do the same?

That's a question General Motors ( F) is asking. CEO Dan Akerson spelled out the automaker's ambitious plans for Cadillac on the automaker's first-quarter earnings call.
2013 Cadillac ATS

In 2011, Cadillac sales in China rose 73% to about 30,000. "That's good, but it's only 30,000," Akerson said. "And we're importing a fair number of those, exporting into China. But if Cadillac starts to build there, we'll have better margins that we do today.

"We'd like to be in the 150,000 to 180,000 range within the next three to five years," he said. "We're serious about this. And we think we'll have the right products for that market as well."

Akerson noted that "half of all the luxury purchases in the world, in all categories not just cars, are predicted to occur in China by the end of the decade." GM will introduce a new Cadillac in China each year through 2016, including the ATS later this year, he said.

Buick's success in China is well known. Buick, uniquely, is a U.S. brand that is more popular in China, where it sold 645,537 vehicles in 2011, than it is in the U.S., where it sold 177,633 vehicles. Buick Excelle, sold in the U.S. as the Verano, is the top selling car in China. On a recent conference call with reporters, Chief Financial Officer Dan Amman said Cadillac can achieve a level of success in China similar to what Buick has done.

"We want Cadillac to be big and important in China," he added. "Even at the current scale it is a profitable business and we absolutely want to grow that. Our peers get significant profit contributions from premium brands, and we want to do that too." Cadillac's U.S. sales in 2011 totaled 152,389.

Analyst Rebecca Lindland of IHS Automotive said Akerson's projections are realistic because "GM is well-known and well-respected in China. Buick continues to do incredibly well there, and everybody knows that GM and VW got in early. They are the models for how to do biz in China."

Lindland said her firm's current projections for Cadillac in China are conservative, with sales of 100,000 in 2020, but added, "We don't make plant assumptions until we find out that GM is absolutely going to build there. It's a no-brainer that with a new plant, GM could cover the vast majority of the demand for the ATS and the SRX and the STS, and I could see us becoming much more aggressive with our numbers." -- Written by Ted Reed in Charlotte, N.C.

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