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Cadillac Sales Surge in China, While Tesla Tests the Waters

Daily Ticker

Sales of U.S. carmakers are accelerating in China: The Ford (F) Focus was the best-selling sedan in China last month and General Motors (GM) set a new record for September sales.

GM sold 277,647 vehicles in China, an increase of 13.7% from September 2012. Its Buick, Chevrolet, Cadillac, Wuling and Baojun brands all reported year-over-year gains. Justin Hyde, managing director of Yahoo Autos, says GM’s efforts to win over wealthy Chinese consumers are starting to pay off.

“Right now half of GM’s sales in China come from Wuling, its joint venture brand with Chinese partners,” Hyde explains in the above video. “GM wants to boost Cadillac and its other luxury models. The company is starting to build Cadillacs in China that are designed for the Chinese market.”

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China is the largest market for new auto sales in the world and automakers are increasingly turning to Chinese customers as a dependable source of growth. Car sales in the U.S. and Europe are slowing; Edmunds.com forecasts that U.S. auto sales will reach 16.4 million in 2014, a 6% jump from 2013 but down from an estimated 7% increase in 2013 and a 13% hike in 2012.

Hyde says Ford’s goal to double its share of the Chinese auto market to 5% from 2.5% by the fourth-quarter of this year is not much of a stretch.

“Ford is competing against a very crowded field of foreign and Chinese built competitors but Ford is getting a break,” he notes. “There is a new nationalistic streak that is pushing Chinese buyers to homegrown brands. The streak is hurting Japanese competitors and helping Ford.”

Chinese consumers may also get a chance to buy one of the hottest cars in the market: Tesla’s (TSLA) Model S. According to CNN, Tesla tweeted on a Chinese microblogging site this week that reservations were now being accepted for its Model S electric car. But demands by the Chinese government may hinder Tesla’s opportunities in this rapidly expanding auto market, Hyde notes.

“Tesla has a lot of opportunity in China but the trick will be how it gets in there,” he says. “The Chinese government controls access to its markets very tightly. It requires automakers who want to build in China to have a joint venture partner so the Chinese auto industry can learn and eventually build its own vehicles. Tesla has to consider whether it wants to partner and share its technology with a Chinese firm.”

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