Lincoln, Cadillac chase Audi

Nov 30, -0001

BEIJING: Classic American luxury brands Lincoln and Cadillac are taking on Germany's long-dominant Audi in China, but face a market leader fortified by enviable brand awareness built over years as officialdom's favourite car.

Black Audis -- with their four interlocking ring symbols, signifying the long-ago merger of four German auto companies -- are ubiquitous at state events, such as the annual meeting of China's legislature in central Beijing.

Audi, which last year celebrated its 25th anniversary in China, has benefitted from its early entry into the market and the prestige its badge holds among high-profile passengers, selling just short of 500,000 vehicles in 2013.

German manufacturers -- Audi, BMW, Mercedes and Volkswagen -- dominate the premium segment, with 80 percent market share, the consultancy McKinsey said in a report last year.

Now other players are hoping to take advantage of what executives and analysts call a "broadening" of the segment, such as General Motors' Cadillac and Ford's Lincoln -- American luxury brands with illustrious traditions at home where they have served as official cars for American presidents.

China's economy has surged to become the world's second-largest, and its auto market has overtaken the United States as the biggest.

That means a growing middle class is increasingly able to afford premium marques, while at the same time the government has been attempting to promote home-grown vehicles for official use.

The foreign ministry last year announced that minister Wang Yi was using a Hongqi, or Red Flag, vehicle -- having switched from an Audi A6, according to Xinhua.

Luca de Meo, Audi board member for sales and marketing, told reporters ahead of the 2014 Beijing auto show that the carmaker "has always been very honoured" at official use of its vehicles.

But the situation has changed, de Meo said, adding that Audi has the "right strategy... to compensate for this".

John Zeng, managing director of LMC Automotive Consulting, said that Audi has sought to widen its customer base.

"They have been putting their focus on the family car" over the past four or five years and are targeting younger consumers, he told AFP.

Seeking exclusivity

Jim Farley, a top Ford executive, sees the dominance by a few in China as an opportunity.

"The ubiquity of the product on the street fights with the exclusivity of the brand... there are opportunities for challenger brands," he told reporters at the auto show.

"But the responsibility of the challenger brand is they have to offer something better and different."

Lincoln will begin sales in China later this year with the Lincoln MKZ, a midsize sedan, and the Lincoln MKC, a small sports utility vehicle.

China's auto sales surged 13.9 percent to 21.98 million vehicles last year. GM, for example, expects total auto demand to increase to 33-to-35 million vehicles by 2020.

In differentiating itself, one card that Lincoln -- named after the 16th US president Abraham Lincoln -- won't be playing in China is national origin.

"We definitely will not present ourselves as an American brand," Farley said.

"We'll present our brand with a heritage, an authentic heritage, but we won't be Ralph Lauren or other brands that have used great American celebrities," he said.

"Americanness has all sorts of things in customers' minds here," he added, suggesting a disadvantage.

Indeed, in an address at the auto show Farley spoke for eight minutes without mentioning the US.

But he emphasised Lincoln's "distinguished heritage", and that it will offer Chinese consumers its "presidential series", which he called the "highest expression" of the badge.

Auto show visitor Wang Yongliang was impressed with Lincoln, describing it as "luxurious" and "fashionable", though said it was out of his reach for now.

"I may need to save money for another three or four years," he said.

Cadillac, already established in China, saw sales surge 67 percent last year to a record 50,005 vehicles and has a goal of increasing that to more than 100,000 by 2015.

And it has no qualms about where it comes from as it pushes to take advantage of the booming market, showing off its CTS model at the auto show.

"We're proud to be an American company," Matt Tsien, president of GM China, told AFP. "We don't hide that fact and it's not been a problem for us."

He acknowledged that the level of awareness about Cadillac is not yet high in China, but stressed that people who know the marque realise it is American.

"I think there are a lot of people in China that root for us, that root for Cadillac," he said. – AFP




Tabool ads will show in this div