Why Buick's future lies in China
Mon, Apr 10 2017
Back in the last half of 2008 and into 2009, when General Motors was looking at too much capacity for too few customers, when it was running out of money and needing to go to the governments of the US and Canada and to the UAW for financial support, its management team was pretty much instructed by the feds to focus resources on what would create the best likelihood for a return on the investments and guarantees that it was getting. Things needed to be cut, and not just the corporate air fleet.
This led to the elimination of Saturn, Hummer and Pontiac and the sale of Saab to Spyker. What remained of GM's North American brand portfolio was Chevrolet, Buick, Cadillac, and GMC. (Oldsmobile had been shuttered in 2004.)
There were a variety of opinions regarding which brands GM should keep/lose during the midst of the Great Recession. Some thought GMC should be axed, but then it was pointed out that GMC essentially produced high-content Chevys, which resulted in fantastic transaction costs. Lots of money in the back of those pickups.
Others thought Buick should be eliminated. The rationale was: Chevy was the mass-market brand, Cadillac was the luxury brand, and GMC helped leverage the company's investment in trucks. (Yes, even back then the F-Series was winning the pickup sales race, so it was always a matter of adding Silverado and Sierra sales to show that GM was solidly in the game.)
So what was Buick? Better than Chevy but not as good as a Cadillac? Somehow that doesn't seem to be a particularly aspirational position to hold. But Buick's identity didn't need to be worked out in 2008-09 because there was a single compelling reason to keep it: China.
According to official GM history, Pu Yi, the last emperor of China, Dr. Sun Yat-sen, the first provisional president of China, and Zhou Enlai, a Chinese premier, "Either owned, drove or were driven in Buick automobiles." What's more: "According to statistics from the Shanghai government, in 1930 one out of every six cars on the city's roads was a Buick." Which is to say that Buick got to China early and has a major presence in that market.
When the Regal Sportback and Regal TourX were being unveiled at the GM Design Dome the first week of April, Duncan Aldred, vice president of Global Buick, gave a briefing of Buick's place on the automotive landscape. He pointed out that last year the brand sold 1.4 million units, a record, and that it was the "seventh consecutive year of international market share growth."
And out of that 1.4 million, how many were sold in the US? 229,631.
According to research firm LMC Automotive, in 2016 Buick delivered 1,230,058 vehicles in China.
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To put that into context, realize that GM in its entirety sold 3,042,775 vehicles in the US in 2016. That's Chevy, Cadillac, GMC, and Buick. So more than a third of that number was sold by Buick alone in China. (Chevy made the top 20 in China with 480,044, according to LMC figures.)
As has been reported here, the Regal Sportback and TourX are both based on the Opel Insignia. The German brand has its own variants, as does its sibling Vauxhall. GM is selling Opel to PSA, a French company, which means that GM's German engineering development is going away. Buick is going to be without a source for some of its products in the not-too-distant future (measured in automotive development years, which are analogous to dog years).
Aldred said that he thinks Buick is in a great position vis-a-vis its competitors (among which he counted Lincoln and Audi, and I thought those were the companies Cadillac is competing with). One reason is that it has "scale and resources." Arguably those hinge on Buick's giant piece of the Chinese market. Ironically, in relation to GM's tough choices at the end of the past decade, Aldred noted, "China became the world's largest vehicle market in 2009." Timing is everything.
Duncan Aldred, vice president of Global Buick, pointed out that last year the brand sold 1.4 million units, a record. How many of those were sold in the US? 229,631.
It seems well within the realm of possibility that as the door closes in Russelsheim it will open in Shanghai. Consider: in giving color to Buick's nimbleness and scale, Aldred said, "Electrification is a great example. In China, where the market demands new-energy vehicles, our strategy is well under way. We recently launched the Velite concept car, which will pave the way for Buick's New Energy Vehicle lineup." And as people who have visited China often say, things move there quickly, with skyscrapers appearing almost overnight. Aldred went on to day, "We already sell the LaCrosse HEV in that market and will reveal the Velite 5 EREV there next week." Didn't take long to pave the way.
What is Buick's electrified lineup in the US? Well, there isn't one. However, Aldred said, "If and when the US market demands these technologies, Buick is well placed to respond." According to estimates from InsideEVs.com, in 2016 Tesla sold 29,421 Model S vehicles and 12,223 of the Model X in the US. That's a total of 47,644 (and we won't even go into all of those deposits for the Model 3.)
Seems like there's some demand for electrics already. Volt sales were up 60.7 percent last year, and aren't they rather geeked about the prospects of the Bolt at the RenCen? But here's the thing: The phenomenal growth of Buick global sales is predicated on China. Although Buick was the only one of the four GM brands to have positive growth in 2016 vs. 2015, its total of 229,631 in the States is about on par with the number of Chevy Malibus delivered in 2016: 227,881.
So if you are in charge of the GM product development budget and have to figure out who you're going to target vehicles to, what's more appealing: 1,230,058 or 229,631? You don't have to be particularly good with numbers to figure that one out.
You can bet that going forward Buick will be quick, nimble, and more than a little Chinese.
Related Video:
Featured Gallery 2018 Buick Regal TourX
- Plants/Manufacturing
- Buick
- GM
By Gary S. Vasilash
See also: Two nearly new 1987 Buick Grand National 'twins' found in garage after 30 years, The 2018 Buick Regal is now a hatchback and a wagon, Buick's Velite 5 is a rebadged Chevy Volt for China.