China could save a tarnished GM brand
Buick set to sell more vehicles in the country than in all of U.S.
Gus Ruelas / Reuters
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Golfer Tiger Woods made all the right noises about the new luxury vehicle at the Los Angeles Auto Show, calling it “stylish” and “elegant.” But the future of GM’s 103-year-old brand may hinge not on the face of an iconic sportsman but because of China, which this year will pass Japan as the world’s second-largest vehicle market after the United States.
This year, the Buick brand looks set to sell more cars in that country than in the United States, according to Automotive News.
The industry publication calculates that Buick sold 206,582 vehicles in the United States in the first 10 months of this year, down 15.4 percent from the same period of 2005. During the same period, Buick sold 218,603 vehicles in China, an increase of 27.4 percent.
Why the Chinese interest in Buick? While it has seen its status fade here in the United States, the longstanding American brand has never lost its reputation in China. And GM has managed to build on that status, selling vehicles under four major brands — Buick, Chevrolet, Cadillac and Saab — through Shanghai General Motors, a joint venture between GM and Shanghai Automotive Industry.
The Sino-U.S. joint venture sells Buicks such as the LaCrosse, the Excelle and the GL8 to Chinese consumers, and it has overtaken German rival Volkswagen AG to become the top automaker in China in 2006, where it has 13 percent of the market. China is now GM’s biggest market after the United States.
The growth comes as GM focuses intently on the growing Chinese market, investing $3 billion over four years ending in 2007, building a network of dealerships and factories.
The thinking is that as GM works to revive its flagging business, which posted a worldwide loss of $10.6 billion for 2005, the booming Chinese economy is a significant new source of revenue that can provide the company with the sort of strong growth that isn’t found in the United States or other Western markets.
Automotive analysts have long said that big U.S. automakers like GM have too many brands to support. Two years ago, GM Vice Chairman Bob Lutz unforgettably described Buick and its sister brand Pontiac as “damaged,” triggering speculation that they would soon be killed off.
Yet both Buick and Pontiac have endured, even though their U.S. sales have lagged in recent years as Japanese and Korean automakers have chalked up significant market share gains. In the face of such fierce competition, many have questioned whether these brands — and others like GM’s Saturn brand and Ford’s Mercury nameplate — can survive in the long term.
GM is working to reverse the staid, old-fashioned aura that surrounds its Buick, Pontiac and GMC brands in the United States through an aggressive restructuring campaign, consolidating dealer networks and focusing on fewer models, making Pontiac its sporty car line, GMC a truck product and Buick a more upscale brand.
The Enclave, which will hit dealerships in late spring or early summer, follows the new GMC Acadia crossover, which is now on sale. Both are based on a unibody platform, offering a smoother ride and better fuel economy than the body-on-frame construction of older SUVs.
“We have very high expectations for these vehicles,” said Tom Appel, editor of Consumer Guide Automotive, which offers buying advice. “These unibody designs weigh less than regular SUVs, have better handling and are more car-like.”
Appel also says that GM’s stated aim to go after the market for luxury SUVs, like the Acura RDX or the Lexus RX 350, is feasible with the Enclave. Buick’s previous small SUVs, like the Rainier and the Rendezvous, didn’t do anything for the Buick brand, he said.
“Sales of those products did OK to mediocre,” Appel said. “But Buick’s aim to go after cars like the Lexus RX 350 is more realistic now with the Enclave. If it’s as good as the GMC Acadia crossover, they might have a serious product here. The Rainier and the Rendezvous were the sorts of vehicles that sold on price, but the Enclave could be a destination car — one that actually brings people into dealerships.”
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