The new Buick Verano makes its debut at the 2011 Detroit Auto Show.
When General Motors went into bankruptcy, two years ago, the maker was pressed to eliminate its weakest North American brands. There were few surprises when it decided to drop Saab, Hummer and even Saturn, but the choice of Pontiac came as a shock, as most observers expected the troubled GM to drop Buick, instead.
There was a time when Buick was considered, a “doctor’s car,” the brand wasn’t quite as flashy but was nearly as exclusive as Cadillac. Indeed, it was equally popular abroad, with dedicated fans including the Bulgari family, famous for their jewelry, and even the last emperor of China. And, indeed, that’s likely why the maker survived – and now appears to be on its way to a stunning turnaround.
The rapidly-expanding Buick line-up is showing a surprising resilience, last month outselling the luxury market’s long-time leader, Lexus, as well as every other high-line brand but BMW – which beat Buick by only 800 units. Obviously, one month does not a turnaround make, but considering the huge plunge the brand had taken over the last two decades, the February numbers are causing many a double-take.
All the more considering Buick nearly didn’t make it through 2009.
In fact, the only reason it did was “because of China,” acknowledged Ed Welburn, GM’s global design chief, in a conversation with TheDetroitBureau.com.
And that’s a curious story. A dozen years ago, when former GM Chairman Jack Smith began negotiating with Chinese bureaucrats, the U.S. maker hoped to open a plant in Shanghai to build one of its mainstream brands, like Opel or Chevrolet. But the Chinese were incensed. They wanted “the best,” recalls a source that had been involved in the negotiations, and that meant Buick.
That was the car that the last emperor drove — and when the communists took over, after World War II, his Buick fell into the hands of Chairman Mao’s top lieutenant, Zhao Enlai. And it was the brand that GM wound up building in Shanghai.
Today, Buick is China’s top marque and GM was clearly worried about the message it might send to Chinese customers if the brand couldn’t survive in its home market.
The problem was that there wasn’t much left to Buick back in the States. Most of its products had been dropped, over the years, but perhaps that has turned out to be a good thing. A new crop of offerings, starting with the big Enclave SUV, have begun to come on-stream, and each seems to be doing a better job of drawing in a newer, younger, more affluent set of buyers.
The new Buicks are also commanding significantly better margins, with the average transaction price of the brand’s products rising $11,000 since 2003, noted a reported on the website KickingTires.com.
As for sales, the brand has gained ground for the last 17 months and is now taking aim at some of the luxury market leaders. In 2010, it fell about 70,000 units short of Lexus, which sold 229,329 cars, trucks and crossovers. But Buick has now outsold its Japanese rival two months in a row, 29,076 to 26,674 for Lexus.
Buick’s February sales, 15,807, were up a whopping 73.3% compared to a 0.2% gain for Lexus, which moved 13,814 vehicles.
Our colleagues at KickingTires note that Buick had a 77-day supply of vehicles on dealer lots — slightly more than the industry norm 50 to 60 days — while Lexus had just a 15-day supply. The Toyota subsidiary has traditionally kept a lean inventory, though that can sometimes hurt sales if consumers don’t find the precise model they want.
General Motors has, on the whole, been offering heftier incentives than its Japanese rival, but with sales booming, Buick’s givebacks are some of the lowest in the GM stable, which has only helped enhance those average transaction prices.
Whether Buick can maintain the current pace remains to be seen. Part of the problem is that Buick has a very limited stable of products, four in all, though it does have the new Verano compact sedan coming later this year. By comparison, Lexus has nine different models, and the product count is even higher for some of the European imports, like Mercedes-Benz and BMW.
Keeping its momentum going all year won’t be easy, analysts caution, but even if Buick doesn’t capture the top spot in the luxury market this year it seems to be proving out the decision to keep the brand around.