A New Development in China’s Luxury Market

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On January 14th, General Motors officially opened its brand-new Cadillac factory in China, signaling the possible start of growth in the country’s auto industry. Cadillacs have been sold in China since 2004, and the country’s auto market is currently the largest in the world by vehicles sold, despite recently slowed overall sales growth. The $1.2 billion factory will have the production capacity of 160,000 vehicles per year—a number that bespeaks GM’s optimism about the market.

Although the luxury market shows no sign of shrinking, and China’s luxury market in particular is one that has developed rapidly over the past several years, the factory’s opening still might seem like a bold move. As noted in a recent Associated Press article, China’s luxury market is already “crowded” with the likes of other luxury automakers such as BMW and Mercedes-Benz.

As a provider of luxury car service from Washington DC to Shanghai, EmpireCLS always has an eye on luxury vehicle news. Here are some highlights from the latest news about China’s new Cadillac factory, as reported by ABC News:

The Factory Introduces A New Model to China: Two models are already manufactured in Shanghai: The XTS (a model with Magnetic Ride Control suspension technology, a V6 engine and luxury appointments that we already use in our chauffeur service) and the ATSL. This month, the new GM factory, built in partnership with Shanghai Automative Industries Corp., will begin producing the CT6 sedan.

The CT6 is a five-passenger sedan that boasts a V6 engine and 400 horsepower, plus 400 pound-feet of torque and an eight-speed transmission. The car is touted as the American answer to German engineering (expertly timed in light of the recent Volkswagen scandal), and, despite its size, has already been assessed as a powerful vehicle. This appeal alone might suffice to drive its sales in China.

Last Year, Vehicles Slowed, But Cadillac Soared: In 2015, the growth of the global luxury vehicle market slowed to 7.3 percent. However, sales of Cadillacs seemed unaffected by this general trend. Sales of Cadillacs in China actually rose 17 percent, with just under 80,000 vehicles driven off the lot.

More Growth Predicted: As the market is predicted to pick up, so are vehicle sales. Matt Tsien, president of GM China, has a particularly optimistic prediction for the next few years. According to Tsien’s projections, luxury vehicle sales could grow to 3.5 million vehicles per year by 2020.

Industry analyst Bill Russo, at Geofeng Advisory Co., added credence to Tsien’s predictions, calling China “the highest growth opportunity in the world” that offers “a lot of margin opportunity.” With the introduction of a new (and much anticipated) Cadillac model, the CT6, the Chinese luxury market might see some much-needed growth. And since the global vehicle industry looks to China to drive revenue, vehicle sales might get a boost worldwide.

Keep up with luxury auto industry news by visiting the EmpireCLS blog or following us on Twitter and Facebook.

Photocredit: Autoweek USA

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