◼ BUSINESS Bloomberg Businessweek August 12, 201917ILLUSTRATION BY WOSHIBAI. DATA: LMC AUTOMOTIVE
Cadillac’s surged 36%. “Luxury sales have definitely
been more resilient than the overall market,” says
GM Chief Financial Officer Dhivya Suryadevara.
Both brands are launching an armada of new
models in the world’s No. 1 auto market and are pro-
jected to account for 1 in every 10 premium vehi-
cles sold there by 2022, according to researcher LMC
Automotive. “It’s been a struggle for them in the U.S.
to get any traction that is lasting,” says Jeff Schuster,
senior vice president at LMC. “But the interest in
the brands by Chinese consumers, combined with
the sheer size of the market, creates a good oppor-
tunity for them to get the volume and scale that they
haven’t been able to in other markets.”
Why do the Chinese revere the Detroit luxury
cars that many Americans find irrelevant? Part of it
is cultural: They admire the brands’ long histories
and see them as the gilded carriages of American
presidents and Hollywood movie stars. Chinese
consumers tend to associate Lincoln with the 16th
American president, who’s highly esteemed there.
And they see none of the baggage Cadillac and
Lincoln built up over decades of disastrous branding
decisions such as the Cadillac Cimarron economy
car and the short-lived Lincoln Blackwood pickup.
“Chinese people associate Lincoln and Cadillac with
wealth and power and everything that goes along
with America’s status as the No. 1 superpower,” says
Michael Dunne, a China expert and chief executive
officer of consultant ZoZo Go. “They were aware of
these prestigious brands coming out of the United
States. They were not sure what they looked like or
how they drove, but the names were pure gold.”With China emerging as the world’s largest mar-
ket for electric vehicles, Cadillac will debut its first
EV there in 2022. GM then plans to roll out a handful
of plug-in Cadillac models in China over the next sev-
eral years. “There is an appeal to American brands,”
says Cadillac President Steve Carlisle. “There is an
association from a values perspective of ‘anything
can happen’ and the American dream.”
Lincoln will introduce a string of SUVs thatTHE BOTTOM LINE American luxury cars are in overdrive in the
world’s No. 1 auto market. More Cadillacs are sold in China than in
the U.S., and the same will likely be true for Lincoln in a few years.will be built in China, starting with the Corsair
crossover later this year. And it’s rapidly expanding
a tearoom-style showroom strategy, where custom-
ers get the royal treatment, including massage chairs
and lattes topped with their personal portraits.
Particularly striking is the huge age difference
between the brands’ average buyers in China, who
are in their early to mid-30s, and in the U.S., who
are about 60. Detroit’s marketers don’t have to over-
come past mistakes or deal with the stigma of pro-
moting a vehicle considered to be an “old man’s car.”
Cadillac and Lincoln have clean slates to introduce
their models to consumers increasingly interested
in looking beyond Audi, BMW, and Mercedes-Benz,
which together control 68% of China’s premium seg-
ment, according to LMC. “We’re an alternative to
what’s in the luxury market now,” Carlisle says.
Rather than copying the languid TV spots they
use to entice luxury buyers in the U.S., Lincoln
and Cadillac are trolling for Chinese consumers
on social media and at online stores operated by
Alibaba Group Holding Ltd., the Amazon of China.
“You really don’t have time for an ad campaign,”
says Joy Falotico, president of Lincoln. “You have
to move quickly and have relationships there with
the social media giants.”
The American luxury brands are also aggres-
sively seeking customers in China’s inland cities,
where personal wealth is growing and the German
automakers aren’t as entrenched. These third- and
fourth-tier cities, with populations of as much as
7 million people, are larger than every U.S. city
except New York. “You have wealthy people in each
of those cities,” Dunne says, “and they’re ready to
buy premium vehicles.”
Looming over this newfound opportunity are
trade tensions between the countries, which have
included increased tariffs on vehicles and auto parts
going both ways. President Trump raised the stakes
on Aug. 1, announcing he would impose a 10% tar-
iff on a further $300 billion in Chinese imports. The
new import taxes, which he later said could go “well
beyond” 25%, will begin to go into effect on Sept. 1.
Avoiding tariffs is a key reason Lincoln plans to
eventually build all its models in China, except for
the Navigator SUV, which doesn’t sell in large enough
numbers to justify local production. “We see China
as ground zero for Lincoln, given the size of the
market and how well the brand has been received,”
said Bob Shanks, Ford’s then-CFO, in May. “It’s a
huge, huge improvement in the business model.”
�Keith Naughton and David Welch, with Tian Ying2010 2022240k1200● Cadillac sales
China
U.S.
Projected240k1200
2010 2022● Lincoln sales
China
U.S.
Projected