Where Cadillac Is Still Prized

The once-dominant luxury car, fading at home, finds fans in China

- David Welch & Yan Zhang

General Motors has been spending billions of dollars on Cadillac, trying to recapture the magic that made the name synonymous with luxury in the U.S. for almost 60 years. There are signs the effort is finally paying off—in China.

Aggressive advertising and a hot new entry, the XT5 sport-utility vehicle, helped Cadillac push past Lexus to become China’s No. 4 luxury car brand last year, as annual sales jumped 46 percent, to 116,000. While German luxury brands, led by Volkswagen’s Audi, have 75 percent of China’s market for upscale vehicles, challengers such as Cadillac, Lexus, and Jaguar Land Rover are making inroads, says Michael Dunne, president of consulting firm Dunne Automotive in Hong Kong. Cadillac enjoys some American swagger on the mainland, thanks to the popularity of GM’s Buick brand and the local admiration for U.S. icons such as Starbucks, Apple, and Nike. That’s given Cadillac a boost while it struggles to revive its lagging business at home. In America, Caddy sales fell 3 percent last year despite a record auto market, and its “Dare Greatly” ad campaign hasn’t done much to counter its second-tier image among affluent baby boomers. “The brand is recognized in China as having long heritage and pedigree,” says Cadillac President Johan de Nysschen. “It is also seen as fresh and new. Its U.S. history has had its ups and downs.”

Mostly down. Cadillac’s U.S. sales peaked in 1978 at 347,000 vehicles. Quality issues and cars that looked too much like Chevrolets and Buicks eroded the brand’s value until it lost its upscale sales crown to Ford’s Lincoln in 1998. Boomers then started a love affair with Toyota’s Lexus brand and German nameplates including BMW and