The ATS is a really good car, perhaps GM’s best product of any kind at the moment. It isn’t a significant part of GM’s China offerings yet, and won’t be until Shanghai GM starts making it locally late this year. At that point, it stands a pretty good chance of gaining some ground on BMW’s 3-Series and Audi’s A4, just as it is doing here in the U.S.
But GM is going to need a lot more than the ATS – which is really an entry-level luxury car — if it’s going to be a significant luxury player in China.
A Cadillac renaissance is coming, but slowly
Like most automakers, General Motors Company (NYSE:GM)’s future product plans are largely secret. But the company is widely believed to be working on a “flagship” Cadillac, previewed by 2011’s Ciel concept car: a big, powerful, opulent luxury sedan that can go toe-to-toe with the Germans’ best, the Mercedes S-Class, Audi A8, and BMW 7-Series, with no excuses.
That’s the car that Cadillac needs to be in order to be taken seriously as a global luxury player. And it’s not even a sure thing: It could cost a billion dollars or more to develop, a number that is said to have given GM’s board some pause.
Why so expensive? Such a car requires the development of a major new rear-wheel-drive platform, said to be code-named “Omega,” which could eventually serve as the basis for several high-end Cadillacs designed to confront the Germans head-on.
The key word there, though, is “eventually.” Analysts don’t expect the first Omega-based Cadillac to appear much before 2015. And, even then, it could take a few years (or more) of careful marketing before the high-end Cadillacs are taken seriously as direct competitors to the Germans, in China, or anywhere else.
Cars like the ATS are laying good groundwork. The all-new mid-sized CTS, which is set to be revealed later this month, is said to share the ATS’s basic framework. If it’s as well-executed as the ATS (and that’s still something of an “if” – this is General Motors, after all), it should be a solid competitor for the Mercedes E-Class, BMW 5-Series, and Audi A6.
The upshot: A long, slow, uncertain process
As the ATS and all-new CTS hit the Chinese market over the next couple of years, Cadillac’s sales should pick up steam. But, without a credible entry at the top of the line, Cadillac is unlikely to be taken seriously as a peer of the Germans by tastemakers in China (or elsewhere). Without street cred, Cadillac won’t be a major player in this market.
Even once those top-of-the-line cars appear (assuming that they do), Cadillac will face an uphill battle to reclaim its long-lost title as the “Standard of the World.” Years of careful marketing may be required and, even then, General Motors Company (NYSE:GM) may have to settle for third or fourth place.
Meanwhile, VW will be selling an awful lot of Audis, and making an awful lot of money, in China.
The article Why GM Won’t Win the China Luxury Wars originally appeared on Fool.com.
Fool contributor John Rosevear owns shares of General Motors and Ford. Follow him on Twitter at @jrosevear. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford and General Motors.
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