GM's Buick To Share Products Between China, US
He said the company has done some sharing between Buick China and the U.S., but that has taken place only by "happenstance" and the two product lineups are largely different. GM is employing a global product-development strategy, and Buick will be at the heart of that strategy. Shannon said the two regions will employ "much more product sharing," and that the products will continue to be built in their respective regions.
Shannon said he is not announcing a plan to build Buicks in China and sell them in the U.S. "This doesn't have anything to do with where they will be built," said Shannon. Instead, GM can save money and realize other benefits by jointly engineering products to be sold in separate regions.
Buick Aims To Remain 'Upside'
Shannon said Buick is looking at ways to advertise its popularity in China as a selling feature in the U.S. He said the idea is still in its formative stage and struggled to name a U.S. product that has been able to effectively market popularity overseas as a selling point for U.S. consumers. He eventually referenced Converse tennis shoes and their popularity in Japan as an example.
Even as Buick explores new marketing opportunities, Shannon said, Buick's main goal is remaining a profitable component of GM. He said the division has historically been in the black and referred to the newly launched Buick Lucerne sedan as a "cash cow."
"Buick is all upside," Shannon said. Still, he admitted it needs to get more inline with the mainstream.
"Do we need to get a little more relevant and a little more contemporary? Sure." Nevertheless, profitability is "the starting point."
Buick carries a strong American heritage and, at 104 years old, is one of the oldest brands in the U.S. auto industry. Its history is well-known internationally, so much so that when GM decided to start selling cars in China in the late 1990s, it opted to badge those vehicles as Buicks because of the local respect for the brand.
GM is now the market leader in China, recently unseating longtime volume king Volkswagen AG (VOW.XE). GM's strategy at Buick is being replicated at Chevrolet as the auto maker expands its reach in emerging Eastern European markets by selling Chevrolet models built in low-cost regions, such as Korea.
Fading American Icon
Buick, like Chevrolet, is fading in the U.S. Buick sold 15% fewer vehicles in 2006 than it did in 2005 in the U.S., and its sales volume of 240,000 vehicles last year was down 40% compared with 2000. The decline comes despite GM's effort to overhaul the division's entire product lineup, including the introduction of crossover vehicles, SUVs and minivans.
Shannon sees Buick sales coming in flat in 2007 in the U.S., but noted the company's new marketing strategy that combines Buick stores into a combined dealership with GM's GMC and Pontiac brands should help ensure profitability despite sales declines. "We think we have a plan (and) we think we know what this brand stands for," he said during his formal speech.
In April 2005, GM Vice Chairman Bob Lutz suggested Buick and Pontiac, another historic GM name in the company's eight-brand lineup, were "damaged" and at risk of being killed. The company quickly sought to soften Lutz's comments, but not before stoking the debate over whether GM supports too many brands in the U.S., where it now holds less than a quarter of the market share.
Now the company is banking on two entirely new models to remake its image - the Lucerne and the forthcoming Enclave crossover vehicle. The Lucerne, launched in 2005, has been praised by the enthusiast media as a solid competitor in the large vehicle class, but executives, including Lutz, have complained that GM's increasingly acclaimed product lineup has been saddled by negative perceptions about GM's brands.
The seven-seat Enclave has an SUV's utility, but is based on a more fuel- efficient passenger-car architecture. It hits showrooms later this year carrying a price tag below similar crossover vehicles sold by Japanese luxury brands. The Enclave will replace the Rendezvous crossover and Ranier SUV currently sold by Buick.
The Enclave is "the right vehicle for the time," Shannon said, adding that it's expected success will be instrumental in "a breakout year for us."
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