Exclusive: General Motors targets China's wealthy urban residents with luxury imports

Exclusive: General Motors targets China’s wealthy urban residents with luxury imports

  • GM launches direct sales channel in China
  • New wholly owned channel to be called Durant Guild
  • GM to target affluent urban consumers with niche US imports
  • High-end SUVs and sports cars are more likely to be imported

BEIJING, Sep 8 (Reuters) – General Motors has lost its influence in China.

Sales of its flagship brands Buick, Cadillac and Chevrolet have fallen by a third over the past five years to 1.3 million vehicles a year as consumers snap up smart electric vehicles made by domestic firms like Xpeng. (9868.HK)Nio (9866.HK) and BID.

To create hype for their American brands, GM (GM.N) plans to target affluent consumers in China’s metropolitan areas through niche luxury imports, executives at the US automaker told Reuters.

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Using a new direct-selling platform called the Durant Guild, the company will host invite-only events to showcase possible products, open “experience centers” in city centers and possibly place pop-ups on select sites, they said.

“The Durant Guild is not a grassroots game, but if we do a good job and the products sell well, it will create a lot of buzz around Cadillac and Chevy and help the way people perceive our products and technology,” said GM China CEO Julian Blissett. , said Reuters.

While he declined to name what vehicles will be sold through the Durant Guild, he said consider premium US models currently unavailable in China, such as the all-electric GMC Hummer pickup truck or SUV, a huge gasoline engine. SUV Chevrolet Tahoe or elegant sports car Chevrolet Corvette.

Blissett, a 16-year veteran of the Chinese market, said such “halo cars” would fit in well with consumer communities in cities that have begun to have an interest in performance cars for racing or SUVs to hit the road.

“There’s a lot more desire to use more off-road vehicles for nature exploration and that wasn’t the trend five to 10 years ago,” Blissett said in an interview.

The Durant Guild, named after GM founder William Durant, will be wholly owned and operated by GM and will officially open later this month.

To mark the launch, GM is hosting a series of indoor events, the first of which is expected in Shanghai on Friday.

MOVING FORTUNE

GM hopes that by using a sales and marketing model like the one that worked well for Tesla (TsLA.O) and an apple (AAPL.O) in China, it will be able to funnel any energy and excitement generated by imports back into existing GM models in the country.

“This will have a positive impact on our business and support our growth plans in China,” Blissett said.

GM plans to do this without relying on traditional dealerships. It wasn’t immediately clear how GM planned to service cars sold through the Durant Guild.

Global automakers such as GM, Volkswagen (VOWG_p.de) and Toyota (7203.T), which dominated China during the internal combustion era, are steadily lagging behind local players in the booming electric vehicle (EV) market. read more

Foreign brands, including Buick and Chevrolet, have dominated China since the 1990s, typically accounting for a combined 60% to 70% of passenger car sales in recent years.

However, in the first eight months of 2022, foreign brands captured only 52.4% of the market.

In a sign of a change of fortune, sales of GM’s Chinese joint venture with SAIC Motor (SAIC-GM) fell 4.6% year-over-year by the end of August, while BYD’s sales soared 267%.

For GM, improving the perception of its brands in China is all the more important as the company prepares to launch a new generation of its own smart electric vehicles in the country, starting with the Cadillac Lyriq SUV this year.

Felix Weller, head of the Durant Guild, said GM has identified three new types of consumers it hopes to attract.

First, there are nature lovers interested in glamping, picnicking, hiking and biking, all while staying close to home after the pandemic has limited travel options.

Then there are VIPs who are professionally successful and busy, and the third group includes young and athletic drivers who drive race cars on race tracks.

The spokesperson subsequently said that there are other communities in China that GM is also interested in courting through the Durant Guild, without giving details.

NO CONFLICT

It was not immediately clear what specific competitive conditions in China’s auto market forced GM to launch a new direct channel to sell special vehicles sourced from North America.

Asked how his Chinese partner reacted to the Durant Guild, Blissett said GM fully supports SAIC. (600104.SS) for both the idea and the intent of the Durant Guild.

“There is no fundamental tension,” he said.

The head of GM China also said that Chinese dealers did not resist selling Buick, Cadillac and Chevrolet vehicles to GM and SAIC, in part because there was no crossover.

“This is a business that they do not need today, so we are not cutting anything from anyone. It’s incremental, spin-off business,” Blissett said.

Asked about the Durant Guild, a SAIC spokesperson said: “The new platform complements SAIC-GM’s existing business. It doesn’t conflict with anything we do.”

Weller said the Durant Guild will try to go beyond locating its experience centers in malls, as Tesla and other electric vehicle startups have done, but that strategy is still in its final stages.

He said GM has no plans to use a similar model for Buick, Chevy and Cadillac vehicles already sold in China, or bring the Durant Guild model outside of China.

Chi-Kiang Lim, managing director for China at Detroit-based automotive consultancy Urban Science, said a direct selling model like the Durant Guild is a cost-effective way to bring cars to market and maximize profits. differentiator.

But he said GM shouldn’t lose sight of an even bigger consumer trend, with consumers increasingly concerned about smart, connected features.

“What Chinese consumers want is to extend their digital lifestyle to their cars. Foreign-brand vehicles designed and engineered overseas are increasingly failing to meet these needs,” said Lim.

“If Durant can overcome this bias and provide high-tech, personalized features and seamless connectivity to China’s digital ecosystems, it will have a better chance of succeeding in the Chinese market.”

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Reporting by Norihiko Shirozu in Beijing; Additional reporting by Zoya Zhang in Beijing; Editing by David Clark

Our standards: Thomson Reuters Trust Principles.

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