UPDATE 2-GM revs up plans for Cadillac in China luxury market

Wed Jun 19, 2013 4:49am EDT

* GM plans to beef up retail network for Cadillac cars

* Cadillac stores to total 200 by end of 2013

* GM breaks ground for a Cadillac plant in Shanghai

SHANGHAI, June 19 (Reuters) - General Motors Co's strategy to make its 110-year-old Cadillac brand one of China's top-selling luxury rides went up a gear on Wednesday as the U.S. automaker unveiled plans to expand its retail network in the world's largest car market.

The company aims to quadruple its share of China's luxury auto market to 10 percent, or about 250,000 cars, by the end of the decade, with new Cadillac models leading the charge against a strong field of competitors.

The Cadillac is crucial to GM's China strategy even though the Detroit company has a long way to go before it can mount a serious challenge to fast-starting European rivals such as BMW , Mercedes and Audi, which dominate the Chinese luxury space.

"We are not only expanding in tier-one and tier-two cities, which would be pretty logical to Cadillac, but ... China's high-growth areas could be in tier-three or even four," GM's China operations chief Bob Socia said at a roundtable with reporters ahead of a ground-breaking ceremony for GM's new Cadillac plant on the outskirts of Shanghai.

The plant will eventually have capacity to produce 160,000 cars a year.

GM is aiming to boost Cadillac's annual sales in China to about 100,000 cars by 2015, up from 30,000 last year.

Socia said the number of Cadillac stores would jump to 200 by the end of this year, from 69 at the end of 2011, as demand for fancy cars spreads from big Chinese cities such as Beijing and Shanghai to smaller regional centres.

GM also sells luxury brands Buick and Chevrolet in China, but GM Chief Executive Dan Akerson has prioritised Cadillac as the vehicle to take on competitors including Ford Motor Co and Japan's Toyota Motor Corp.

"We'll bring in our high-end, premium products here, and we're going to see how we run against our competitors in Europe and Japan," Akerson told reporters in Shanghai.

DESIGN TWEAKS

Akerson has given GM five to six years to establish the Cadillac brand -- once synonymous with classic American features like extravagant tailfins and glittering chrome -- on the same footing as more popular rivals in China.

Revitalised with new models, GM says Cadillac sales are growing in the United States at a pace not seen since the 1970s. But the edgy new designs, with sharp creases and flat planes inspired by U.S. stealth fighter jets, have failed to impress China's wealthy car buyers who have voted with their wallets in favour of smoother-looking European rides.

Akerson himself has admitted that aspects of Cadillac designs have been "ugly" and aimed too much at the North American market.

For China, GM hopes to tap a refreshed version of the top-selling Cadillac SRX crossover and local production of the Cadillac XTS sedan in Shanghai, which began this year, to boost sales.

Cadillac's China sales jumped 74 percent year-on-year by volume in May, after nearly doubling during the previous month, making Cadillac the fastest-growing among GM's brands in the country.

China has become a crucial market for makers of luxury cars, with 2.7 million expected to be sold there each year by 2020, overtaking the United States as the world's leader in the segment.

GM plans to introduce more than 10 new or upgraded products for its brands in China on average each year through 2016. GM and its joint ventures sold a record 2.8 million vehicles in China in 2012, up 11.3 percent from a year earlier.

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