GM expects demand for luxury vehicles in China to grow at a slower pace this year compared with the total vehicle market.
GM says that sales of premium vehicles in China will likely increase 4% in 2013, which would be half of the automaker’s forecast made at the beginning of this year, according to Bob Socia, GM’s China head. The company added that it sees total industry sales up around 7% to 8% by the end of this year.
Demand for luxury products in China, such as Swiss watches, sports cars and many more, has dropped since President Xi Jinping demanded a cut on lavish spending. China sales, where German automakers accounted for 3 in 4 luxury cars sold, are beginning to drop at a time when deliveries in Europe are heading towards a 20-year low.
“Even taking into consideration the crackdown on corruption, calls for frugality and slower economic growth, luxury car demand should hold at around 10 percent growth,” said Han Weiqi, an auto analyst with CSC International Holdings Ltd. in Shanghai. “GM’s estimate for 4 percent growth means they expect the segment will be pretty sluggish.”
GM still plans to triple sales of its Cadillac brand by 2015, reaching 100,000 units, as the automaker will introduce a new model each year through 2016. CEO Dan Akerson said that the company will invest $11 billion in the region by 2016, planning to reach 10% of China’s luxury market by 2020.