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GM expects Cadillac China sales to increase by at least 40 pct this year

By Samuel Shen and Norihiko Shirouzu

SHANGHAI, July 4 (Reuters) - General Motors Co expects Cadillac sales in China to rise by at least 40 percent this year, as the U.S. carmaker steps up local production in a market key to transforming Cadillac into a global luxury brand, a senior executive said.

Cadillac sales in China surged 71.7 percent during the first half, outpacing roughly 32 percent growth in China's premium vehicle market, the company reported on Friday.

GM China Vice President John Stadwick forecast full-year sales of 70,000 vehicles.

"If you want to be a global brand, you have to have presence in the largest (auto) market, so there's complete focus from leadership to ensure that we do it and we do it right (in China)," Stadwick, who's in charge of vehicle sales, service and marketing, said in an interview in Shanghai.

China may overtake the United States as the world's biggest market for premium cars, consultancy McKinsey & Co has forecast.

To accelerate growth in China, GM will announce a second Cadillac model next month to be locally made, and a third one early next year, he said, declining to give details.

The strategy of local production, which helps skirt high import duties, would enable Cadillac to be priced more competitively in a luxury car market currently dominated by German brands BMW, Audi and Mercedes-Benz, all of which are heavily made in China.

"We believe in building where you sell ... so going forward, you will see fewer and fewer Cadillacs imported and more and more built in China," Stadwick said, adding that the strategy gives Cadillac an edge over rivals such as Lexus who don't make cars in China.

Lexus, the premium brand of Toyota Motor Corp which sold 70,400 vehicles in China last year according to consultancy LMC Automotive, has no plans to make cars there due to its emphasis on quality, Lexus head Tokuo Fukuichi said in April.

Another newcomer, Ford Motor Co.'s premium brand Lincoln, will hit showrooms in China later this year, but Ford hasn't disclosed any plans to produce it locally.

GM, which also sells Chevrolet and Buick in China, is counting on Cadillac to triple its share of the country's luxury car market to 10 percent.

(Editing by Susan Fenton)