Cadillac Buyers in China Are Surprisingly Young

March 24, 2016, 8:36 AM UTC

2. China luxury

GM has set a goal of increasing its share of the China luxury automobile sales to 10% by 2020. The upscale car market in China is fiercely contested, and Mercedes has just announced a big push there to catch up with market leaders Audi and BMW. Its new S-class, which will sell for close to $500,000 (you heard right), is packed with amenities like hot-stone massage to appeal to well-heeled Chinese buyers. To reach 10%, according to analysts quoted by Seeking Alpha, GM will need to lift the number of Cadillacs it sells to close to 250,000 per year from a current level of around 30,000 -- an eightfold improvement! That's in the face of a McKinsey study that forecasts growth of upscale vehicles sales at just 12% a year through 2020. Cadillac is only now breaking ground on its first plant in Shanghai and is racing to boost the number of its dealers to 200 by the end of this year, from 69 at the end of 2011. The big question: You've got a long journey ahead. Why make it harder by setting stretch targets for yourself?
CREDIT: Nelsion Ching/Bloomberg via Getty Images

Cadillac, like many brands, has a whole different image in China than in the U.S.

The latest evidence comes from the age of its buyers in the country, which Cadillac’s president told Reuters are almost half the age of those in the U.S. Chinese average age: 34; in the U.S.: 59.5 .

“In China, young buyers already dominate the luxury market. Since Cadillac is a relative newcomer … it was far easier to begin to cultivate the desired positioning for the brand from the get-go,” Cadillac President Johan de Nysschen told Reuters. In Beijing and China’s other major cities you don’t see seniors behind the wheels of BMWs or Land Rovers. Luxury car buyers, at least those of brands not associated with the government or retirement—such as Audi and Mercedes-Benz—are young and hip. General Motors’ Cadillac is near the top of that list.

Cadillac recently opened a $1.2 billion factory in China where it will produce cars for the local marker to avoid the 25% duty on imported cars, which is expected to help entice a younger demographic with smaller sticker prices. Last year Cadillac sold 80,000 cars in China compared to about 175,000 in the U.S.. This year the goal in China is 100,000.

GM and Cadillac have some advantages in the country. GM opened business early in China, in the mid-1990s, and just a few years later began producing a domestic car, the Buick Century, and signing a dozen joint ventures. GM’s brands have been around for a while in China.

GM also doesn’t carry the stench of a bankruptcy or decades of press scrutiny for mismanagement and lack of innovations like it does in the U.S., highlighted in a Fortune 1983 cover story. Cadillac in China is free from GM’s burdens elsewhere.

fortune cover

Cadillac is hoping its next hit is the China-produced crossover XT5, Reuters said, which may tap into the country’s booming demand for SUVs. Audi and even Lamborghini have also zeroed in on the booming Chinese market for SUVs growing at nearly 50% a year. And the demographic showing the fastest growth in demand for SUVs? Young families.

Cadillac might yet keep its fresh image in the world’s biggest market for new cars.

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