Saturn Outlook Forum banner

Lambdas Lure Drivers Away From Asian Brands

4841 Views 2 Replies 2 Participants Last post by  admin
Offerings Are Bright Spot Amid U.S. Sales Decline; Dealers Can't Get Enough

General Motors Corp. is struggling to halt declining U.S. sales, but it has a bright spot in the three large crossover vehicles it launched in the past year.

The Buick Enclave, GMC Acadia and Saturn Outlook each have three rows of seats and look like big sport-utility vehicles, but they are lighter, have a smoother ride and get better gas mileage than SUVs. Made from many of the same parts, all three are selling briskly and have a GM plant in Lansing, Mich., running at full capacity, a key to profitable auto production.

More importantly, the trio is doing something few other Detroit vehicles can achieve these days -- they are pulling drivers from import brands.

Luring drivers of foreign brands back to domestic vehicles is a critical task for all three Detroit auto makers as they scramble to turn around their North American operations and stem their decades-long slide in market share. Fresh evidence of their troubles is due today in August vehicle-sales reports, which are expected to show continuing weakness for both foreign and domestic manufacturers.

Brian MacDonald is one driver attracted by GM's new crossovers. An investment-fund manager in California, Mr. MacDonald has driven nothing but BMWs and Mercedes-Benzes for the past 20 years. But last month, with the lease on his Mercedes ML-Class winding down, Mr. MacDonald leased a $45,000 Enclave, the most luxurious of GM's three models.

"If someone had told me a few months ago I'd be driving a Buick, my reaction would have been 'no way, no how,' " says Mr. MacDonald, 46 years old. The Enclave, he said, offers the roominess to haul around his three young children and the styling and interior comforts he was accustomed to with the Mercedes. Because the Mercedes ML sells for about $30,000 more than the Enclave, his monthly payment on the Buick was almost $300 lower.

GM, Ford Motor Co. and Chrysler LLC remain the dominant manufacturers of trucks, but sales of pickups and SUVs have been falling amid high gasoline prices and changing consumer tastes. With more and more consumers moving to passenger cars and crossovers, the Big Three have to step up their competitiveness in these segments or their turnaround efforts could be squeezed for cash.

But it is an uphill battle. About two-thirds of the vehicles GM sells through its dealerships go to customers who trade in GM vehicles, according to data from the Power Information Network, a division of J.D. Power & Associates. Only a fraction -- less than 3% -- go to people trading in vehicles made by Toyota Motor Corp. or Honda Motor Co.

The three new crossovers do much better. Half of all Acadias and Outlooks go to customers who trade in GM vehicles; about 20% go to people trading Asian-brand vehicles. For the Enclave, the numbers are slightly lower but still better: 44% of all trade-ins are non-GM brands; 14% of the trade-ins are Asian vehicles.

GM doesn't disclose profit margins of its vehicles, but other measures indicate the three crossovers are performing well financially. The company just added a third shift at the Michigan plant producing the vehicles, at a time when GM is trimming production of its full-size SUVs and pickup trucks.

Dealers say they can't get enough Acadias and Enclaves. "We're selling them as soon as they come off the truck," said Dan Marquardt, owner of Barrington Buick-Pontiac-GMC in Barrington, Ill.

At the end of July, GM had enough cars and trucks in inventory to last 70 days. But it had only a 22-day supply of Enclaves, a 32-day supply of Acadias and a 51-day supply of Outlooks.

Such tight supplies cut the need for sales incentives. "We're getting full price," Mr. Marquardt said.

It will be a challenge for GM to keep the three crossovers in this position. A Chevrolet version is in the works, and could skim buyers from the Buick, GMC and Saturn models. The Chevy model will be built in a different plant in Spring Hill, Tenn.

See less See more
1 - 1 of 3 Posts
I've seen many indications that the Lambdas appeal to import owners like no other domestic model in recent memory. For one thing, they're taken seriously on the import forums.
1 - 1 of 3 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.