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Cadillac pushes back Europe expansion plans

Melissa Burden
The Detroit News

Cadillac will concentrate on growing in China, the Middle East and Russia before it puts major focus into growing across Europe, the head of General Motors Co.’s Global Cadillac brand said Tuesday.

Johan de Nysschen, who spoke at the J.P. Morgan Auto Conference, said GM is pushing plans to expand the luxury brand in Europe “beyond 2020.”

Cadillac wants to nearly double its global sales to half a million vehicles annually by 2020. It expects to sell about 275,000 vehicles this year. Europe is expected to grow in sales but remain a fairly small part of Cadillac’s growth plans in the future.

The carmaker sold just 838 vehicles in Europe and Russia through the first seven months this year, down 16.9 percent year-over-year. GM in March announced plans to largely pull out of Russia as it said it would stop selling Opel and most Chevy vehicles there by the end of the year. Its plans for Russia include focusing on the premium market there including selling Cadillacs.

Previously de Nysschen had said Europe would be part of the luxury brand’s global growth strategy, but not in the near term. He had confirmed GM was working on right-hand drive and diesel offerings for Europe that could arrive by 2019 or later.

“We’ll go to that market when we have the right powertrains and the right cars,” he said Tuesday.

“We can only achieve so much at the same time; all of these things cost money,” he added. “Let’s get strong in these other markets which naturally provide immediate volume opportunities before we tackle the Germans in their backyard, and we do so then with a position of strength.”

De Nysschen said Cadillac is focused on establishing China as a second sales volume hub for the brand behind the United States and it sees growth opportunities in the Middle East and Russia over the next five years.

The brand’s global sales are up 1.5 percent through July this year. Sales in the U.S. are down 2.4 percent through July as the U.S. luxury market overall is growing, and sales in China are up 7.4 percent.

GM is investing $12 billion into Cadillac so the brand can launch eight new vehicles by the end of the decade.

De Nysschen said an emphasis is on more crossovers. Cadillac also will move from three midsize luxury sedans to one and add some “lifestyle cars, convertibles that really have been part of our heritage (and) some coupes” that will be more positioned in the growing compact luxury segment, he said.

De Nysschen, who joined Cadillac a year ago, said the brand is making progress on growing for the long-term and improving the quality of the business. He said incentives are down about $600 so far this year compared to the same time in 2014, dealer inventories are down 40 percent from a year ago and the second quarter average sales price for Cadillac totaled nearly $52,000, second only to Mercedes-Benz in the U.S.

The company also plans to officially open its New York headquarters in Soho next month. It is bringing talent from Detroit and has hired dozens with automotive and luxury brand experience.

Cadillac plans to begin providing the luxury brand’s financial results separate from GM around 2017, de Nysschen said.

Separately, Cadillac last week said it appointed David Leone, 57, as executive chief engineer of Cadillac product programs. He reports to Doug Parks, GM vice president of global product programs and de Nysschen.

Leone has worked at GM since 1979 and in 2012 was named an executive chief engineer of global performance luxury cars and Cadillac lead executive chief engineer.