By on May 7, 2013

GM received the hao de (O.K.)  to build a Cadillac factory from China’s powerful National Development and Reform Commission (NDRC), says Bloomberg.

GM will invest at least 8 billion yuan ($1.3 billion) into a factory located in Shanghai’s Jinqiao zone. Annual production capacity will be 150,000 units, Dayna Hart told the business wire.  By making cars in China, GM avoid paying China’s import tariff of 25 percent and more, especially on bigger bore imports.

According to Bloomberg, GM’s CEO  Dan Akerson “plans for the luxury brand to compete with BMW and Audi.“ It will take more than a new factory to do that.

GM sold 30,010 Cadillacs in China last year. Audi sold 405,838 units, BMW 327,341. Very unhappy with its own numbers, Daimler sold 196,211 units in China.

Cadillacs are a tough sell in China, a fact that has been conceded by Hart’s marketing colleague Susan Docherty. Dispatched from China to Europe.  Docherty said that to be successful in China, Cadillac must first be successful in Europe. Good luck with that. Cadillac sales in Europe are so low that they rarely register in official statistics.

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44 Comments on “GM Sinks $1.3 Billion Into Chinese Cadillac Factory...”


  • avatar
    jpolicke

    Now Cadillac has product they can sell at Walmart. The tire & lube center can be the service department.

  • avatar
    tikki50

    whats stopping those cars from coming here when they dont sell?

  • avatar
    rpol35

    Ironic seeing this after reading Ed Neidermeyer’s Op-Ed piece and then seeing the GM push back.

    As for, “Cadillacs are a tough sell in China, a fact that has been conceded by Hart’s marketing colleague Susan Docherty”; don’t know if they are really a hard sell in China or a hard sell for Susan Docherty; she doesn’t seem to have the midas touch when it comes to moving product.

    • 0 avatar
      sunridge place

      How is this ironic? GM announced a year ago or so their plan to increase Cadillac production in China. GM didn’t push back at Ed’s hack job by saying they weren’t investing in China. GM pushed back at the Op-Ed piece by pointing out the incorrect assumptions and half-assed use of ‘facts.’

      • 0 avatar
        rpol35

        The fact that it is happening isn’t ironic, it’s the timing; Ed’s article was Friday, the GM pushback yesterday and now this today.

        • 0 avatar
          sunridge place

          I guess we have different definitions of irony.

        • 0 avatar
          Domestic Hearse

          rpol35, you’re so right! How could I have missed it? Ed’s piece was so spot-on, so damaging, GM went ahead with a plan that was in place for years, involving the highest levels of government and corporate negotiations, along with a 1.3 billion dollars. There’s too much here to be a coincidence! That Ed, he’s the straw that stirs GM’s drink. /facepalm

          • 0 avatar
            CJinSD

            It certainly fits Ed’s narrative better than GM’s. That’s what happens when one side is reporting and the other one’s spinning.

          • 0 avatar
            sunridge place

            Actually CJ, Ed came back and tried to explain his main point–which he never really made in his WSJ Op-Ed.

            http://www.thetruthaboutcars.com/2013/05/ed-niedermeyer-returns-to-the-wsj/#comment-2044588

            He doesn’t dispute the business sense in these decisions in China–although he covers himself somewhat by calling them ‘risky’ as if investing huge $$$ in expansion is a non-risk when other OEMs do it.

            In the end, his feeling is that GM should not invest a penny outside of the US (and I assume Canada) until every penny is paid back. So, he believes that GM should wait for the govt stock sale to be completed…figure out what balance is left…plan to pay that back before investing a penny anywhere else.

            I assume he would mean China, Russia, Western Europe, South America, etc if he was consistent.

            Do you think that would be a smart move?

          • 0 avatar
            CJinSD

            Ed Niedermeyer: If GM were making it clear that the inevitable shortfall from Treasury’s stock sale was going to be refunded (even on some kind of payment plan), GM’s investments overseas would be no different than any other company’s.

            sunridge place: In the end, his feeling is that GM should not invest a penny outside of the US (and I assume Canada) until every penny is paid back.

            This: I’m beginning to think that you’re willfully misunderstanding my criticism.

          • 0 avatar
            sunridge place

            Dodging questions just like Ed….how shocking CJ.

          • 0 avatar
            CJinSD

            If they want to give the farm to China, that’s their prerogative once they’ve committed to repaying the taxpayers. Who’s dancing around the issue? I’ve never heard GM even pay lip service to paying back their involuntary financiers. Of course they’re a badly run company. They haven’t been anything else in my lifetime. They don’t have to pay back every penny before they offshore every aspect of their business. They just have to say they’re going to pay back every penny.

          • 0 avatar
            sunridge place

            Real sharp business mind there CJ.

            The final gap is determined by the stock price over the past few months and the upcoming year.

            Hey Investors!!!!

            We’re gonna pay back this thing…we have no idea how big it is…but we’re gonna do it. Soooooo, we have this large unknown expense coming up in 2014 or so. We think it’ll be a big # but it might not…so buy our stock please!!

            That’s your approach to how you recommend GM run their business post bailout–that’s what ‘automotive consultant’ Ed says they should do too.

            They should be doing everything they can to maximize the long-term view of their company…solid investments in China are kinda what they should be doing.

            Your suggestion is garbage to anyone with a clue about the business world.

    • 0 avatar
      corntrollio

      Ironic in the Alanis Morissette sense, clearly.

      I’m not sure how this contradicts what GM said, but maybe you can explain it to us. They said they are going to invest China dollars in China — how is this inconsistent?

    • 0 avatar
      bd2

      Cadillacs are a “hard sell” in China when they have to be imported from the US and thus be hit with the hefty 25% import tariff while the Germans produce their top selling models in China.

      Cadillac has done well with XTS which recently started production in China and increased Chinese production will only help.

      Lincoln, otoh, has a “wait and see” approach when it comes to investing in Chinese production (Ford’s hefty investment in China has largely been for Ford) – but the problem is, Lincoln models like the MKZ likely won’t see large enough sales to justify Chinese production as long as they are imported from Mexico and get hit with tariff.

  • avatar
    mike978

    Seems a sensible plan and it should boost sales since there will be no 25% tariff.

  • avatar

    A “CADIRRAC”

    • 0 avatar
      Summicron

      Never understood that. Unlike in Japanese, the lateral consonant “L” exists in putonghua but I hear the same thing from the Chinese I know.

      But, then, why not just carr it Cadirrac if Chinese are more comfortaberr with that? Their market is carring the shots now.

    • 0 avatar
      sunridge place

    • 0 avatar
      28-Cars-Later

      How about a Rincron MK whatever?

    • 0 avatar
      VA Terrapin

      Bigtruckseriesreview,

      Why do you like encouraging white supremacists like Summicron and 28-cars-later? If you and your Chinese girlfriend were to ever have children, would you try to make your kids ashamed of their Chinese ancestry?

      • 0 avatar
        28-Cars-Later

        “White supremacists”, really?

        The beauty of a message board is its race neutral until someone gives details about their background. White, black, brown, blue, polka dot, doesn’t really make a lick of difference unless you want it too.

        • 0 avatar
          VA Terrapin

          1) White supremacy is a belief, not a physical or cultural trait marking someone’s race. A person doesn’t have to be white in order to be a white supremacist.

          2) I didn’t read this article and comments hoping that some would make insults about Chinese people getting Rs and Ls mixed. Bigtruckseriesreview started the insult. You and Summicron piled on. If you don’t want someone calling you a white supremacist, keep your racist insults and beliefs you use to attack non-whites to yourself.

          • 0 avatar
            CJinSD

            So a white supremacist doesn’t have to be white, but anyone you consider to be a racist is a white supremacist? Why isn’t Bigtruckseriesreview a white supremacist in your esteemed estimation?

          • 0 avatar
            VA Terrapin

            CJinSD,

            Not everyone who’s a racist is a white supremacist. While Bigtruckseriesreview is definitely an anti-Asian bigot, he could be a black supremacist or a white supremacist for all I know. Summicron definitely comes across as a white supremacist, while 28-Cars-Later isn’t far behind.

            I would like to read TTAC without racist baggage that some commentators like to add. But if someone is going to spew racist crap on TTAC, I don’t always feel like I should be the one who keeps quiet.

          • 0 avatar
            Summicron

            @Small Edible Turtle

            You’re killin’ me here…

            There’s a certain East Asian language department at a mighty fine school that would laugh till they peed at my being called a Whaat Su-PREM-acist.

      • 0 avatar
        thelaine

        Turtle, I hope it makes you feel superior to call other people white supremacists. Please tell all your friends that you worked for social justice today and that the work never stops for tireless college graduates such as yourself. You are a warrior, bro.

        If you ever had any real-world dealings with actual white supremacists your ignorance on this issue would vanish in an instant.

        Races mix just fine. You know what doesn’t mix? Leftists and humor.

        • 0 avatar
          Summicron

          “If you ever had any real-world dealings with actual white supremacists your ignorance on this issue would vanish in an instant.”

          +1000
          Serious bad guys. They will kill anybody if their sick brains squirt the right chemicals.

        • 0 avatar
          VA Terrapin

          I could care less if someone on TTAC spends their spare time writing epic love poems to Noam Chomsky or worshipping at the church of Ayn Rand. I could care less if someone on TTAC likes to call Democrats anti-American, taxing and spending baby killers, or if someone on TTAC likes to call Republicans women, minority and gay hating troglodytes. I’m here to enjoy reading about cars, car news and the car industry, and at least a lot of political discussions on TTAC are relevant to the articles being discussed.

          What definitely takes some of the fun out of TTAC are people who bring their racially hostile baggage over here. What do insults about some Chinese people getting Rs and Ls mixed up when speaking English have to do with GM making a Cadillac factory in China? Nothing.

          As for dangerous white supremacists, the guys who wear pointy caps and burn crosses or shave their heads, wear Doc Martens and stomp on non-white people pale in comparison to powerful elites who have widespread legitimacy in mainstream society.

  • avatar
    stroker49

    30000 Cadillacs, that is less than Volvo who failed last year at 40 grand in China! If GM wants to succed here in Europe they must do something spectacular. Owning a Cadillac here is at least as expensive as driving a BMW or Mercedes. Then Cadillac must be at least as good and have good service and support. GM charged me 4800 usd for a LHS Xenon headlamp unit, that unit is 700 usd in the USA.When I complained their service organisation answered me that it might be wiser to buy a Lexus or BMW if I live here in Europe. As I like America and American cars I can take some hassle to drive something odd. Most Europeans would NOT.

  • avatar
    blowfish

    not sure to invest 1.3B and what kind of return projection?
    they should have some feasibility studies done, but how accurate is it going to be?

    sometimes when the car is being built locally it kind of lost its allure of being an import and the image can go down hill from there, unless the car is very entrenched in the culture.

    Look at what VW did to wabbits during the early 80s, plus all those cars made here were all shaking as much as late great Elvis.

    • 0 avatar
      sunridge place

      A $50,000 car built in China is sold at $50,000 in China. The same $50,000 car built outside of China and imported into China is sold at $75,000 due to import tariffs.

      That’s why they are doing it.

      • 0 avatar
        stroker49

        Yes, I guess they are building their investment on this level of math ;-)

        • 0 avatar
          sunridge place

          I do have to dumb it down on here to make some people understand.

          • 0 avatar
            rpol35

            A 25% tariff would put a $50,000 car at $62,500, not $75,000.

          • 0 avatar
            sunridge place

            You would be correct…bad quick math..my bad.

            Not sure if there’s anything else going on above that 25% because the SRX starts at about $70k in China.

            http://www.carnewschina.com/2013/03/14/spy-shots-dongfeng-liuzhou-v20-does-the-cadillac-srx-in-china/

            I think there’s an additional tariff on imported engines above a certain displacement but I could be wrong. Or, perhaps they only export the high end models from NA to China.

  • avatar
    icemilkcoffee

    Susan Docherty is a moron. Buicck has no presence in Europe, yet is very successful in China. hat is true for America is not necessarily true for China.She needs to b fired ASAP and replaced with somebody who ctually familiar with the conditions on the ground in China.


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