"Good" GM: Maybe Not All That Good
#1
"Good" GM: Maybe Not All That Good
"Good" GM: Maybe Not All That Good
June 29, 2009
By Bill Visnic
General Motors's Chapter 11 bankruptcy is winding its way toward completion -- perhaps even quicker than the lickety-split Chrysler bankruptcy restructuring. And everybody knows the plan, as it was with Chrysler, is to leverage the now-famous section 363 of the bankruptcy code to create a "good" GM that sallies forth with all of the company's best assets.
In addition to the numerous hard parts -- assembly plants, stamping facilities, powertrain- and other major component-making operations -- the "good" GM will comprise four major marketing divisions: Chevrolet, Cadillac, GMC and Buick.
Chevy need make no excuses: it is the domestic counterpart of Toyota, a sales channel for unapologetically mainstream cars and trucks that remains one of the most effective brands on the planet.
But Buick, Cadillac and GMC? Be careful, "new" GM and Obama Administration Auto Industry Task Force: recent sales and market-share data compiled by Edmunds.com shows these brands may not be the rock-solid foundation for the leaner, meaner GM they've led the company's new taxpayer-owners to believe is coming.
On Tuesday, the bankruptcy judge hears the case for the "good" and "bad" GM. He is expected to rule shortly thereafter - perhaps within days - if the good assets can be sold into the new GM. He's expected to say yes.
So what's left then? Studying sales and market share data back to 1991, Edmunds data analysts paint a picture of GMC and Buick, in particular, as two struggling divisions, with Cadillac having its challenges as well.
Buick Still On The Decline
The raw sales and market numbers are not kind for Buick, although GM executives insist the brand is profitable. Except for brief periods of minor fluctuation, the sales and market-share trendline for the old-folks division has declined as steadily as its owners' vision.
A look at Buick's sales volume shows a division selling more than a half-million cars every year in the 1991-94 period, with a peak of 546,836 in 1994. After that, Buick not only never regained sight of those heights, but just four years later its volume slid to less than 400,000 units.
The totals bounced around for a few years, but then plunged steadily to a meager 185,791 in 2007, a lowpoint if one charitably discounts the industry's dismal 2008, in which Buick sold just 137,197 vehicles -- barely a quarter of its volume in the mid-1990s.
Source: Edmunds.com
Buick's market-share snapshot is the same: the division had endured a dropoff from its 4.4 percent share in 1991 to 2.8 percent by 1996, 1.8 percent by 2004 and 1 percent last year. Since 1991, Buick's market share fell in all but four years.
Source: Edmunds.com
Now that it is one of the four surviving "new GM" divisions, what about Buick's portion of the corporate market share? As Led Zeppelin said, the song remains the same: in 1991, Buick accounted for 12.2 percent of GM's total sales. By 1995, the number was in single digits and has slid consistently to last year's 4.6 percent of GM share.
By contrast, Chevrolet last year accounted for 60.5 percent of all GM sales.
GM executives point to the Buick Enclave as evidence that division can expand beyond the its older buyer base. Indeed, the Enclave has been a sensation, not only in terms of sales but also in attracting a younger demographic than the Buick norm. The Enclave has soared from accounting a third of Buick sales in 2007 to 45 percent in 2008. But Buick's vehicle line is skimpy with only three models, the Enclave crossover, the Lucerne sedan and the LaCrosse sedan, going on sale soon as a 2010 model and similar to the LaCrosse sold in in China.
Source: Edmunds.com
Buick also has been able to transfer the brand's Chinese magic to the U.S.; Buick now sells more vehicles in China than it does in the U.S., albeit not all of the same models.
For GMC, the '90s Were Fine, But...
For GMC, the results are more positive than Buick's, thanks to the enormous impact of the pickup and SUV trend that started in the late '90s and only truly was laid to rest in the second half of last year.
But that was then and this is now. How will GMC, as solely a truck, SUV and crossover brand, fare in the new world order of stricter fuel-economy standards?
In fact, GMC mushed around in a 300,000- to 500,000-unit band from 1991 to 1998, then vaulted to more than a half-million sales for each of the next seven years, finally dipping once again to less than a half-million sales (456,565) in 2006.
By almost any measure, not a bad run. But the lights at GM's "upscale" pickup and SUV division seem to be dimming quickly, short-circuited by rapidly shifting consumer tastes. In 2007, GMC's volume rebounded slightly to 484,744, but last year endured a plunge to 361,739 -- a sales-volume low the division hasn't seen since 1992.
Source: Edmunds.com
GMC's market share, meanwhile, has worked in a longstanding band between 1991's 2.3 percent to a high of 3.5 percent in 2004. But last year's 2.7 percent share was GMC's third-worst performance since 1991. And there is little chance for near-term recovery. Through May this year, GMC's market share was 2.4 percent; if that figure holds, it will be the division's worst performance since 1991.
Source: Edmunds.com
Maybe in approving GMC as a part of the new GM, the car czars were looking at the division's portion of corporate market share -- a metric that shows GMC to be a formidable contributor.
In 1991, GMC accounted for just 6.4 percent of GM's total sales. GMC hit double-digits in 1999 and by 2004 accounted for 12.4 percent of GM's sales, nearly double the 1991 figure. And in 2007, GMC peaked at 12.7 percent of GM's total sales.
Every model in GMC's line is a truck, SUV or crossover shared with Chevrolet, and in some cases, other GM brands. The GMC Sierra pickup accounts for 32 percent of the brand's sales, an even larger share than its higher-volume twin, the Silverado, represents in Chevrolet's line. The GMC Acadia, virtually identical to the Buick Enclave and Chevrolet Traverse, accounts for about a quarter of GMC's sales. GMC is now adding the Terrain crossover, twin to the Chevrolet Equinox and cousin to the Cadillac SRX, as its entry-level vehicle.
Source: Edmunds.com
The Fall, Rise and Fall of Cadillac
Thanks to GM's almost religious product-development focus -- and a synchronized big-dollar investment -- to revive its luxury-car division, Cadillac did indeed pull itself up from a decade of doldrums that started in 1995, when it slid to less than 200,000 units, and didn't end until 2002, when Cadillac just missed clawing back to that threshold.
Cadillac started to climb again, peaking at 235,002 sales in 2005 -- its best year dating to the 1991 starting year of the Edmunds.com analysts' data review -- but has declined every year since, including an outsize plunge to just 161,159 units last year.
Source: Edmunds.com
Cadillac's trajectory seems to have flattened along with the truck and SUV market, as the once white-hot Escalade has frozen and perhaps exposed Cadillac as a division with one trick pony, the entry-level CTS. The fact that the ancient, front-wheel-drive DTS full-sizer is the division's second-bestseller should trouble anyone arguing Cadillac truly is competitive with European and Japanese luxury marques.
And despite all the investments and high-profile marketing, Cadillac's market share has been lifeless, a reflection of its continuing inability to deal with the increasing number of luxury and near-luxury nameplates entering the market.
Source: Edmunds.com
In 1991, Cadillac's market share was 1.7 percent, eroding steadily to 1 percent by 2001. The division fought back to a peak of 1.4 percent from 2004-2006 (likely due to the Escalade's impact, not to mention a brief popularity flash for the DTS fullsizer). But Caddy's market share is fading again, to 1.2 percent last year and 1 percent through May of this year.
Source: Edmunds.com
Transitions Within Transitions
Numbers don't tell the entire story of GM's evolution over the past 18 years, but they do provide a thought-provoking snapshot of how its surviving divisions have performed not only through the company's nearly two-decade transition -- one that hosted a steady erosion of market share -- but also through several significant market epochs as well.
Based on the performance timeframe of this Edmunds.com data analysis, is the new GM really poised for success?
Any absolute answer is speculation, particularly considering the likelihood of a sputtering and volatile U.S. market for the foreseeable future.
But the indicators point to a Buick that has to find a strategy to reverse a decades-long slide, a GMC that, if it is to remain true to its hefty-truck heritage, is in discord with the market direction and a Cadillac that has yet to develop a successful and mature model range.
Maybe a workable formula for a new GM. Or maybe another whistlestop on the express track to the eventual downsizing many analysts say is inevitable: a GM consisting of Chevrolet and Cadillac.
June 29, 2009
By Bill Visnic
General Motors's Chapter 11 bankruptcy is winding its way toward completion -- perhaps even quicker than the lickety-split Chrysler bankruptcy restructuring. And everybody knows the plan, as it was with Chrysler, is to leverage the now-famous section 363 of the bankruptcy code to create a "good" GM that sallies forth with all of the company's best assets.
In addition to the numerous hard parts -- assembly plants, stamping facilities, powertrain- and other major component-making operations -- the "good" GM will comprise four major marketing divisions: Chevrolet, Cadillac, GMC and Buick.
Chevy need make no excuses: it is the domestic counterpart of Toyota, a sales channel for unapologetically mainstream cars and trucks that remains one of the most effective brands on the planet.
But Buick, Cadillac and GMC? Be careful, "new" GM and Obama Administration Auto Industry Task Force: recent sales and market-share data compiled by Edmunds.com shows these brands may not be the rock-solid foundation for the leaner, meaner GM they've led the company's new taxpayer-owners to believe is coming.
On Tuesday, the bankruptcy judge hears the case for the "good" and "bad" GM. He is expected to rule shortly thereafter - perhaps within days - if the good assets can be sold into the new GM. He's expected to say yes.
So what's left then? Studying sales and market share data back to 1991, Edmunds data analysts paint a picture of GMC and Buick, in particular, as two struggling divisions, with Cadillac having its challenges as well.
Buick Still On The Decline
The raw sales and market numbers are not kind for Buick, although GM executives insist the brand is profitable. Except for brief periods of minor fluctuation, the sales and market-share trendline for the old-folks division has declined as steadily as its owners' vision.
A look at Buick's sales volume shows a division selling more than a half-million cars every year in the 1991-94 period, with a peak of 546,836 in 1994. After that, Buick not only never regained sight of those heights, but just four years later its volume slid to less than 400,000 units.
The totals bounced around for a few years, but then plunged steadily to a meager 185,791 in 2007, a lowpoint if one charitably discounts the industry's dismal 2008, in which Buick sold just 137,197 vehicles -- barely a quarter of its volume in the mid-1990s.
Source: Edmunds.com
Buick's market-share snapshot is the same: the division had endured a dropoff from its 4.4 percent share in 1991 to 2.8 percent by 1996, 1.8 percent by 2004 and 1 percent last year. Since 1991, Buick's market share fell in all but four years.
Source: Edmunds.com
Now that it is one of the four surviving "new GM" divisions, what about Buick's portion of the corporate market share? As Led Zeppelin said, the song remains the same: in 1991, Buick accounted for 12.2 percent of GM's total sales. By 1995, the number was in single digits and has slid consistently to last year's 4.6 percent of GM share.
By contrast, Chevrolet last year accounted for 60.5 percent of all GM sales.
GM executives point to the Buick Enclave as evidence that division can expand beyond the its older buyer base. Indeed, the Enclave has been a sensation, not only in terms of sales but also in attracting a younger demographic than the Buick norm. The Enclave has soared from accounting a third of Buick sales in 2007 to 45 percent in 2008. But Buick's vehicle line is skimpy with only three models, the Enclave crossover, the Lucerne sedan and the LaCrosse sedan, going on sale soon as a 2010 model and similar to the LaCrosse sold in in China.
Source: Edmunds.com
Buick also has been able to transfer the brand's Chinese magic to the U.S.; Buick now sells more vehicles in China than it does in the U.S., albeit not all of the same models.
For GMC, the '90s Were Fine, But...
For GMC, the results are more positive than Buick's, thanks to the enormous impact of the pickup and SUV trend that started in the late '90s and only truly was laid to rest in the second half of last year.
But that was then and this is now. How will GMC, as solely a truck, SUV and crossover brand, fare in the new world order of stricter fuel-economy standards?
In fact, GMC mushed around in a 300,000- to 500,000-unit band from 1991 to 1998, then vaulted to more than a half-million sales for each of the next seven years, finally dipping once again to less than a half-million sales (456,565) in 2006.
By almost any measure, not a bad run. But the lights at GM's "upscale" pickup and SUV division seem to be dimming quickly, short-circuited by rapidly shifting consumer tastes. In 2007, GMC's volume rebounded slightly to 484,744, but last year endured a plunge to 361,739 -- a sales-volume low the division hasn't seen since 1992.
Source: Edmunds.com
GMC's market share, meanwhile, has worked in a longstanding band between 1991's 2.3 percent to a high of 3.5 percent in 2004. But last year's 2.7 percent share was GMC's third-worst performance since 1991. And there is little chance for near-term recovery. Through May this year, GMC's market share was 2.4 percent; if that figure holds, it will be the division's worst performance since 1991.
Source: Edmunds.com
Maybe in approving GMC as a part of the new GM, the car czars were looking at the division's portion of corporate market share -- a metric that shows GMC to be a formidable contributor.
In 1991, GMC accounted for just 6.4 percent of GM's total sales. GMC hit double-digits in 1999 and by 2004 accounted for 12.4 percent of GM's sales, nearly double the 1991 figure. And in 2007, GMC peaked at 12.7 percent of GM's total sales.
Every model in GMC's line is a truck, SUV or crossover shared with Chevrolet, and in some cases, other GM brands. The GMC Sierra pickup accounts for 32 percent of the brand's sales, an even larger share than its higher-volume twin, the Silverado, represents in Chevrolet's line. The GMC Acadia, virtually identical to the Buick Enclave and Chevrolet Traverse, accounts for about a quarter of GMC's sales. GMC is now adding the Terrain crossover, twin to the Chevrolet Equinox and cousin to the Cadillac SRX, as its entry-level vehicle.
Source: Edmunds.com
The Fall, Rise and Fall of Cadillac
Thanks to GM's almost religious product-development focus -- and a synchronized big-dollar investment -- to revive its luxury-car division, Cadillac did indeed pull itself up from a decade of doldrums that started in 1995, when it slid to less than 200,000 units, and didn't end until 2002, when Cadillac just missed clawing back to that threshold.
Cadillac started to climb again, peaking at 235,002 sales in 2005 -- its best year dating to the 1991 starting year of the Edmunds.com analysts' data review -- but has declined every year since, including an outsize plunge to just 161,159 units last year.
Source: Edmunds.com
Cadillac's trajectory seems to have flattened along with the truck and SUV market, as the once white-hot Escalade has frozen and perhaps exposed Cadillac as a division with one trick pony, the entry-level CTS. The fact that the ancient, front-wheel-drive DTS full-sizer is the division's second-bestseller should trouble anyone arguing Cadillac truly is competitive with European and Japanese luxury marques.
And despite all the investments and high-profile marketing, Cadillac's market share has been lifeless, a reflection of its continuing inability to deal with the increasing number of luxury and near-luxury nameplates entering the market.
Source: Edmunds.com
In 1991, Cadillac's market share was 1.7 percent, eroding steadily to 1 percent by 2001. The division fought back to a peak of 1.4 percent from 2004-2006 (likely due to the Escalade's impact, not to mention a brief popularity flash for the DTS fullsizer). But Caddy's market share is fading again, to 1.2 percent last year and 1 percent through May of this year.
Source: Edmunds.com
Transitions Within Transitions
Numbers don't tell the entire story of GM's evolution over the past 18 years, but they do provide a thought-provoking snapshot of how its surviving divisions have performed not only through the company's nearly two-decade transition -- one that hosted a steady erosion of market share -- but also through several significant market epochs as well.
Based on the performance timeframe of this Edmunds.com data analysis, is the new GM really poised for success?
Any absolute answer is speculation, particularly considering the likelihood of a sputtering and volatile U.S. market for the foreseeable future.
But the indicators point to a Buick that has to find a strategy to reverse a decades-long slide, a GMC that, if it is to remain true to its hefty-truck heritage, is in discord with the market direction and a Cadillac that has yet to develop a successful and mature model range.
Maybe a workable formula for a new GM. Or maybe another whistlestop on the express track to the eventual downsizing many analysts say is inevitable: a GM consisting of Chevrolet and Cadillac.
#3
I'm not sure about the author's arguments...
Buick will get a full line of vehicles, which GM hopes will be as successful as Enclave in projecting to a younger audience.
GMC is more profitable than Chevrolet even if it's market share is relatively low. Afterall, GMC's are badged versions of Chevrolets so how is it that that brand is no good to GM's overall bottom line?
Buick will get a full line of vehicles, which GM hopes will be as successful as Enclave in projecting to a younger audience.
GMC is more profitable than Chevrolet even if it's market share is relatively low. Afterall, GMC's are badged versions of Chevrolets so how is it that that brand is no good to GM's overall bottom line?
#4
Buick gets a free pass because of China plain and simple. Besides their lineup soon will be almost all new. The money has been spent.
GMC does carry that higher profitability on what is largely shared platforms. GMC offers Buick stores a truck line once the dealer shuffle is complete.
Caddy is solid and I think for them it's just a matter of staying fresh and continuing to get better quality and more refined style both interior and exterior. They have a solid foundation and GM must have a luxury division.
There is also the thought that the surviving GM brands would tend to pick up new buyers from defunct brands from GM loyalists. No matter how shrinking that group is.
IMO the biggest holes in the full product lineup ore oddly all offered at Pontiac, Solstice, G6 coupe/convert/sedan and G8.
GMC does carry that higher profitability on what is largely shared platforms. GMC offers Buick stores a truck line once the dealer shuffle is complete.
Caddy is solid and I think for them it's just a matter of staying fresh and continuing to get better quality and more refined style both interior and exterior. They have a solid foundation and GM must have a luxury division.
There is also the thought that the surviving GM brands would tend to pick up new buyers from defunct brands from GM loyalists. No matter how shrinking that group is.
IMO the biggest holes in the full product lineup ore oddly all offered at Pontiac, Solstice, G6 coupe/convert/sedan and G8.
#5
#6
Well just because you give Buick product does not mean it will be relevent. Again..I don't know almost anyone my age who would be seen in a Buick. My wife for instance likes the Enclave..but said she would rather buy a Acadia because she does not want to drive a Buick. This is really Saturn 2.0. Saturn had a core market of young buyer who wanted cheap cars...GM strangled it of product to almost nothing. Then they found some bright spot (i.e. Saturn's dealer network), and used it as an excuse to expand Saturn full line in a slightly import fighter mid lux direction rebadging Opels. Now we have Buick...who's core market is really old buyers, who like somewhat cheap faux lux American cars. They let it languish down to three models while they invested in Saturn. Now they are using Chinese sales as an excuse and expanding it into the same role they wanted Saturns in using Chinese Buicks (which are rebadged Opels). Blah!
#8
Well , if you look at the latest CTS and SRX, I find the interiors far more appealing than equivalent models from Lexus. In that respect, I think Cadillac is kicking some goals and on the basis of interior design alone, is able to win back some loyal fans.
Cadillac still has loads of potential even though GM has merely scratched the surface with where the product portfolio currently stands. I still love the 'Art and Science' theme and, in my view, it should stay with Cadillac for the foreseeable future.
#9
Great article, especially the graphs.
Personally, I think that neither Buick or GMC has any sort of "free pass" -- they both have one product cycle to try to attract a new customer base. If they don't, GM will either kill them, or fold them into Chevrolet.
In Buick's case, essentially the only customer traction they have is a single larger CUV. It remains to be seen if the 40-somethings interested in the Enclave are actually willing to buy a Buick sedan.
For GMC, it's obvious the Sierra makes a ton of money, but GM can't support an independent dealership network on a single pickup truck. Unfortunately, GMC was never established as crossover brand, and it's unclear whether customers will consider GMC for smaller car-like vehicles.
Anyway, I personally wouldn't bet on either of these brands being around in 2015.
Personally, I think that neither Buick or GMC has any sort of "free pass" -- they both have one product cycle to try to attract a new customer base. If they don't, GM will either kill them, or fold them into Chevrolet.
In Buick's case, essentially the only customer traction they have is a single larger CUV. It remains to be seen if the 40-somethings interested in the Enclave are actually willing to buy a Buick sedan.
For GMC, it's obvious the Sierra makes a ton of money, but GM can't support an independent dealership network on a single pickup truck. Unfortunately, GMC was never established as crossover brand, and it's unclear whether customers will consider GMC for smaller car-like vehicles.
Anyway, I personally wouldn't bet on either of these brands being around in 2015.
#10
GM and Cadillac are very lucky that the Escalade did as well as it did as long as it did, considering that it's nothing more than a Tahoe with bling and a more powerful engine.
The STS needs updating and a better V8. 320hp does not make for a convincing flagship V8 these days.
Finally, Cadillac needs a model smaller than the CTS.
Hopefully the SRX will sell in big numbers. I can't understand why it offers the 2.8PI turbo, when the 3.6DI has more power and better mileage.
The STS needs updating and a better V8. 320hp does not make for a convincing flagship V8 these days.
Finally, Cadillac needs a model smaller than the CTS.
Hopefully the SRX will sell in big numbers. I can't understand why it offers the 2.8PI turbo, when the 3.6DI has more power and better mileage.
#11
GMC for as long as I have been alive has been a superfluous brand. I'm with the author here in terms of questioning why they need to continue on. The sales drop he gives in the chart clearly corresponds with the sharp rise in gas prices however.
Buick, I pretty much echo what Brandon said. Giving Buick a "full line" of vehicles does nothing to guarantee success. The brand itself still has a very problematic image.
Last edited by Z28Wilson; 07-01-2009 at 08:39 AM.
#12
Cadillac just needs more product. XLR, STS, DTS are dead to me. The new SRX should sell very well, I expect it to over take the Escalade. CTS coupe, Alpha, a larger sedan and the electric Caddy concept.
Yup I totally agree with him too, Buick is taking the Olds, Saturn path. I loved the styling of both Olds and Saturn before they died, now Buick has those same sporty near lux cars.
GMC is only good while gas is cheap. I don't know if they have a future in the world of $4-$5+ gas.
GMC is only good while gas is cheap. I don't know if they have a future in the world of $4-$5+ gas.
Last edited by Z28x; 07-01-2009 at 09:47 AM.
#13
Nothing guarantees a brand's success. But how does one fix a brand? The brand had products that make it look old. Giving it a new better line of products is a step in the right direction for the brand.
#14
As Brandon stated, Saturn started bringing over Opels to entice younger buyers. We all believed they had great product. Didn't help so much.
#15
Sure. It's a step in the right direction, and I agree that a brand's renaissance has to start with product. But how well can you market the changes? Can you get people to forget the fact that Buicks haven't been cool in decades?
As Brandon stated, Saturn started bringing over Opels to entice younger buyers. We all believed they had great product. Didn't help so much.
As Brandon stated, Saturn started bringing over Opels to entice younger buyers. We all believed they had great product. Didn't help so much.
Saturn did have some good products, but products that competed with Chevy and Pontiac. That is not a good place to be. You can get an Aura, a Malibu, or a G6 for roughly the same MSRP, with the exact same options. There was no point in that. Also, Saturn was supposed to be a no haggle pricing store (not sure if that ever stopped), which didn't help that either. I liked several of Saturns products. But with the same price point and products of other GM dealers, it doesn't make sense.
Buick doesn't have that. Buick is supposed to be nicer than Chevy, Pontiac or Saturn. Buick is going to be more expensive than any of those brands. Buick will have different options available, as well as options you won't be able to get on a Chevy.
I think the charts have a lot of good information in them. The Enclave has 45% of the sales at Buick, and is the most expensive vehicle. It doesn't have a bench seat or column shifter either . People are buying the new product because it is good.
GMC, looks like it is relying on Sierra sales, and Acadia sales are strong as well. This brand could be in trouble when gas is high again, but it takes minimal updates to make for trucks. I think that GMC should remain trucks and SUV's. Leave the crossovers to Buick. I think the GMC Terrain should have a Buick version and not a GMC version.
Most here have spoken about what Caddy needs. And they need a lot. Newest product, CTS, looks to be selling well and it should. No one really cares about the rest of Caddy's lineup which is the problem. To fix Caddy, you need better products. It is suffering from the same disease that Buick has, but to a much smaller extent. With the new Caddy SRX and new Lambda, they will be better. A new STS replacement and a smaller car, and they are good to go.