http://online.wsj.com/public/article/SB116370925620225464-yIDnpbHG_SsrFmDWb_B7n_WVSms_20061123.html?mod=regionallinks

BEIJING -- A sleek Cadillac sedan created to tap China's burgeoning market for luxury cars is also General Motors Corp.'s poster model for new-car development as the company tries to slash manufacturing costs while at the same time tailoring its automobiles to fit local tastes.

The Cadillac SLS -- which will be in the spotlight here tomorrow at the Beijing Auto Show -- has been stretched to provide more legroom for rear-seat passengers, since many wealthy Chinese ride in chauffeur-driven cars. Its upright chrome grille presents a more formal silhouette than its sportier North American counterpart. And the interior of the SLS, which will start at $62,500, is more plush, with wood paneling, reclining back seats, indirect lighting and flat-screen televisions.

But underneath, the car is nearly identical to Cadillacs built for the U.S. and Europe -- with the same chassis, engine, transmission and other key components -- helping GM to save money by buying parts in bulk.

As GM and other major car makers fight to survive in a fiercely competitive global marketplace, they are struggling with competing priorities: tweaking vehicles to appeal to the local market, while at the same time trying to wring costs out of manufacturing by hewing to common standards.

"We're trying to strike a balance between global economies of scale and local-market adaptations," says Raymond Bierzynski, GM's head engineer in China.

China's car market is booming, with sales up 38% this year. The world's major auto makers -- and a slew of Chinese car companies -- are scrambling to cash in on the soaring demand. And it's more than the fertile Chinese market that has the industry buzzing as the Beijing show opens: Auto executives are also watching to see if DaimlerChrysler AG will announce what would be an industry first -- a possible tie-up with a Chinese car company to make small cars for export to the U.S. and other markets. DaimlerChrysler has said it is in talks with possible partners, including government-owned Chery Automobile Co., and expects to make a decision before year's end.

For GM now, though, it's all about the Chinese market. The world's most-populous country has been a bright spot in an otherwise bleak profit picture for the world's largest auto maker. The company, which sells Buicks, Cadillacs and Chevrolets here, has been moving rapidly to introduce new models tailored for the local market.

GM is also looking to spread engineering work around the globe, in part to cut costs and in part to tap expertise in different countries. Work on large luxury cars, sport-utility vehicles and trucks is handled in the U.S. GM engineers in Germany focus on midsize and compact cars, while small cars are the specialty of engineers at GM's South Korean affiliate.

In the case of GM's new Cadillac, engineers at GM's China research-and-development center, a joint venture with the company's local manufacturing partner, worked hand-in-hand with their counterparts at GM's engineering center in Warren, Mich., to reshape a U.S.-conceived vehicle into one that meets the even more demanding specs of Chinese luxury buyers.

Getting it right is critical to GM's effort to turn Cadillac into a world-wide luxury brand. The company says it expects China to surpass Europe as the second-largest Cadillac market next year. Sales of luxury cars in China during the first nine months of this year were up nearly 80% from the year-earlier period.

The Chinese version of the new Cadillac has been stretched about 4 inches. The center of attention is the back seat, something that tends to be an afterthought in the U.S., where car buyers drive instead of being driven. The SLS has a wood-paneled console from which passengers can choose whether to have their seat heated or cooled or activate an in-seat massager. There is even a remote control for a DVD player and flat screens embedded in the back of the front seats.

Depending upon the model and options, the price of an SLS could jump as high as $93,750.

The engineering teams used virtual-reality studios and sophisticated data-sharing software to collaborate and shipped design details back and forth to engineer the new model. Often, they worked together in real time, requiring a lot of late nights and early mornings on both sides of the Pacific.

James Shyr, GM's top designer in China, logged long hours in the "visualization center" at the Shanghai R&D center, going back and forth with Cadillac's lead designer in the U.S., zooming in on design details and manipulating images on a theater screen. "You get two sets of creative minds. That is the real value," says Mr. Shyr.

The result is an interior for China that looks vastly different from the one used in the U.S., but in which all of the new parts were required to fit within the existing "architecture" for GM's rear-wheel-drive luxury cars. An inability to enforce that kind of discipline foiled earlier efforts to standardize parts across GM's global operations.

"We used to let people change things too quickly, too easily," says Mr. Bierzynski. "It's human nature. If you can change it, you will." Now, he says, engineers and designers are forced to make changes within "the bandwidth" that can be accommodated by cars' common underpinnings. Those platforms, in turn, are designed to allow for more flexibility, he says.

David M. Leone, GM's head engineer for luxury cars, says the approach cut the cost of developing the new car by about two-thirds and shaved more than a year off the time usually required to roll out a new model -- two crucial measures as GM looks to stay competitive and keep up with rapidly shifting consumer tastes.

The sister model of the SLS in the U.S., the Cadillac STS, was launched in 2004. So far this year STS sales are down 24% in the U.S. over 2005. GM has been offering thousands of dollars in incentives, mainly in the form of subsidized leases as it struggles to woo buyers away from the German and Japanese luxury brands, which have high loyalty rates.

To build the SLS for China, engineers also had to overcome cultural barriers. At first, says Mr. Leone, U.S. engineers needed to gain confidence in their counterparts' skills -- a process slowed, he says, by the two groups' contrasting styles. The Americans were more brash and assertive, while the Chinese side was more reserved, which led initially to the U.S. side dominating meetings.

"We needed to learn to be better listeners," says Mr. Leone. Once they did, input from the Chinese engineers gained influence. U.S. designers, for instance, initially suggested a colder, more high-tech feel for the interior, an approach that was rejected by the Chinese side, which felt that a warmer, richer style would appeal more to Chinese buyers.

"We're beginning to establish trust," says Mr. Leone. "You see how competent and capable" the engineers in China and elsewhere are and "you rely on them for more and more."