TOKYO – ForCorp., Cadillac is the name and gorilla marketing is the game these days in Japan.
Because the brand is not well known here, GM Japan President Jay Hunt tells Ward’s, "we must focus on efficient methods to reacquaint the Japanese with Cadillac."
The old playbook has been discarded. The auto maker is starting fresh with completely new models and new marketing techniques.
Backed by print ads, these include Sunday demonstration parades; special dealer events, such as test drives on theSpeedway: tie-ins with Japanese celebrities; and celebrity transportation, illustrated by the fleet of Cadillacs ferrying California Gov. Arnold Schwarzenegger and his entourage around Tokyo during a recent visit.
The new Cadillac lineup, completed in November when the STS sedan was added to the CTS sedan, SRX cross/utility vheicle and XLR roadster, is aimed at the 40,000 affluent Japanese who buy imported luxury cars. More specifically, the typical prospect is a self-made male entrepreneur, 35- to 55-years old and described as independent-minded.
"These Japanese buyers are sophisticated, so we're implementing a boutique strategy, seeking brand-specific distribution with exclusive, independently owned Cadillac dealerships," Hunt says.
This is a Cadillac first in Japan. So far, two exclusive dealerships have opened, in Sapporo and Chiba, and three more are to follow. Supplementing these in major cities will be special Cadillac corners in the dealerships of Yanase & Co. Ltd., GM's longtime Japanese distributor.
CTS is only model being offered with right-hand drive.
Eight of these will become exclusively Cadillac dealerships in 2005, and an additional 68 Yanase dealers will continue to sell Cadillacs in midsize cities.
It won’t be easy. Only the CTS is being offered with right-hand drive, a handicap in a market where left-hand-drive luxury imports have lost their allure and 80% now are RHD models.
Timing could have been better, withMotor Corp. launching Lexus models here next August and Motor Co. Ltd. reportedly planning to introduce Infinitis in 2006. And prices roughly will match comparable Mercedes-Benz models.
"Not everyone wants to buy a German luxury performance vehicle," Hunt argues. "We have to offer something different."
Hunt says GM hopes Cadillac’s bold styling, cutting-edge technology and luxurious appointments will be distinctive enough to attract select Japanese buyers.
"We're seeking image impact here," he says. "We have no big-volume ambitions. We foresee Cadillac sales in Japan of around 500 this year and as many as 1,000 next year. Our mid-term goal is annual sales of 2,000."
Hunt says published statistics here are inflated by inclusion in the official numbers of Escalade sales by Mitsui Trading, authorized by GM, as well as unauthorized gray market Cadillac sales, which nearly double Cadillac numbers.
But whatever the appropriate totals, some industry analysts here are skeptical of GM’s modest goals.
"Japanese people buy a foreign car as a status symbol," says Kunihiko Shiohara, a managing director of Goldman, Sachs (Japan). "Without a bargain price, they have no incentive to buy a Cadillac, which does not have the status of a Mercedes or."
Seiji Sugiura, senior analyst with HSBC Securities (Japan), agrees. "GM's new Cadillac models may suit American tastes, but they don't meet customer specs in Japan," he says. "It will be tough to reach the mid-term target, especially with only one RHD car and so few outlets."
Sugiura says GM should use the Harley-Davidson approach and focus marketing on the Japanese in love with all things American and not just those who covet imported cars.
Despite anticipated low sales, GM says Japan, the world's second-largest car market, should not be left out of Cadillac's new global marketing plan, which includes a hearty sales push in China and the establishment of an assembly plant there.
"In September, the first month Cadillacs were on sale in China, we outsold Japan for a whole year," says Hunt, adding that sourcing from China is a future possibility but that no decision yet has been made.
Given the differing expectations, it is natural to wonder why GM still bothers with Japan. Cadillac sales here peaked in 1998 at 4,384 units and sales of all GM vehicles peaked two years earlier at 22,101.
The answer is a recent shift in thinking.
"In the past, we were willing to accept a long-term pay off," says Hunt. "My charge is to be successful and profitable, and we are making more money in Japan today than we were five years ago."