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

  • GM to launch direct-to-customer sales channel in China
  • New wholly owned chain called Durant Guild
  • GM to target wealthy urban consumers with niche US imports
  • High-end SUVs and sports cars are the most likely imports

BEIJING, Sept 8 (Reuters) – General Motors has lost its mojo in China.

Sales of its flagship Buick, Cadillac and Chevrolet brands have fallen by a third over the past five years to 1.3 million cars a year as consumers buy smart electric vehicles made by local companies such as Xpeng ( 9868.HK), Nio (9866.HK) and BYD.

To generate buzz around its U.S. brands, GM (GM.N) plans to target affluent consumers in Chinese megacities with niche and luxury imports, executives at the U.S. automaker told Reuters.

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Using a new direct-selling platform called Durant Guild, the company will hold invite-only events to showcase possible products, open “experience centers” in urban centers and potentially host pop-ups at venues. selected, they said.

“Durant Guild is not a game of volume, 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 how people perceive our products and technology. GM China director Julian Blissett told Reuters.

Although he declined to name the cars that would be sold through Durant Guild, he said he was thinking of high-end US models currently unavailable in China, such as the all-electric GMC Hummer pickup or the sport utility vehicle (SUV), the huge gasoline engine. Chevrolet Tahoe SUV or the stylish Chevrolet Corvette sports car.

Blissett, a 16-year veteran of the Chinese market, said such “halo cars” would fit well into consumer communities in cities that have begun to take an interest in performance cars for racing or SUVs for s to venture off the beaten track.

“There’s a lot more appetite to take on more types of off-road vehicles to explore nature, and that wasn’t a trend five or ten years ago,” Blissett said in an interview.

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

To mark the launch, GM is hosting a series of invitation-only events, with the first expected in Shanghai on Friday.

CHANGING FORTUNES

GM hopes that by using a sales and marketing model similar to those that have worked well for Tesla (TSLA.O) and Apple (AAPL.O) in China, it will be able to channel all the energy and excitement that imports generate towards GM’s existing system. models in the country.

“This will positively impact our business and support our growth plans in China,” Blissett said.

GM plans to do this without relying on traditional brick-and-mortar dealerships. It was not immediately clear how GM planned to service the cars sold by Durant Guild.

Global automakers such as GM, Volkswagen (VOWG_p.DE) and Toyota (7203.T), which dominated China’s combustion era, are falling behind local players in a vehicle market electricity (EV) in full swing. Read more

Foreign brands, including Buick and Chevrolet, have dominated China since the 1990s, typically winning a collective 60-70% share of passenger car sales in recent years.

In the first eight months of 2022, however, foreign brands only captured 52.4% of the market.

In a sign of the change in fortunes, sales of GM’s Chinese joint venture with SAIC Motor (SAIC-GM) had fallen 4.6% at the end of August compared to the same period last year, while BYD’s sales soared 267%.

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

Felix Weller, head of 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, while staying close to home in the wake of the pandemic that has limited travel options.

Then there are the executive VIPs, who are professionally successful and busy, while the third group includes young, sporty drivers who take performance cars to the race tracks.

A spokesperson later said there were other communities in China that GM also wanted to woo through Durant Guild, without giving details.

NO CONFLICT

It was not immediately clear what specific competitive conditions in the Chinese auto market compelled GM to launch a new direct-to-consumer channel to sell specialty vehicles shipped from North America.

Asked about his Chinese partner’s response to Durant Guild, Blissett said GM has the full support of SAIC (600104.SS) for the idea and intent behind Durant Guild.

“There is no fundamental tension, he said.

The GM China chief also said there had been no reaction from Chinese dealers marketing Buick, Cadillac and Chevrolet cars for GM and SAIC, in part because there was no crossover .

“It’s a business that they don’t have to date, so we’re not cutting anything off anyone. It’s extra, extra business,” Blissett said.

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

Weller said Durant Guild would try to move beyond placing its experience centers in malls, as Tesla and other EV startups have done, but that strategy was still being finalized. .

He said GM has no plans to use a similar direct-to-consumer model for Buick, Chevy and Cadillac cars already on sale in China – or take the Durant Guild model beyond China. .

Chee-Kiang Lim, China managing director of Detroit-based automotive consultancy Urban Science, said a direct-selling model such as Durant Guild was a cost-effective way to market cars and maximize profits – and l GM’s focus on changing consumer lifestyles could be a differentiator.

But he said GM shouldn’t overlook an even more critical consumer trend, where consumers are increasingly concerned about smart and connected features.

“What Chinese consumers want is to extend their digital lifestyle to their cars. Foreign-branded cars designed and manufactured overseas increasingly don’t meet those needs,” Lim said.

“If Durant can overcome this bias and provide high-tech custom features and seamless connectivity to China’s digital ecosystems, its chances of success in the Chinese market will be higher.”

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Reporting by Norihiko Shirouzu in Beijing; Additional reporting by Zoey Zhang in Beijing; Editing by David Clarke

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