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Cadillac Floors It in China

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Cadillac Floors It in China

To coax drivers from their BMWs and Audis, GM is treating shoppers like VIPs

by Dexter Roberts

Asia

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The Cadillac charm offensive in China starts at the front door. In the companys 39 mainland dealerships, showroom attendants greet visitors by the polished-glass entrance, cigars and Napa Valley wines are on offer at a black-marble bar, and VIP rooms with leather sofas provide a comfortable venue for dealmaking. There's even an exhibit of the brand's 105-year history—with a movie and details on features such as hand-stitched leather seats and authentic wood trim—to show off Caddy's pedigree. "Everything gave me the feeling I was a VIP,'" says Hu Ming, a 44-year-old entrepreneur from Shanghai, who in February plunked down nearly $65,000 for a silver-gray Cadillac SLS. "The décor is very different from other brands'. The place has an American style."

Cadillac is counting on its brash brand of American luxury to differentiate itself from the pack. Caddy's parent, General Motors Corp. (GM), has done well in China with Buick and Chevrolet, but it has lagged at the high end. While Audi, BMW, and Mercedes (DCX) have been in Chinese showrooms for a decade or more, Cadillac arrived just three years ago. The European trio controls 77% of luxury-car sales in the mainland. And Cadillac? Just 2.7%.

Now, Caddy is revving up its marketing engine to narrow the gap. It has more than doubled the number of showrooms on the mainland in the past year. And it offers five models in China, ranging from the $46,000-plus CTS sedan to the $140,000 Escalade SUV and the $160,000 XLR convertible roadster. (Sticker prices run higher than in the U.S. because China slaps a 25% tariff on imported cars.) Cadillac got buzz when it delivered a pink CTS to Mary Kay Inc.'s top salesperson in China. It also ferried VIPs to a boat show in Shanghai and an exhibition of American art in Beijing.

Then in February, Cadillac introduced a China-designed and -built version of its SLS sedan. The car is four inches longer than the U.S. model, a nod to Chinese customers, who like a roomy backseat since they tend to have chauffeurs. The model powered a 62% jump in Cadillac's mainland sales in the first quarter, compared with a 19% increase for all of 2006. "We are putting everything in place," says Karen Rafferty, Cadillac brand director for China. "Building a brand is certainly not a sprint."

MILLIONAIRES GALORE

Luxury is a big deal in China because the high end is the fastest-growing part of the market. While overall sales of domestic passenger cars jumped by 35% last year—hypergrowth, to be sure—those of locally made luxury vehicles soared 57%. "With the growing ranks of millionaires, a booming stock market, and booming economy, the prospects are very strong," says John Bonnell of consultancy Automotive Resources Asia Ltd. in Bangkok. Bonnell predicts luxury sales will more than double by 2010, to 380,000 cars a year.

GM wants to make China the No. 2 Cadillac market. But it won't be easy to unseat rivals. Audi alone commands a 45% share. And the Asians are ramping up, too, led by Toyota's Lexus. "The problem is Chinese people are not so familiar with [American brands]," says Jia Xinguang, an independent auto analyst in Beijing.

One who has taken notice is Guo Jing. The 23-year-old Beijinger is a self-confessed car fanatic: His family owns a Citroën (PEUGY), a Hyundai, a Chrysler, and a Jeep. Then late last year they shelled out $58,000 for a black 2.8 liter CTS. What got Guo interested in Caddy? Another American icon: Hollywood. "There was a Cadillac," he says, "in the movie The Matrix Reloaded."

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source:

http://www.businessweek.com/globalbiz/cont...age_top+stories

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Mao would not be happy to see haggling! Or a good that some people cannot afford for matter.

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That is a good question. 98 where did you get the photo of the SLS? And is there a bigger size of it? I would love it for a photo-shop!

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The closest Cadillac dealer to me has a very similar look/feel to it. Massive sliding glass doors, large enough to drive an Escalade through, that woosh open as you approach. Black marble, stainless steel, and frosted glass all around. An in-showroom delivery area. A glassed in service area for basic repairs that is kept spotless. Cars that need major work go back to the "dirty" shop. A selection of fancy coffees, teas, and fancy pastries <not Dunkin Donuts>... and of course the perky blond behind the counter with the big rack and obvious pushup bra who irritates me. I should take some pictures sometime.

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"Why don't they do Cadillac showrooms like that here? "

It's very simple, really: economics. The cost of real estate, insurance and taxes is so much higher here. Cadillac will enjoy huge growth over there for the same reason Lexus enjoys huge growth here: newer dealer body, newer franchise agreements, hand-picked dealers, etc.

As we have discussed to death on other threads here, GM and Ford are hampered by their dealer body. Successful dealers are too busy investing in Japanese rivals and unsuccessful franchises won't go away. I am sure many dealers in North America are just waiting for a big check to be told to go away. Franchise Agreements can either be too tough and strong investors won't sign them, or too lenient and Cadillac is stuck with intractible dealers that they can't tell what to do.

What a mess.

GM in China does not have to deal with that crap, so the opportunities are endless. Sadly, one would think Cadillac dealers here would enjoy the strength of being on their own home turf and their heritage. Unfortunately, that isn't the case. Many older dealers are sitting on real estate that is worth more than they can make in the car business and won't invest. GM burned up a lot of Cadillac's heritage with the crap they put out in the '80s. I also suspect a lot of dealers in North America who were used to making money hand over fist are not adjusting to the new reality of having to fight for customers.

GM has the benefit of all its knowledge of selling vehicles here and can avoid the mistakes overseas. Just like Toyota and Honda here.

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That is a good question. 98 where did you get the photo of the SLS? And is there a bigger size of it? I would love it for a photo-shop!

Go to that link in the article. It will say view slide show. Go there and you will see the car.

"Why don't they do Cadillac showrooms like that here? "

It's very simple, really: economics. The cost of real estate, insurance and taxes is so much higher here. Cadillac will enjoy huge growth over there for the same reason Lexus enjoys huge growth here: newer dealer body, newer franchise agreements, hand-picked dealers, etc.

As we have discussed to death on other threads here, GM and Ford are hampered by their dealer body. Successful dealers are too busy investing in Japanese rivals and unsuccessful franchises won't go away. I am sure many dealers in North America are just waiting for a big check to be told to go away. Franchise Agreements can either be too tough and strong investors won't sign them, or too lenient and Cadillac is stuck with intractible dealers that they can't tell what to do.

What a mess.

GM in China does not have to deal with that crap, so the opportunities are endless. Sadly, one would think Cadillac dealers here would enjoy the strength of being on their own home turf and their heritage. Unfortunately, that isn't the case. Many older dealers are sitting on real estate that is worth more than they can make in the car business and won't invest. GM burned up a lot of Cadillac's heritage with the crap they put out in the '80s. I also suspect a lot of dealers in North America who were used to making money hand over fist are not adjusting to the new reality of having to fight for customers.

GM has the benefit of all its knowledge of selling vehicles here and can avoid the mistakes overseas. Just like Toyota and Honda here.

Thank you.. This is why Oldsmobile should not have been dropped and it was a mess when they did it...

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and of course the perky blond behind the counter with the big rack and obvious pushup bra who irritates me. I should take some pictures sometime.

Please do the latter of the former.

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This approach may be "all fine and dandy" for establishing Cadillac in China. However, given the limited resources of GM, the money for the American market will be better applied towards development of outstanding products--of the highest quality. I'm reminded of the expression, "It's the man that makes the clothes, not the clothes that make the man!" (Of course, there is no detriment to wear garments of the highest calibre.) I buy Cadillacs repeatedly where my parents have bought Cadillacs repeatedly at a dealership in Pittsburgh in business since 1938! The physical plant is Their customer service, as well as the quality of work from their Service Department, has always been exceptional in my experiences. One of the major pluses, quite indicative of their organization, is the consistency of their employees--the same Service Writer and mechanics have been there for years, as have the Sales Managers and other recognizable staff members, every time I visit--whether buying or servicing my vehicles. Needless to say, the dealership is Number One in the tri-state area, compared to the previously mentioned, "newly-built showroomed" local area dealer. To me, the quality product and the outstanding Customer Service will achieve far more than all the fancy showrooms and lavish accessories will do.

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This approach may be "all fine and dandy" for establishing Cadillac in China. However, given the limited resources of GM, the money for the American market will be better applied towards development of outstanding products--of the highest quality. I'm reminded of the expression, "It's the man that makes the clothes, not the clothes that make the man!" (Of course, there is no detriment to wear garments of the highest calibre.) I buy Cadillacs repeatedly where my parents have bought Cadillacs repeatedly at a dealership in Pittsburgh in business since 1938! The physical plant is Their customer service, as well as the quality of work from their Service Department, has always been exceptional in my experiences. One of the major pluses, quite indicative of their organization, is the consistency of their employees--the same Service Writer and mechanics have been there for years, as have the Sales Managers and other recognizable staff members, every time I visit--whether buying or servicing my vehicles. Needless to say, the dealership is Number One in the tri-state area, compared to the previously mentioned, "newly-built showroomed" local area dealer. To me, the quality product and the outstanding Customer Service will achieve far more than all the fancy showrooms and lavish accessories will do.

Which dealer do you use? I don't use the "newly-built" showroom dealer either. They lost me when I was an Olds customer and treated me poorly. I bought my car and have it serviced at Baierl in Wexford.

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Which dealer do you use? I don't use the "newly-built" showroom dealer either. They lost me when I was an Olds customer and treated me poorly. I bought my car and have it serviced at Baierl in Wexford.

Rohrich Cadillac. As the saying [advertisement] goes, "Cadillac makes the car. . . Rohrich makes the difference." Or, "Sit back, RELAX, in a Rohrich Cadillac." :AH-HA_wink:

P.S.--in my post, part of it got lost dealing with their physical plant being quite old, but nonetheless, meticulously clean. It appeals to me, because I think of the "history" within those walls!

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Rohrich Cadillac. As the saying [advertisement] goes, "Cadillac makes the car. . . Rohrich makes the difference." Or, "Sit back, RELAX, in a Rohrich Cadillac." :AH-HA_wink:

P.S.--in my post, part of it got lost dealing with their physical plant being quite old, but nonetheless, meticulously clean. It appeals to me, because I think of the "history" within those walls!

Rohrich lost my interest because they wouldn't take me seriously about wanting to buy a CTS <I was 25 at the time> and basically told me to go over to Volkswagen.

Baierl has been great with me.

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That's unfortunate. It was obviously their loss. In my experience, I would unequivocally recommend them for a Cadillac purchase. Their Cadillac operation is completely separate from their other franchises (Lexus, Toyota, Mazda, Volkswagen and Honda).

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and of course the perky blond behind the counter with the big rack and obvious pushup bra who irritates me. I should take some pictures sometime.

AH, NOW I HAVE TAKEN NOTICE OF THIS DISCUSSION

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One question after reading the article....

Why don't they do Cadillac showrooms like that here?

Good question. Our local Cadillac dealership also sells Nissans, Pontiacs, Buicks, GMCs, Chryslers, Dodges, and Jeeps. And the building itself looks like something straight out of the mid 1970s. Not exactly "standard of the world" facilities for people purchasing a car or waiting to have their car serviced. <_<

But that sort of thing is common around here. Buicks and Kias all at one location. The nearest VW dealership also sells Subarus and Suzukis. Hell, we purchased our Saab at a Saab-Chrysler-Jaguar dealership. Elitist as it sounds, how does it make you feel that you get the same service when you buy and service your Jaguar as a person buying a Dodge Calibre?

Edited by Hollingsworth
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"Another American icon: Hollywood. "There was a Cadillac," he says, "in the movie The Matrix Reloaded." "

It's good to hear the Matrix Reloaded is still paying dividends for the CTS. :thumbsup:

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i like the selected architecture. my only question.....is the chinese buffet included?

MMMMMMMMMMM......ehg ro.

Edited by regfootball
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and of course the perky blond behind the counter with the big rack and obvious pushup bra who irritates me. I should take some pictures sometime.

Please do the latter of the former.

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Some things you guys should keep in mind. The Cadillacs in China are selling for about twice what they go for here. It's competing in a much more premium segment of the market. That's why the Chinese SLS had to be lengthened for folks who have chauffers. It's also why these customers expect to be wined and dined when they walk into a dealership.

Here in the U.S., most Cadillacs sell for $30,000-$60,000.

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This approach may be "all fine and dandy" for establishing Cadillac in China. However, given the limited resources of GM, the money for the American market will be better applied towards development of outstanding products--of the highest quality. I'm reminded of the expression, "It's the man that makes the clothes, not the clothes that make the man!" (Of course, there is no detriment to wear garments of the highest calibre.) I buy Cadillacs repeatedly where my parents have bought Cadillacs repeatedly at a dealership in Pittsburgh in business since 1938! The physical plant is Their customer service, as well as the quality of work from their Service Department, has always been exceptional in my experiences. One of the major pluses, quite indicative of their organization, is the consistency of their employees--the same Service Writer and mechanics have been there for years, as have the Sales Managers and other recognizable staff members, every time I visit--whether buying or servicing my vehicles. Needless to say, the dealership is Number One in the tri-state area, compared to the previously mentioned, "newly-built showroomed" local area dealer. To me, the quality product and the outstanding Customer Service will achieve far more than all the fancy showrooms and lavish accessories will do.

The difference is, GM actually makes money selling cars in China, whereas here in the U.S. it does not. The fact is, Chinese profits have been helping subsidize American losses for a number of years.

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The difference is, GM actually makes money selling cars in China, whereas here in the U.S. it does not. The fact is, Chinese profits have been helping subsidize American losses for a number of years.

Excuses, excuses, excuses...Too many excuses...

Cadillac would not be losing money here if it built dealerships like that...

As for "high real estate prices., insurance, etc...", some of this is true...But a lot isn't. Chinese real estate has skyrocketed, especially in urban centers like Shanghai where Cadillac is huge. Not to mention you have to grease the palms of local officials just to get anything done there...

I think the biggest problem in this country is that too many fat-cat deealers who couldn't care less about the brand don't want to invest the money and time it takes to build a truly world-class dealership. They are stuck in the 60's and 70's...

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heres my 2cents....

Who cares if Cadillac dealerships are world class here if people barely know the cars to begin with. I see more Lexus and Mercedes tv commercials on any given night than I do of Cadillac.

Invest in more advertisement and put more effort in customer pampering at the current dealerships.

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Some things you guys should keep in mind. The Cadillacs in China are selling for about twice what they go for here. It's competing in a much more premium segment of the market. That's why the Chinese SLS had to be lengthened for folks who have chauffers. It's also why these customers expect to be wined and dined when they walk into a dealership.

Here in the U.S., most Cadillacs sell for $30,000-$60,000.

No, not really. The cars there are more expensive because of the huge tariffs China levees on the cars. It's not like the carmakers are pocketing the extra cash. It's true that the lux market over there is extremely competitive.

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The difference is, GM actually makes money selling cars in China, whereas here in the U.S. it does not. The fact is, Chinese profits have been helping subsidize American losses for a number of years.

Cadillac would not be losing money here if it built dealerships like that...

whoa.. whoa... whoa. What gives you guys the idea that Cadillac is even close to red ink, nevermind 'losing money' ??
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