BEIJING (Bloomberg) -- As General Motors Co. executives celebrated the opening of a special pavilion in Beijing to woo luxury customers away from Audi, a subtle message about the brand stood on display: a scale model of Cadillac's U.S. presidential limousine.
GM is betting Cadillac's 110-year heritage, including its role as the president's car, can help sell the brand in China, where sales are a 10th of market leader Volkswagen Group's Audi and German luxury brands dominate the premium segment.
The U.S. automaker, a year after reclaiming global sales leadership, is preparing a renewed Cadillac push in China with plans to introduce new products, increase local production and expand sales outlets as it aims to boost sales in the country at least fivefold to match U.S. deliveries by 2020.
Narrowing the gap against Audi can help keep GM ahead of VW.
"Chinese may or may not like America, but they definitely like the power that's associated with America," said Michael Dunne, a Jakarta-based industry analyst and author. "They admire, respect and like power and America is the world's leading superpower, so owning an American car offers an opportunity to be part of that."
The Cadillac push in China, where the automaker mostly sells Chevrolet, Buick and Wuling models, is part of CEO Dan Akerson's effort to raise profit margins and develop Cadillac as a top global brand to hedge against the risk of declining sales of high-profit trucks.
While Cadillac's China sales rose 73 percent last year to 30,000, Audi increased sales by more than Cadillac's total.
Audi's full-year tally of 308,808 made it the country's luxury leader, according to LMC Automotive, and helped propel VW ahead of Toyota in 2011 global sales to trail only GM.
"Talk luxury cars in China and you're really talking about German domination," Dunne said.
The three German high-end brands dominate China's upscale auto market, with a combined share of more than 75 percent last year, according to figures by industry analyst LMC Automotive.
Cadillac's pavilion in Beijing, erected in connection with the city's auto show that begins this week, is intended to highlight the brand's uniqueness.
Influential guests will be invited to see art, such as works by pop icon Andy Warhol and contemporary Chinese artist Yue Minjun, displayed around classic and modern Cadillac cars.
"We want to create a whole story and tell customers and people here that Cadillac is different," Kevin Chen, general manager of the Cadillac brand in China, said during an April 21 interview at the monthlong exhibit's opening for local media.
"We own the asset; nobody can replicate" Cadillac's history, he said.
At the pavilion, GM displayed a 1927 Webster's dictionary, opened to the entry for Cadillac: "Something that is the most outstanding or prestigious of its kind."
Cadillac has lost some of its luster as the world's luxury car market has grown more competitive.
Akerson wants to restore the brand and push Cadillac into the top tier globally along with German competitors BMW AG's BMW brand and Daimler AG's Mercedes-Benz. He aims to overtake Toyota Motor Corp.'s Lexus to become the fourth-best selling premium brand, people familiar with the plans have said.
Hedging truck profit
Part of the reason is to make up for less profits on trucks. GM acknowledges that planned tougher U.S. mileage standards, known as corporate average fuel economy, or CAFE, may hurt sales of large pickups.
While GM benefits from high-margin, high-volume pickup sales, "Volkswagen has luxury," Steve Girsky, GM vice chairman, said of the competitor's Audi brand.
"And if you believe the truck business, because of CAFE or whatever reason, is at risk of going down, globalizing Cadillac and getting more out of your luxury brands is a priority, and it's a priority for us."
Akerson is making his push to restore Cadillac first in the United States and in China, where the luxury auto market may grow 15 percent this year, according to LMC.
By 2020, GM anticipates half of the world's luxury goods to be consumed in China, said Don Butler, vice president of Cadillac marketing.
He spent time with Chinese luxury consumers in December and said the brand is highly esteemed, in part because its models have been used to shuttle U.S. presidents from Woodrow Wilson to Ronald Reagan, Bill Clinton and Barack Obama.
"We are held in essentially the same regard as BMW and Audi and Mercedes-Benz, and part of it does go back to this really fond association with America" and its image of power and success, Butler said. "It's the car of presidents."