May 9, 2012
Here Comes the Made-in-China Cadillac
By Howard Richman & Raymond Richman
It's déjà vu all over again! GM again caves to Chinese pressure. In September it was the electric car. In April it was the Cadillac.
The Chinese government made its latest move in December. That's when The Guardian reported that the Chinese government raised its already high 25% tariff upon American-made vehicles, concerned that increasing numbers of big-engine cars were being purchased by Chinese consumers:
General Motors faces the greatest impact, almost 22% extra on some sports utility vehicles (SUVs) and other cars with engine capacities above 2.5 litres. Chrysler faces a 15% penalty, while a 2% levy will be imposed on BMW, whose US plants make many of the cars it exports to China.
Existing taxes and duties already push up the cost of US imports by 25%, and the new levies make it even more expensive for Chinese consumers to buy American.
Now we learn what they were after. In a May 2 Huffington Post commentary ("Commies in Cadillacs: GM Turns Chinese"), economists Peter Navarro and Greg Autrey reported that GM will build its luxury cars in China instead of exporting them to China. They began:
General Motors announced this week that it will start building the Cadillac XTS, CTS and ATX in China in an attempt to keep up with the insatiable demand for luxury consumption by that nation's nominally Marxist elite. It seems that Communist Party princelings and their crony capitalist clients just can't get enough Caddies, not to mention the BMWs, Ferraris and Lamborghinis.
This will be a joint venture with SAIC, the company that owns 51% of GM's China business. The announcement of the new factories was made by the vice president of GM China at a Beijing auto show on April 23. Valuewalk.com reports:
In 2012, GM will build the new 2013 Cadillac XTS sedan in China, followed by the ELR luxury electric coupe.
Currently, China is only selling one model, the large-length luxury sedan, the Cadillac SLS; it is built in the country while it imports the CTS, SRX crossover and Escalade from U.S. and Mexico plants, reported The Detroit News.
Nine months ago, the same scenario played out even more quickly. On September 16, the Wall Street Journal reported ("Road Gets Bumpy for GM in China") that the Chinese government was pressuring GM to give away its proprietary electric car technology. At that point, GM was refusing. Here's a selection:
GM would like to bring its Volt electric car into China. But Chief Executive Dan Akerson said he refuses to share electric-car technology in exchange for hefty consumer rebates from the Chinese government that would juice sales of the vehicle.
Just one week later, on September 22, the NY Times reported ("GM to develop electric cars with Chinese automaker") that GM had caved to the Chinese government demand:
HONG KONG: General Motors said Tuesday that it would develop electric cars in China through a joint venture with a Chinese automaker [SAIC], and would transfer battery and other electric car technology to the venture.
As a condition for doing business in China, the Chinese government requires that GM share its made-in-America technologies with SAIC, which is both its Chinese partner and its competitor. Back in 2009, Bloomberg reported ("GM Set for 'Harder Life' in China as Partner SAIC Adds Models") that SAIC is already using GM's technology to produce cars for the Chinese market, outside its partnership with GM. In February, SAIC got GM's electric car technology. In April, SAIC got GM's Cadillac technology.