General Motors gears up for push in Chinese market

The battle for dominance of the Chinese car market continues, with General Motors (GM) the latest automobile manufacturer from overseas to step up its push in the world's biggest car market.

It expects Chinese sales of its luxury brand Cadillac to increase 40 per cent this year to sell about 70,000 vehicles, the company's China president, Matt Tsien, said in Shanghai last week. It plans to introduce nine new Cadillacs in China over the next five years.

“We’re very optimistic about the luxury market, we believe that the luxury market by 2016 here will become the largest luxury market in the world, surpassing even the size of luxury in Europe,” he said.

His remarks display confidence in the Chinese economy to continue to deliver, and Tsien said one in 10 vehicles sold annually in China would be luxury models by the end of the decade.

The ongoing tussle for dominance between GM and Volkswagen continues. Last year VW ended GM’s nine-year reign as China’s top-selling foreign automaker.

Detroit-based GM said it would spend $12 billion (€9.5 billion) up to 2017 to increase capacity and expand its product line in China, and it foresees the Chinese buying between 33 million and 35 million vehicles a year by 2020. GM will have a local line-up of 60 models by 2018, up from about 40 now. GM also said it was reorganising its luxury brand as a separate unit based in New York.

One challenge the car market faces in China is a lack of loyalty. The Boston Consulting Group said in a report published last months that three-quarters of Chinese car owners, which represents an enormous installed base of some 90 million vehicles, plan to switch brands when they purchase their next car.

The report, The Battle for Automotive Brand Loyalty in China, warns of a "great brand migration" that will affect every segment of China's automobile market.