Monday, February 28, 2005

GM to launch second Cadillac model in China

Reuters

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SHANGHAI - General Motors, the world's largest auto maker, will begin selling an SUV model from its Cadillac line in China from Tuesday, after introducing the iconic brand to its second-largest market worldwide in 2004.

General Motors Corp. said it had sold more than 1,000 Cadillacs in China since sales began last October and a company executive told Reuters last year the company expected to sell several thousand in the country in 2005.

The entry of the Cadillac pitted GM head-to-head against more established high-end models by Volkswagen AG's Audi AG and BMW AG in the world's third-largest vehicle market.

The Detroit giant, second to Germany's Volkswagen in China sales, launched the Cadillac to flesh out its product slate -- from the cheap Spark minicar to luxury models -- as it accelerates a drive to grab market share in China.

GM will offer an imported version of the SRX sport utility vehicle (SUV) for 688,000 yuan ($83,130) and a version made by its Shanghai joint venture for 759,000 yuan -- more than double the base retail price in the United States.

It can cost up to 20 percent more to produce a vehicle in China due to inadequate logistics and higher import tariffs, analysts say.

GM said in a statement it would start taking orders on Tuesday for the SRX, which complements the Cadillac CTS sedan it launched in China last year.

Analysts estimate the luxury sector takes up 5 percent of China's market, versus more than a tenth in the United States.

The mainland SUV market is dominated by local players such as Great Wall Automobile Holding Co. Ltd. and established foreign companies such as Mitsubishi Motors Corp.