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Why Cadillac sells more cars in China than in America

Rick Newman
Senior Columnist

Cadillac sold 156,000 vehicles in the United States last year. It sold 175,000 in China. That makes 2017 the first year the General Motors (GM) luxury division has sold more vehicles in China than in its home market.

There’s good news and bad news in those numbers. Sales in China eclipsed those in the U.S. for two reasons — improving numbers in China, and declining numbers in the U.S. GM has been revitalizing the storied Cadillac brand, which has struggled with overproduction and a tarnished image in the U.S. “We decided four years ago that we had to prioritize investment in China,” Cadillac President Johan de Nysschen told Yahoo Finance at this year’s Detroit Auto Show. “In the United States, the focus had to be different. We focused on brand reposition and brand perception.”

GM built too many Cadillacs in recent years, which forced GM to offer steep discounts and sell to corporate and rental-car fleets. Such moves usually lower resale value and hurt a brand’s image. The average age of a Cadillac buyer is 60, according to research firm Strategic Vision. That’s eight years older than the average age for luxury-vehicle owners, which is 53. Younger buyers usually indicate a better product perception and stronger brand health. The average buyer age is 48 for Tesla, 49 for BMW and Land Rover, and 50 for Audi.

[Related: The buzz in Detroit: Who will buy Tesla?]

Cadillac has dialed back incentives and fleet sales, and developed a strong reputation for quality among journalists and industry pros. What it needs to do next is roll out new models to capitalize on the shift from sedans to crossovers. It already offers the gigantic Escalade and the XT5 midsize. A smaller utility vehicle, the XT4, is coming later this year. Cadillac would have liked to have the smaller crossover sooner, but it’s been waiting for the joint U.S.-China revival to take root.

The Cadillac XT5 crossover. Source: AFP

Cadillac has been a popular brand in China for years, but it needed to crank up the volume to boost the division’s scale and make investment in new models economically viable. “We’ve got the volume,” de Nysschen said. “Now we can invest in new product. We’ve got that foundation to launch new cars.”

Cadillac also offers SuperCruise, one of the most advanced self-driving features available on cars today. The technology just became available on the CT6 sedan, and de Nysschen said about 25% of that model’s buyers opt for the feature. SuperCruise pilots the vehicle itself on certain highways, with sensors and computers handling steering and throttle. The “driver” can literally take his/her hands off the wheel and feet off the pedals, as long as a monitoring camera indicates he or she is alert. Tesla offers similar technology, and that’s the kind of innovative competition Cadillac wants to be compared with. Whether here or in China.

Confidential tip line: rickjnewman@yahoo.com. Encrypted communication available.

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Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman

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