General Motors is a trash talker. The automaker brags about future show-stoppers, unveils concept vehicles with a sly wink (knowing full well they're stuck in development Hell) and offers press hacks "preview" drives of half-baked green machines. No GM brand has been more abused by these dishonest "you just wait" promises than Buick. The 2004 Velite was a glimpse of an alternate universe, where Buick made perfect sense. And as far back as 2003, board-certified spin specialist Bob Lutz was busy proclaiming that Buick will be "an American Lexus." As if.
That said, last year, with minimal fanfare, General Motors introduced a brand new model: the Buick Park Avenue. The badge-engineered Aussie (nee Holden Statesman) is a full-sized rear wheel-drive sedan boasting the kind of understated elegance– both inside and out– capable of resurrecting the ailing marque's appeal. In China.
America didn't get it. (Literally.) Buick's U.S. aficionados couldn't understand why America's favorite military dictatorship received the brand's potential savior, while the States got a milquetoast sedan whose name means masturbation in Quebecois. Slapping the "Super" moniker on Buick's front wheel-drive sedans did nothing- as in zilch- to appease the faithful. Buick's beat-up bolsterers lit-up their corner of the Internet, venting their electronic ire at the missed opportunity.
Understandably, John McElroy over at Autoline Detroit wanted to quiz Bob Lutz about Buick building better cars in The People's Republic. In May, GM's Car Czar agreed to tackle the issue– provided Autoline didn't air the relevant segment on TV. The news op could, however, put video of Maximum Bob's reply on their website.
Hang on. Never mind the fact that "one of the deans of the Detroit automotive press corp" [sic] agreed to censor himself at GM's behest. Consider GM's logic. The automaker attempted to minimize the spread of Lutz's response to an internet-disseminated controversy by restricting it to the internet.
Anyway, Lutz blamed that the Statesman misstep on Buick's beleaguered dealers. Back around the time Lutz had been playing the dozens with Lexus, his minions had previewed Lucerne and Holden Statesman prototypes to American Buick [Pontiac, GMC] dealers. According to Maximum Bob, the car floggers said they didn't need two models. They picked the Lucerne to grace their showrooms.
It's hard to understand why General Motors left the fate of the entire Buick brand in the hands of its dealers. Buick dealers don't really have customers. How does a car dealer grasp the desires of potential buyers that have never darkened their doorways?
Answer: you don't. Buick's sharp-end sharpies opted for what was clearly the worse of the two cars: a front-wheel drive H-body sedan riding on a platform dating back to the year Geraldo Rivera opened Al Capone's secret vault (1986). Twenty-one years later, and these not-entirely-prescient Buick dealerships are selling, on average, six cars a month. Not six Lucernes. Six Buicks.
Normally, GM in general and Bob Lutz in particular sweep these sorts of decisions under the red-ink stained rug (GTO?) and tout The Next Big Thing. For reasons known only to Maximum Bob and his handlers (i.e. his ego and super ego), Lutz felt compelled to address the question again, via a video on GM's Fastlane Blog. So, Bob's people asked Bob, why is China selling a better looking Buick luxury car than the U.S.?
"I don't think they are," Maximum Bob insisted, confusing prevarication with fact. "They simply are the first market to get the new Buick Park Avenue, which they will actually assemble in China. And that vehicle, or a variant of it, is always a possibility for Buick [USA] in the future."
Translation: "The critics are wrong! And even if they are right, we were also right, just a bit… premature. Cautious. Sensible. You'll see! Maybe." Bob's answer may not set new standards for this master of ill-informed, shoot-from-the-hip and sort it all out later (or just forget it) analysis, but it's not for lack of trying. Meanwhile, the Buick brand is spinning off into oblivion.
Or not. No discussion of Buick's Lexian aspirations would be complete without mentioning the new Enclave. The brand's sales may be down 30.4 percent from last June, but their crossover is gaining traction. May's aforementioned six cars per dealer per month average represents a two car per dealer improvement on their previous stat. As GM ramps-up Enclave production, Buick dealers may soon stagger into double digits.
But the broader question remains: is the vehicle pitched against the RX350 Bob Lutz' "American Lexus?"
Perhaps. But there is an important corporate disparity that overshadows any model vs. model comparison. Toyota doesn't compete with itself. GM does (Buick Enclave vs. GMC Acadia vs. Saturn Outlook vs. Chevrolet playertobenamedlater). As Buick's Chinese debacle proves, whenever you compete with yourself, you lose.
Great editorial, but I have to ask…outside of GM emplyees and stockholders, WHO CARES??
“Buick aficianados”? Arent they all either in retirement centers or pushing up daisies?
Typical generic GM. The best they can hope for is to hang on to their ever-dwindling customer base, forget conquest sales from non-GM brands.
Are there actual Buick engineers, Buick assembly plants, Buick sales and marketing personel?
And along with that, what makes a Buick a Buick? Fake portholes on the front fenders?
Same applies to the rest of their lines, except for Corvette, MAYBE a Cadillac or 2, and their trucks. What makes these cars “divisional” outside of grilles, tailites, or interior trim treatments?
I think it says everything we need to know about the current market that Buick wants to be the “American Lexus,” while I imagine a Lexus buyer would probably be insulted if you called his purchase a “Japanese Buick.”
I’d like to see them bring back the old Electra 225 in the original 225″ overall length, RWD, its own unique engine (could the inline 6 in the Trailblazer/Envoy be adapted to an inline 8 ala the old Buick Fireball 8?), etc.
Buick’s golden years were a time when they were allowed to get the 2-door hardtop a year ahead of even Cadillac, ditto the 4-door HT a few years later and their own unique body for 4 model years in the original Riviera.
Just think of how popular a car the size of a modern Maybach that costs only $35-40K would be!
Gas mileage? With the old duece-and-a-quarter-sized trunk, you could put all of that space-hogging hybrid stuff in there and still have room for a couple of dead mobsters, shovels and a cooler of beer for later.
A lot has changed since the Golden Age of the Deuce+1/4–Cylinder deactivation, overdrive ttransmissions, better tires and brakes. The new Deuce would handle better and get better economy than the classic Deuce.
Detroit should have never made EVERYTHING into an
FWD clone of a foreign car. Somebody needs to give us the traditional American car in something other than a Crown Vic/Grand Marquis/Town Car that looks ,brand new, looks like surplus cop car, taxi, livery car. A Big American Car that doesn’t scream “fleetmobile” will sell.
Justin,
This is a good editorial. It reminds me of RF’s challenge to automakers to be more like Apple. I doubt Steve Jobs ever asked the clerks at the Apple stores if they wanted an iPhone. Buick needs to determine its vision and execute on it, torpedoes be damned.
I do have one quibble with the sentence: “Toyota doesn’t compete with itself.” It seems to me that the RAV4, Highlander, and 4Runner compete with themselves, as well as with the LandCrusher, FJ, ans Sequioa. Not to mention the RX350, GX470 and LX470.
i don’t think we should underestimate the importance of the enclave and its siblings. these are excellent vehicles that are fully competitive in their segment, and that is a remarkable statement for any GM product other than corvette (and btw a very cool all leather option appears to be coming for the vette interior :o). it makes sense to utilize a common chassis/engine layout to create several vehicles of very distinctive character. i’ve driven the enclave and acadia, but not the outlook. certainly the former vehicles are very distinctive, with different engine output, interior layout, styling, and options. the enclave is remarkably quiet under steam, not a bad thing for wafting mode. the foundation for any turnaround has to be quality product and it looks like GM is capable.
but alas, it’s the dealers that may be the famous heel in this saga. my dealership ordeal to drive the enclave/acadia was long and painful and not worth space here, i’ll just say a very obese good old boy waited until i had parked and gotten out of my car before dropping his cigarette (he was standing RIGHT by the front door) and squashing it with his grossly overstressed footwear. i was hardly able to breathe (do smokers know how much they stink?) as we sat together in the front of the vehicles (i bravely looked at both the acadia and enclave at the same dealership, figured to get the pain out of the way all at once). he assured me that the acadia had a variety of options that it didn’t (auto wipers, bluetooth, autodim ext mirrors) and i couldn’t resist asking him how the pairing procedure would be carried out with my bluetooth phone. this slob couldn’t distinguish bluetooth from gangrene; my whole point here is that these bozos are representing the brand. American lexus? puleeze
This whole scenario smacks of brand mismanagment. If Buick is supposed to be the “Lexus beater”, then what the hell is Cadillac there for? If someone says “as a ‘BMW/Merc/Audi” beater, then what class do people think Lexus is in?! Lexus is stealing market share from the German big 3 like looter in the middle of a power cut.
Now although, we don’t get Buick in the UK (call it a blessing, if you want) but I did some research online and I have to say, I’m throughly unimpressed with the line up. I don’t think I’ve been so uninspired by a line of cars ever! (And remember, I’m a Toyota fan, through and through!) The line up and the brand just screamed to me “Give up on life”. It just wasn’t saying anything. At least, other GM brands have an identity, no matter how poor it is. If GM carry on being successful in China, I’m going to take a bet and reckon they’ll introduce Cadillac there and watch Caddy cannibalise Buick’s market share. I believe the 2 brands cannot co-exist.
I suppose Buick could re-invent themselves as a maker of everyday cars? Oh hang on, that’s Chevrolet’s job. Ok, what’s about sports cars? Sorry, forgot, Pontiac! OK, SUV’s? Hummer and GMC! Oh and it’s a dying market. OK, maybe, Buick could be the experimental brand! The brand which tries new and exciting cars, sort of like a Euro beater! Oh, now I remember why not…….! ;O)
KatiePuckrik
Snap. You beat me to the question. Still, I’d like to harp on brand identity just a bit.
It seems to me Lexus is as badly managed as GM’s brands. MSRPs range from $30K (which gets me anything from an Impala SS to a baby Mercedes – not to mention Avalon) all the way up to $104K. I can drive the same brand and save $74K by getting the IS sedan.
Perfect opportunity for GM to go back to the old Sloan school – each brand a step up with little or no price overlap.
If Buick is to be the American Lexus, let it be the entry to mid level Lexus. Let Caddy be the upper end Lexus. Let upper end Lexus drivers figure out why others are driving a car with the same badge for the price of an entry level Buick – or top of the line Chevy.
SherbornSean: I think if you regroup your list of Toyota SUVs you’ll see that they all have a reason to exist and don’t really compete with themselves.
Offroad capable SUVs: FJ, 4Runner, Land Crusher.
Soft SUVs: RAV4, Highlander, Sequoia.
FJ gives you funky style and offroad ability. 4Runner gives you traditional SUV shape. Land Crusher gives you offroad cred, toughness, and luxury.
RAV4 handles almost car-like and gives decent mileage, Highlander is for Pilot drivers and offers a Hybrid model, Sequoia is for moms who’ve got to have the biggest boats for, you know, safety.
Dynamic88:
I don’t know if I agree with your assessment of Lexus. I know several very wealthy people, and regardless of their geographic locations, they all prefer to be stealthy with their cash. While a Lexus is by all means more obvious than a Cobalt, an LS doesn’t give the world the finger like a 7-series BMW. If you turn Lexus into an exclusive brand, the quiet rich will have to look toward Infiniti or something.
Regardless of branding, the PRODUCT has to be awesome. I drove an ’06 GTO and was amazed that the switches were nicer than those in my VW, which is full of award-winning Audi bits. I think pontiac branding is a joke, but I’m interested in the Holden G8 for next year. I don’t care if buick is for oldsters. If they bring over a Holden Statesman, they might have the cash in my P71 fund.
BTW,
Lucerne means alfalfa in French. The masturbation reference is probably excessive given that It is hard to pass through that name either way…
Poor Buick (poor Oldsmobile) : The chronicles of an announced death.
NICKNICK
I respect you opinion, and I agree that there exists a need for a car which shows that one has “arrived” w/o being as in your face as a Bimmer.
Still, isn’t there a fair amount of hair-splitting here? If one is really quiet about having money, one could simply buy a Camry or Avalon. Lexus exists so that buyers can show they have more $ than other people, even if it is a bit more subtle than some other choices.
I have to think that a $74K spread leaves room for two brands (e.g. Buick and Cadillac, back when there was actual brand identity) Mr. Megabucks who cut a check for six figures must surely be asking himself why someone else can enjoy the same brand status for the price of Buick Lucerne.
If Buick is to be the American Lexus, let it be the entry to mid level Lexus.
That’s the purpose of the LaCrosse & Lucerne – they both have some strong Lexus design hues to them. But those cars are no more than fleet queens – literally. I know of no one who has willing bought one – rent or lease, yes – buy, no. Even a good friend in her early ’60’s who drove nothing but Buicks her whole life “crossed over” to Japan, Inc. last year because of the dearth of choice at Buick and GM in general. And the 7th sign was my aunt, late ’70’s, another lifelong Buick customer, buying a Camry this year.
The Enclave, as beautiful as it is, won’t be enough to save Buick as a free-standing division. Should the brand survive, I see it living in the Pontiac/GMC stores along with GM’s other boutique brands.
Pity.
I recently spent a month in China, staying in Shanghai and Beijing. Buick IS the Chinese Lexus; anywhere you’d see an RX or an ES here, a Lacrosse or Regal is taking its place. The Chinese Lacrosse is especially saddening to GM optimists over here, because it has the kind of elegance that the Kiarific import-wannabe American Lacrosse can’t hope to emulate, even if the rear has shades of ’02 Altima and the front mildly resembles a flattened RX300 nose. It’s a proud Buick. A chat with my uncle, though, reveals some troubles in the future for Shanghai GM. The reason why I saw so few Lexi, and yet so many Buicks, as well as Toyota Reizes (about equal to the Lexus ES350) and Crowns (LS-sized and RWD), is the luxury car tariff. The advantage had by domestically-produced imports is quite staggering, which explains the fact that there are almost as many Audi A6s or BMW 5-series as Lacrosses: they too are locally built, while all Lexi have to be imported. In the eyes of Chinese consumers, it’s simply not worth the extra 25% or so in transaction price to go from a Lacross to an ES, though I did see one or two of those around Shanghai. As soon as either the tariff barriers go down, or Lexi become locally produced, Shanghai GM is in trouble.
Pity, really, because the managers over there know what they’re doing. GM only has 3 brands there: Chevy, Buick, and Cadillac. Last year, they downgraded a tiny Daewoo-designed Buick, the Sail, to Chevrolet status, hopefully for the right reasons. Given the status quo, I don’t think there will be much Buick/Cadillac cannabilizing in China for the same reason that the Lexus IS and ES don’t cannibalize: they’re accurately positioned for different markets. Cadillac sells the CTS, the SLS, Escalade, and I think the XLR, though the last two hardly show up on the sales charts. Sales of the revitalized Buick Royaum (the Holden Statesman holdover before the real, separately-designed Park Avenue kicks in) is unlikely to cannibalize SLS sales, tiny as they are.
Still, three brands, tariff barriers, and thriving sales: Sounds too like pre-70s Ford to be too optimistic. Can I expand this into an editorial, honchos? This is turning into more than just a comment.
Lexus’ hallmarks are superior quality and first-class customer care. Buick’s are …?
How about building a Riviera that in terms of impact is similar to that of the original Riviera? People I know that don’t give a damn about cars will stop and ogle a vintage Riviera. A timeless, handsome, elegant design that knocked the ball out of the park.
A straight 8 would be a good concept, but I can’t imagine them making their money back. Even the process of adding two cylinders to GMs new inline 6 would be prohibitively expensive. However, an elegantly package blower on an inline six could be appealing.
Still, isn’t there a fair amount of hair-splitting here? If one is really quiet about having money, one could simply buy a Camry or Avalon. Lexus exists so that buyers can show they have more $ than other people, even if it is a bit more subtle than some other choices.
That’s not really it. My personal life provides a good example: I am, by all accounts, prototypical yuppie scum. I am a relatively high earner, and I work among other relatively high earners.
And I just can’t drive a Toyota sedan. Seriously. Not because Toyotas are bad, but because it conflicts with my professional profile to the extent that my clients just wouldn’t take me seriously if I did. My image simply won’t allow for it, and the money that I saved on the car would be more than lost on the business that I’d eventually lose from people who would regard me as being too low rent to be worth my rate.
That’s the funny thing — it’s about the brand value of the marque, not the actual cost of the car. You can spend $30+ k on a Toyota sedan, but it just doesn’t resonate in the same way that it would have if you had spent the same amount on a sedan with a Lexus badge, a BMW propeller or a three-pointed star on it. The Lexus tells them that you’ve arrived; the Toyota says that you haven’t shown up, and that you aren’t going to get there.
Toyota knows this, which is why they take such pains to keep the branding message so different. (Lexus is luxury and impeccable quality; Toyota is sensible good value; Scion is youthful and keyed in to the internet kids, the future of America.) The guys at Toyota City are a bit fuddy duddy, but they generally know what they’re doing.
I do wonder about the ES, though — badge engineering is always hazardous, and it’s just too close to its Camry cousin for comfort. It’s OK for them to share the same platform, but if I was at Toyota, I’d drop the conservatism and make a lot more effort to make the ES much more distinct from the Camry than it currently is.
Actually, there is a degree of cannibalization with any automaker that provides a full line of vehicles. You can argue that a loaded up Corolla would do battle with a base Camry, and that a loaded up Camry would hit head on with a base ES series. The former may be few and far betweeen. The later, I can tell you from experience, is far more common.
The difference between Toyota and GM… Toyota will almost never price comparable vehicles at a similar price point, while at GM it has remained a decades old core strategy. It’s continued to devastate their sales and I’m willing to bet that if it continues during these next several years, GM will file for Chapter 11.
American lexus eh! I remember when Maximum Bob was waffling on about the LaCrosse/Allure at product launch describing the vehicle as Lexus-like or Jaguaresque and I thought he should not be using this kind of terminology to describe a vehicle that should stand or fall on it’s own merits. Either the LaCrosse is as good as a Lexus or it isn’t. Of course it isn’t and ol Bob knew that full well but it did not stop him trying to convince us it was. But that is just like GM, talking up the quality perception gap as more imagined than real with incredible arrogance.
As for GM’s new CUV’s, I have only seen the Acadia up close and it looks nice. The build standard looks very high with nice even tight panel gaps, great paint job. Overall it looks a nice vehicle. BUT……given that all it’s various components come from suppliers who have been squeezed to the limit on price and who in turn have looked for the cheapest possible way to make the components, will it exhibit the reliability problems after 2 or 3 years that we have come to expect from GM. My new GMC Safari looked great the day I got it (in so far as you can call a GMC safari ‘great’) and it ran well for 3 years and then one by one the major components started to fail. Each time I replaced something like say a water pump I could not believe how cheap and nasty it was. If this is still how GM builds vehicles, even the so-called high end ones like Cadilac then they have nerve (or as the say in the old country,’having a neck like a jockey’s arse!’)to compare anything they make to a lexus.
Dynamic88: “Still, isn’t there a fair amount of hair-splitting here? If one is really quiet about having money, one could simply buy a Camry or Avalon. Lexus exists so that buyers can show they have more $ than other people, even if it is a bit more subtle than some other choices.”
Good point. However, Toyota doesn’t seem willing to put rear or all wheel drive in any of their cars. That would matter to me if I were in the market for a cruiser. Maybe to non-enthusiasts it doesn’t. I think the best “stealth” going right now is the Prius. Even though it’s totally non-stealthy by design, you have no idea how much money the driver has.
I hope Terry is wrong and Dave M. is right in that Buick customers selected another brand rather than died-off in droves in June.
Americans prefer SUV/CUV to large cars. Enclave will cannibalize Lucerne (granted, not a very hearty meal). Lucky for GM that Americans are willing to pay a premium for SUV/CUVs which might just earn GM a…What’s that word…Oh…Profit.
Buick is toast…milquetoast.
Too bad we don’t know WHY the dealers turned down the Holden/Park Ave.
I bet I know: margins. The profits on an ancient chassis and beancounted interior are gonna be a lot fatter. The imported car is gonna cost GM more, which leaves less money on the table for dealer incentives, holdback, etc.
If I’m right, that’s a damn shame.
Pch101
In the short time I’ve been here at TTAC I’ve developed much respect for your insight. I agree with you about what the various makes say about their owners, and I understand why you can’t drive a Toyota. (But there are other wealthy people who can, if they so choose. Or Chevy, as some wealthy people of my aquantance do)
The problem as I see it can be put in two ways. One, if the rules of marketing arent’ the same for all players, then we just say that GM’s brand dilution, a big part of which was price overlap, had nothing to do with it’s misfortune and we chalk it all up to bad Feng Shui. Two, what happens when your clients meet me, and see me stepping out of a Lexus?
It won’t happen, because I’ve no interest in the brand. But what if I did? I’m a skilled blue collar guy (albeit college educated), and my wife is a scientist. We are empty nesters, so if I wanted to drive a Lexus I could, and it needn’t be the cheapest model. (Though certainly I can’t afford the most expensive model) So I meet your clients and yourself, and you guys order Merlot, while I opt for Miller Genuine Draft (well, no, but for argument’s sake) and while you talk about high level financial dealings and perhaps horse racing, I talk about my bass boat and NASCAR. At some point, both you and your clients have to ask why you are driving the same marque as me. To borrow Groucho’s saying – I’d never join a club that would have me as a member. If there is suppossed to be some brand chache, then it’s important to keep people like me from buying a new Lexus. The best way to do that is with price.
If we compare Lexus pricing with the prices in Paul Neidermeyer’s series on GM brand mismanagement, (showing where brands would be had distincitions been maintained) we see that Lexus comes in just above Pontiac, (right where Olds would be if it were still around) all the way up to well beyond Caddy range.
If selling through various price levels spelled trouble for GM’s divisions, it’s hard to see why it won’t for Lexus. It took decades for GM to ruin brand distinctions. The fact that Lexus doesn’t appear to be in trouble doesn’t mean it isn’t.
Blue collar friends of mine spent a lot more than $30K on their last Ultra Duty Turbo Diesel King Buckaroo Pickup. Now that they are in the market for a sedan, how long before they figure out that Lexus status can be had on the cheap?
Dynamic, I could write a multi-volume novel on this topic, and since Mr. Farago would prefer an audience that doesn’t doze off mid-thread, I’ll just write a novella, instead.
For one, I’d suggest that automotive branding has changed quite a bit since Sloan invented progressive branding, and would submit that Sloan’s tiering system, while brilliant for its time, was doomed to fail in today’s market. At the time that these brands were differentiated under Sloan’s strategy, it was possible to differentiate specific brands to a much greater extent than it would be today. At the time, the GM brands typically sold just a few nameplates each, which themselves would have perhaps several body styles between them. Cars often varied greatly based upon features and quality, so it was fairly easy to distinguish a Chevy from a Buick with an engine choice, some whiz-bang-for-their-era gadgets and higher build quality.
This is not possible in the modern era. We have now gotten to the point that quality is expected at all price points, and even the humblest of econoboxes can often now be equipped with features that were once considered exotic, from A/C to automatic transmissions to high-end audio equipment to leather interiors to NAV systems. You can’t distinguish yourself with features anymore.
At the same time, the concept of mainstream car brands have changed. Previously, consumers did not demand, and dealers did not expect to carry, a wide variety of products. The market was less sophisticated at the time (the mainstream versions of the product were much cruder than they are today, and these deficiencies were accepted by the buying public), plus the dealer networks were then forced by their agreements to maintain single brands or else lose their franchises, which forced them to work harder to reinforce brand identities. (Subsequent court rulings since WWII found these constraints to be a violation of antitrust law, which paved the way for dealers to carry multiple brands and to not be used as an dumping ground for excess inventories at no cost to the manufacturers, as had been the case previously.)
The product qualities and regulatory environment that made Sloan’s scheme so successful are now dead, dead, dead. Without the ability to distinguish based upon options, features and build quality, the whole Sloan concept falls apart at the seams. And the stuff that allows the high-end such as BMW, Lexus and Porsche to distinguish itself from the middle — intangible driving qualities, impeccable finesse in the build quality (the details that are hard to see), and high performance combined with refinement — completely elude GMNA, that builds to a price point, rather than to customer satisfaction. GM simply never learned how to do finesse well, which means their high-end branding effort is now virtually meaningless.
Compare GM (the loser) to Toyota (the winner) in their respective US businesses. GM has, by my count, seven US badges and 48 US nameplates, excluding SAAB. In contrast, Toyota has three badges, one of which (Scion) is a subset of the main brand, and 26 nameplates.
Talk about a legacy cost. Just on the marketing side alone, GM would need virtually double Toyota’s marketing budget just to stay on par with TMC’s per-nameplate spending. Is it any wonder that GM is getting killed while TMC is growing?
In my opinion, the GM situation is absolutely unsupportable, and doomed to fail in today’s market, no matter who is in charge. Not only do the GM brands cannibalize each other, there is no way that they could avoid cannibalization — you just can’t make 48 cars that differ from each other in a meaningful way. Unless you get into the low-volume exotic car business, there is simply no way to build that many nameplates under that many badges without creating abundant overlap.
If someone needs to make “Bold Moves”, it’s GM. While there has been some effort to reduce this problem (Olds is dead, and Buick-Pontiac-GMC are being somewhat consolidated), it’s still just not enough, fast enough. The problem of their enormity is, er, enormous.
Simply put, GMNA needs to figure out — fast — how to cut the number of nameplates that it has by half, and to use the savings to build some really interesting and unique products that are better than the competition and don’t overlap.
But this article implies why it won’t happen. The brands are now worthless to the point that even GM doesn’t really know what they are supposed to represent. I can’t see how a company with so much cognitive dissonance at the top can be expected to survive, let alone prosper.
Luther:
July 8th, 2007 at 3:59 pm
I hope Terry is wrong and Dave M. is right in that Buick customers selected another brand rather than died-off in droves in June.
Yes, I was wrong to have worded it that way. I SHOULD have said that to many of the older former GM owners, BUICK is the dead entity, no longer on the consumer’s radar screens.
But as a child of the ’50s, I remember the Gran Sports, Wildcats, Rivieras etc that many of us dreamed about.
The market is penalizing Buick for putting forth less than a best effort.
Pch101
My point wasn’t about features, but more about price levels. Lexus is a status symbol, pure and simple. No mystery the underpinings are Toyota, so why pay more? – simply to show that one can. (Or in your case to maintain an image for business reasons – but that makes it a defacto status purchase)
Lexus is spread accross pirce levels from Toyota Avalon to 7 series BMW. The problem (and it isn’t unique to Lexus) is that the likes of myself could get into one. Not an old depreciated second or third hand Lexus, but a brand spanking new one, albeit one of the cheaper models. And I’m talking purchase. If we talk lease, I might be able to move up a notch or two in the Lexus hierarchy.
Let me put it this way. If I can drive one, Fraiser Crane no longer cares to be seen in one. So, either I get priced out of the club, or Fraiser wanders off to find higher levels of status. For a while it’s possible to get by making a distinction between Frasier’s high end Lexus and my low end Lexus. But in the long run, we can’t share a brand name, it just won’t do.
I again make my claim that Acura has become the new Buick. I think Acura has filled the niche where GM should have placed Buick, and GM has some serious work ahead if they ever hope to pull Buick out of the hole they steered it into.
Two, what happens when your clients meet me, and see me stepping out of a Lexus?
A paramour’s father ran a contracting/building business in a Southern city. He made a tidy living, but to buy a Caddy with literally the money paid him by friends and neighbors Simply Was Not Done. Oh, the affrontery!
For a slightly smaller amount of dough they drove the most loaded Buicks available. (And yes, this was many years ago.)
What is the modern motoring equivalent?
My point wasn’t about features, but more about price levels. Lexus is a status symbol, pure and simple. No mystery the underpinings are Toyota, so why pay more?
Price is a component of branding, but not the only component. I’d suggest that at the moment, there is generally enough distinction between Toyota and Lexus to avoid brand conflicts.
Branding communicates to the consumer what to expect. Lexus is a luxury and “perfection” brand, and the consumer is told to pay more for that perfection and the status that runs with it. In contrast, Toyota is about “value.” Consumers seem to understand this at the gut level, which is exactly what is needed to make a brand work.
“Value” is not necessarily the same thing as price. Value means that you get your money’s worth, which is not the same thing as paying bottom dollar for it. In fact, a good marketer makes you pay a premium for value, precisely because you are getting more for your money than you would from a cheaper rival, so the price premium paid becomes part of the appeal.
The Sloan system was based largely upon price and features; you pay less, you get less, and vice versa. It’s not quite the same segmentation strategy as is Toyota’s, and the Sloan system was facilitated by the differences in the market at that time that largely don’t exist today.
The fact that there is some degree of price overlap is no big deal, just so long as the other brand qualities stay segregated and that pricing overlap is managed effectively. It is something that does need to managed carefully — it is easy to screw this sort of thing up — but they aren’t quite there yet.
The point of the GM example above is to show that market segmentation is much more difficult to maintain with the seven or eight badges that GM supports than it is with the 2 1/2 brands carried by Toyota. (Scion is not a full-fledged badge, and is sold under the Toyota umbrella.) If Toyota started stacking more brands into the system, then yes, I’d be wondering whether it’s time to sell the stock, but for now, 2 1/2 badges is about right.
In my mind, the main threat to Lexus’ status is the ES, and I would personally suggest heavily modifying the styling to separate it from the Camry. But so far, they have done really well with it, so I’d say that I may be overstating the risk. Still, thinking ahead to the future, I’d change it soon before the market passes them by and they have no choice.
What’s the big deal about Lexus offering a $30k+ entry level luxury car? Does it dilute or weaken the brand / status symbol? By the same token, I guess BMWs, Mercedes and Audis don’t qualify as status symbols as well since they all offer entry level cars retailing for around $30k (in the case of the C-Class and A4, even lower).
If you really want to look at cars that the everyday Joe can’t get into, and doesn’t overlap in pricing with other economy brands, you’re pretty much limited to the likes of Rolls-Royce, Bentleys, etc.
Phil:
“but alas, it’s the dealers that may be the famous heel in this saga. my dealership ordeal to drive the enclave/acadia was long and painful and not worth space here, i’ll just say a very obese good old boy waited until i had parked and gotten out of my car before dropping his cigarette (he was standing RIGHT by the front door) and squashing it with his grossly overstressed footwear. i was hardly able to breathe (do smokers know how much they stink?) as we sat together in the front of the vehicles (i bravely looked at both the acadia and enclave at the same dealership, figured to get the pain out of the way all at once). he assured me that the acadia had a variety of options that it didn’t (auto wipers, bluetooth, autodim ext mirrors) and i couldn’t resist asking him how the pairing procedure would be carried out with my bluetooth phone. this slob couldn’t distinguish bluetooth from gangrene”
Well – am just a good old guy who comes here to extend my knowledge of cars in general. You know – one of the much maligned “baby boomers” who is now starting to feel his old bones, was not a member of the “hippie” crowd, and served in the USN for 20 years. Don’t you guys ever get tired of bashing Buick? Maybe it is because they are such an easy target. After all, they serve us “seniors” (check your demographics, there are lots of us) with reasonably well built, full size, comfortable cars at a price that is not out of line.
For the record, have owned a number of cars over the course of my life including LTD’s, Crown Vics, a ’65 T-Bird, a Chrysler Concorde (very nice and still running well in my daughters hands), and more recently a 2002 Camry XLE (which is easily one of the most reliable ever). Only GM was a hot-rod ’56 Chevy which my buddy wrecked in Yokohama (a story for another day).
Believe me, I do not begrudge the desire for sportier, faster, RWD vehicles. God
knows, when I was younger I would have almost killed for a Vette or 240Z, but
never had the cash, and then I got married and started raising two kids. Just
recognize that, if you are VERY fortunate, you will get older too, and your vehicle
priorities will change. Heated leather and fully power adjustable seats WILL become
a major issue. 0-60 times, not so important.
Just loved the line bout how you “bravely” checked out both cars at the dealership.
Possibly, you need to get out more. The salesman works long, crappy hours dealing
with a (rightly) suspicious public. If he was in your face as soon as you pulled in, I’m
sure you would be bitching about the “vultures” at the dealership. I fully agree that
there is NO excuse for any salesman not to know his or her product.
Finally, although I really make an effort to ignore it, the almost obligatory,
sanctimonious slap at us “smokers” is really getting tiresome and boring. Those of
us that still smoke are well aware of our shortcomings. The next time you are forced
to be around one of us social lepers, why don’t you just deal with it in a mature
manner instead of being such a drama queen? Heaven knows, we have to deal with
YOU too.
Pch101: The fact that there is some degree of price overlap is no big deal, just so long as the other brand qualities stay segregated and that pricing overlap is managed effectively. It is something that does need to managed carefully — it is easy to screw this sort of thing up — but they aren’t quite there yet.
There was still some price overlap among the various GM divisions even during Sloan’s heyday. A big reason that Buick was able to eventually knock Plymouth out of third place in sales in 1954 was because of the relatively low-priced Special series.
Pch101: In my mind, the main threat to Lexus’ status is the ES, and I would personally suggest heavily modifying the styling to separate it from the Camry. But so far, they have done really well with it, so I’d say that I may be overstating the risk. Still, thinking ahead to the future, I’d change it soon before the market passes them by and they have no choice.
There is still a difference in the level of fit-and-finish between the two cars.
The paintwork on the Lexus, for example, really is superior to that of the paintwork on the Camry (which is still actually quite good).
With GM, I’m not seeing a higher level of build quality among vehicles on the same basic platform, even if the various vehicles come from different divisions, and the one division is supposed to be “better” than the other.
An Escalade, for example, isn’t any better built than a Tahoe or Suburban. A LaCrosse isn’t any better built than an Impala. Which further reinforces the impression that the distinctions between GM’s various divisions are largely based on smoke-and-mirrors.
jimmy2x: After all, they serve us “seniors” (check your demographics, there are lots of us) with reasonably well built, full size, comfortable cars at a price that is not out of line.
There are more seniors than ever before, and they are wealthier and healthier than ever before (which means that they can still think about buying a new car).
The problem is that as the number of seniors has increased, the number of Buicks sold has decreased.
So even large numbers of senior citizens apparently prefer to drive something besides a Buick.
The only way Buick becomes the American Lexus is if Lexus sticks the Buick nameplate on their models.
Hey GM, people in Hell want ice water, too… But don’t expect either to happen…
I remember TTAC mention something to the effect of
Buick’s target market is slowly going the way of the dinosaur…
Geeber:
There are more seniors than ever before, and they are wealthier and healthier than ever before (which means that they can still think about buying a new car).
The problem is that as the number of seniors has increased, the number of Buicks sold has decreased.
So even large numbers of senior citizens apparently prefer to drive something Buick.
True – some of my wealthier compatriots can afford to go the Lexus route. More power to them – if they have the money and that is what they want to spend it on, why not?
Many of the rest of my generation are obsessed with the SUV/CUV route and that is OK too. Some of us just want a comfortable full size sedan with a “Mafia” size trunk so we can travel in comfort. I do not hold any particular “torch” for Buick – they are just in the mix. If Ford would get off their butt and update the Panther platform (even old farts like me would like an I-Pod connection), I’d look there in a minute.
I hadn’t planned on making this many comments, and I don’t want to come accross as thinking I’m right and everyone who disagrees is wrong. I respect the opinions that have been presented and recognize that there is truth in them. I’ll refrain from further commentary, after this post, because I don’t want to appear argumentative (well, no more so than I already seem :-)
muffinman, to answer your question, yes, I think a 30K Lexus does diminish brand value. The reason is Lexus exists solely as a luxury brand based on pretty much nothing but price. To put it another way, a Toyota isn’t a cheap version of a Lexus, where your getting the same mechanicals for a bargain price. Rather, it’s the other way around – Lexus is a premium priced Toyota, where you’re getting Toyota mechanicals but paying appreciably more for them. IOW, they are rather poor value, since one can have the same reliability and to a considerable degree the same quality in terms of fit and finish by purchasing a Toyota. All that makes the Lexus brand work – as far as I can see- is that some people can swing the payments, while most cannot. Exclusivity based on price, while making no pretense of being mechanically superior to Toyota.
Compare that with BMW, which is also dipping into the low 30Ks with the 3 series. BMW isn’t a gussied up VW – it’s a BMW. And while low 30s hurts it in terms of exclusivity, it’s still a Bimmer. BMW can still sell on the basis of it’s Tutonic engineering (but uncomfortable questions about VW’s Tutonic engineering should be side-stepped) whereas Lexus has nothing (much) to differentiate it from Toyota – just ability and willingness to pay. Ok mayber there is full leather seating or a walnut shift lever or some such that I can’t have on my Avalon. As Pch101 pointed out, cars aren’t differentiated – to an appreciable degree- by features. It’s the less tangible aspects that sell premium cars. Lexus has always seemed to me to be built on a very shakey foundation -”Hey, it’s basically a Toyota, but priced so that Joe Six Pack can’t have one, you’d be willing to pay extra for that, right?”
So far, yes. Lexus owners do seem willing to pay for the Toyota that Joe Six can’t afford. But 30K really isn’t a very expensive car these days. Not entry level, to be sure, but hardly pricing Joe Six out of the market. For a brand based almost solely on ability to pay, offering too low a price diminishes the brand.
Possibly there is something about Lexus which completely eludes me. Being value conscious I’ve never had any interest in the brand. Perhaps some intangible makes it different than a Toyota at the same price, and I just don’t get it. But if I payed 80k for a Lexus I’d wonder why others are cruising around in the same brand for the price of a Buick. I just don’t see how Lexus is long for this world if they are sold for Toyota prices. Again, maybe there is something about the brand identity that compeletly eludes me.
I’m stepping down from the soapbox now.
Dealer service.
Dynamic, point well-taken but I guess we’ll just have to agree to disagree.
No biggie, but I think in your comparison, you were getting the VW-Audi relationship mixed up with the independent BMW. Also, with the exception of the ES and the LX, Lexus vehicles do not share any platforms with Toyota (The LS460 can’t be compared to anything in Toyota’s stable) and the IS250/350 platform is exclusive to that car alone. On the other hand, VW/Audi share components/heavily with one another. The only true distinction Audi holds over VW is superior build quality, quality of materials and quattro. So your argument that a Lexus is “just” an expensive Toyota is a bit flawed. As far as I know, no current Toyota is RWD-based (like the IS250/IS350/LS460 are) and offers the same styling cues and material quality of a Lexus. You’re not only paying for the name badge, but you’re also paying for better quality.
I can certainly respect your position / view on Lexus as a brand that solely exists based on price, but perhaps that’s because we are of a different generation. I am in the younger mix (not to say you’re “old”) but as far back as I can remember, Lexus has always been an established name badge that exudes higher quality, luxury and more appeal over a Toyota (not just a higher price). Perhaps you remember the first Lexuses, when the name was still young and they shared heavily with their Toyota counterparts and maybe that’s the reason our views differ..?
Well, I’m going to comment on two separate issues occuring un this thread:
1. GM – As mentioned earlier, GM has too many brands. This is bad on several levels. Many have mentioned the competition, price overlap etc. However, as a psychologist, I feel obliged to give GM a basic education in the science of choice. Though not my field, I do know a fair about this. The key here is lack of choice. People are more likely to make a decision and feel positive about it afterwards if given less choice. A little bit of choice is good, too much overwhelms us. With this many cars, you simply confuse the customer with choices and they go elsewhere. It is also why inertia is working for toyondissan. When Joe and Jane Schmoe are looking for their new midsize sedan, they need to narrow down the decisions. Thus humans make assumptions to narrow them down:
1. Oh, Japanese cars are reliable
2. Well, my Camry has been great, let’s see the new one
3. Neighbor Jim loves his Accord
So, Joe and Jane check out the japanese three and buy the one with the available beige leather because it is cooler in the summer. They are happy.The only way GM will take back market share is if they produce a vehicle that is in a new segment or makes itself one of the top three by appealing to something others don’t (see: pt cruiser, vw bug, mini cooper). A hint for GM; premium small cars under 25k would be nice.
2.Toyota – In the past, I had bashed the ES series, but have ccome to recognize Toyota/Lexus brilliance. Back to Joe and Jane. They are still shopping for a midsize car, but Joe just got the big promotion to manager, partner, etc. Well, Joe loves his Camry and its reliability, He is thinking the XLW v6. However,his secretary/assistant just got the new one in I-4 LE form. He can’t be seen in the same car as his assistant. Well, sir, for a few thousand more you can have the safety and security of your old Camry with a badge your assistant can’t afford. What is that, you want something different? More like a BMW? Well step over here and check out the new IS series.
Playing both camps is a smart idea. Double the traffic and rarely is there overlap between the two cars.
Okay 88, I’ll bite. To understand WHY Lexus exists in the US you have to understand a little bit of history.
Back in the good old days of the 1980’s, when Lee Iacocca was selling Dodge Dynastys with trombone case red interiors, there were three little car companies.
Toyota, Nissan, and Honda. Well OK, there was that company called Mitsubishi who was helping Chrysler sell American cars. And there was also Mazda, who could actually make a great small car, but terrible mid-sized cars. And of course we also had Subaru which made cars that were more or less inspired by agricultural machinery. But the three companies that would eventually enter the American luxury market for good were Toyota, Honda and Nissan
Most everyone who bought one of these vehiclesa liked them. They offered very well made cars that attracted a wide breadth of consumers. Unfortunately, these three companies had one big weakness.
None of them made a true luxury car. When it came time for folks to buy into the upscale portion of these brands, their simply wasn’t much there. You had a Cressida, which was a rather narrow and wonky model. You had a Maxima that really was more like a Stanza than a Cadillac. And you had an Accord that was quite small even compared with most midsized cars of that time.
In short, the brand names of the Japanese Big 3 were synonymous with smaller high quality vehicles that simply didn’t have much in the way of luxuries. They also rode a bit harder than your father’s Oldsmobile or the neighbor’s Riviera. When it came to the nice cushy ride or German handling that many Americans wanted, the Japanese simply didn’t have anything to offer.
There was also a LOT of anti-Japan bias within many segments of America during the late 1980’s. The obvious reason was still WWII but the more promiment espoused largely by a Detroit friendly media was that the Japanese Big 3 were only good at making small(er) cars that didn’t have the ride or power of Detroit Iron or German Iron for that matter. The thought of paying $25,000+ for a Japanese car in those days was not a viable option in a market where manufacturers always used premiere brands to compete. Cadillac, Lincoln, BMW, MErcedes, Jaguar all had the panache and pedigree that Toyota simply couldn’t offer at that point.
The Japanese realized the ’snob’ factor involved with owning a luxury car and acted appropriately. A Honda Legend in Europe became an Acura Legend in the US. For about $22,000 to $27,000 you could have a car that had good power (thanks Yamaha), exceptional handling (thanks Honda Japan), and a surprising level of roominess for that time period (thanks Honda of America). My mom actually bought a 1987 model and I can tell you that in a matter of a year, the two of us put over 50k miles on it. It made my Dad’s Continental look as old and irrelevant as the modern day Town Car.
When Honda succeeded, Toyota and Nissan followed suit. In the case of both their flagship models, the LS400 and Q45, the decision to market them differently was highly justified. Many of the reasons are still not very evident to most consumers of the modern day.
The first issue, especially with Toyota, had to do with their dealer network. When it came to customer service, they simply did not differentiate themseleves as well as the actual cars they marketed. Everything from shady sales practices (still very much the norm of that time) to service issues were still in the formative stages. If the Japanese Big 3 wanted to truly compete with BMW, Mercedes and Cadillac, they needed to give customers the high-end dealer experience.
Besides the nice cushy carpets, subdued lighting, and willingness to go with the soft sell, they needed to make their customers feel like #1 every time they went in the door. Drop dead gorgeous service areas, top notch loaner cars, and quality, quality, quality, in every component of the ownership experience was a must. It wasn’t a matter of meet and greet when it came time to meet that upscale customer. It was relax… enjoy the best because you deserve it…. and is there anything whatsoever we can do for you.
The traditional dealers were simply not near that point of service for the most part. One noteworthy exception were the Sewell dealerships in Texas, but that was one state out of fifty.
As for the cars….
Toyota really didn’t have a Camry that could compete well with upscale brands until the 1992 redesign. That was nearly four model years AFTER the Lexus LS400 came out of the chute. When the first Lexus ES300 came out (the prior ES250 was a big time bust) it offered much of the same things you would find in today’s ES. More luxurious seats and trim, better sound insulation, a nicer stereo system, and a suspension that was a bit more tweaked for a luxurious ride. 15 years later, Lexus more or less uses the same formula for that model.
Now Infiniti was a bit different. It took them a bit over a decade to actually figure out what they wanted to be in the marketplace. Marketing at first was just plain terrible. Commercials that showed nothing more than rolling brooks (where the F is the car!), an entry level model that was based on the nauseatingly bad Nissan Sentra of the late 80’s, and a flagship model that intentionally didn’t offer the wood trims that were considered synonymous with luxury for that time. Then there was that convertible I30 that somehow managed to be even more ugly and badly proportioned than the Chrysler Lebaron, and the J30 squid car with the vestigal back seat. Infiniti really didn’t get any traction in the marketplace until the early 2000’s.
Oh, but back to why the Japanese sell gussied up Camrys and Maximas. That’s easy. Most ‘prestige’ car owners are snobs to one degree or another. Even yours truly takes a bit of pride in driving ‘The Ultimate Driving Machine’ and the car that’s ‘Egnineered Like No Other’. Before there were owners who were willing to pay $30,000 for a gussied up Ford Explorer, there were millions of luxury owners who demanded the ‘best’ and were willing to pay for that privelege. They were the market. So the Japanese simply catered to that mindset.
I’m sure that even the Senators of Ancient Rome had beautiful chariots custom made by the finest engineers and artisans of that time. But in the end, the wheel was/is still the same.
muffinman
Though I wasn’t going to comment again, I wanted to clear up one thing – I wasn’t confusing the VW/Audi
connection. That’s why I pointed out that Bimmer isn’t a VW under the skin. No platform sharing and no component sharing, so BMW can actually justify it’s price because it’s not a lesser car dressed up in different sheet metal with a nicer interior.
In my mind, the main threat to Lexus’ status is the ES, and I would personally suggest heavily modifying the styling to separate it from the Camry.
Personally, I think this latest redesign did it. The new Camry is pretty fugly, the ES quite distinctive.
Once upon a time there was an American bicycle manufacturer called Schwinn. In their day, Schwinn built innovative, stylish, and durable bicycles at an attractive price. Schwinn prospered, they had the biggest share of the US bicycle market and made money hand over fist. Schwinn was known as the “Cadillac of Bicycles”.
Then the foreign competition showed up. The European and Japanese bicycle makers offered new technology, high quality, and low prices. Schwinn countered by cutting corners, and squeezing their dealers and suppliers. After all, what did those G*d damn feriners know about the bicycle industry? Schwinn WAS THE BICYCLE INDUSTRY.
Soon Schwinn was teetering on bankruptcy. They kept the wolves at bay by hocking everything they could. Eventually, there was nothing left to hock and the sheriff shut the doors in 1992.
A corporate vulture bought out the Schwinn name at the bankruptcy sale. Today the Schwinn name is plastered on crap produced by a concern known as China Bike — the Chinese sure don’t waste a lot of effort coming up with snazzy corporate names. These “Schwinn” bikes are then sold at fine retailers like Walmart.
Replace “Schwinn” in the above story with “GM”, and replace “China Bike” with “China Car”, and it sure is funny how history repeats itself.
Replying to Dynamic88:
It seems to me Lexus is as badly managed as GM’s brands. MSRPs range from $30K (which gets me anything from an Impala SS to a baby Mercedes – not to mention Avalon) all the way up to $104K. I can drive the same brand and save $74K by getting the IS sedan.
If Lexus is “badly managed” due to the $30k~$104k gap, try Mercedes which ranges from $20k (A Class) to $187k (SL65AMG).
“muffinman
Though I wasn’t going to comment again, I wanted to clear up one thing – I wasn’t confusing the VW/Audi
connection. That’s why I pointed out that Bimmer isn’t a VW under the skin. No platform sharing and no component sharing, so BMW can actually justify it’s price because it’s not a lesser car dressed up in different sheet metal with a nicer interior.”
Okay, you lost me there. How does using a chassis for a non-luxury brand make it inferior?
A chassis is nothing more than a basic platform. Heck, given the right engineering talents you can make a car with a platform for a $20,000 car outperform those cars that cost $40,000.
As Car & Driver said when the 3rd Generation Camry came out, “With a car like this who needs a Jaguar?”
A chassis is nothing more than a basic platform. Heck, given the right engineering talents you can make a car with a platform for a $20,000 car outperform those cars that cost $40,000.
This is a really valid insight that bears repeating.
There seems to be some misunderstanding of the differences between “platform sharing” and “badge engineering.” The latter occurs when the differences between different nameplates are so minimal that the consumer sees no distinction among the near-identical products that have different nameplates.
Badge engineering is ultimately a marketing problem, not a technology problem. It’s the sort of cancerous growth that appeals initially to the finance department (squeezing more value out of a given production line, therefore amortizing fixed costs across more units), but kills the brand.
This is precisely the type of melanoma that destroyed the brand differences that used to exist among the domestic badges, and ultimately killed off Plymouth and Oldsmobile. And it’s ultimately an affront to the customer, the byproduct of a cynical, patronizing management team that honestly believes that a bit of advertising and slightly different taillights can fool the customer into believing that a product is better than or different from what it is. Detroit has spent decades underestimating the consumer, and payback has not been sweet.
Platform sharing makes perfect sense — it saves money and increases efficiency without compromising the relationship with the customer. It’s not really necessary to avoid sharing underpinnings that the customer doesn’t see.
The Mazda 3 and Volvo S40 are, in my opinion, good examples of two distinctly different cars that can peacefully coexist atop the same platform to the benefit of both. They look different, they feel different and they behave differently from one another, so no channel conflicts are created with this, and both add value to their respective segments.
Buick is so dead in the US it isn’t even worth talking about any more. Do we talk about Isuzu anymore ? …. Buick is only steps away from the same door.
Outside of GM insiders, nobody gives a damn for or about modern Buicks anywhere except China. They are over.
Skor has it right. Fast forward a few years (or perhaps decades) and I think you will see that Buick brand owned by a Chinese company and oddly enough once again competing vigorously in the US but with nothing except a name linking the brand to it’s roots. Hopefully they will not be in WalMart like the poor Schwinn brand!
Side note, North American Lexii were Toyotas in the RoW at one point. The IS was the Altezza, and so on. It’s only been in the last few years that Toyota has globalized the Lexus brand, introducing it to the Japanese domestic market, for example.
They’ve gotten around to thinking they need that extra high class tier to better cover the market.
“Okay, you lost me there. How does using a chassis for a non-luxury brand make it inferior?”
I think for the typical Lexus customer it doesn’t make a difference. They don’t care if it’s a Camry on the bottom side because that means they’ll get the legendary Toyota reliability. Lexus offers the somewhat odd combo of down market reliability with a price that your brother-in-law can’t afford. Except that at $30K, he probably can afford it. The only thing making Lexus a Lexus is it’s price tag.
By contrast, what’s making a Bimmer a Bimmer is the fact that it’s made in Bavaria by BMW. No down market VeeDub parts sharing, so Bimmer has to sell in part on snob appeal, but in part on the golly-gee-whiz German techno-engineering dazzle. Lexus doesn’t sell engineering dazzle. They sell reliability – courtesy Toyota. That’s why they’ve taken share from the Germans as well as the Americans. (How many 3 pointed starts have been traded in for a Lexus?) People paying a premium want reliability and Lexus offers that. They also want some exclusivity, and Lexus doesn’t really offer that, not when you can buy one for $30K.
If you look at Neidermeyer’s series on GM branding fiascos, one thing you’ll really notice is that Caddy used to be in the stratosphere – as I recall something like 165% of MHI on the low side, and up to 650% on the high end. Do you think Caddy would like to be getting those prices today? I think so. But they can’t, because over decades they’ve cheapened the brand by down-lapping (I just invented a new term) their prices with the lower divisions. (Of course quality is a big factor as well) Caddy couldn’t ask $300K for their top of the line model today – no way. You can have a low rent Caddy for $30K (Same as the low rent Lexus) so the brand no longer has cache – not like it used to. Even I could buy an new Caddy, and there’s no sense having an exclusive club if you’re letting people like me in – it ceases to be exclusive.
If it’s a bad marketing decission for Caddy to go too far down market, and it is, then it’s just as bad for Lexus. $30K just isn’t very exclusive these days, and you can only get by on model differentiation for so long. In the end, the working slob like me can be driving a car with the Lexus moniker, just as if I’d payed $99K instead of $30K. There’s a reason Caddy can’t charge six figures, and it’s only a matter of time until Lexus can’t do it either.
Buick still has got chances. what is a sad irony that even chinese, that are associated with cheap brands and a questionable quality, are even at higher quality when dealing with making buicks. lucerne and enclave are way good cars, only lucerne needs to make the beauty deeper than that of the skin. as you can`t switch to rwd, at least make a Lucerne awd, and add a 6speed manual.well, LED taillaights wouldn`t hurt either. an for god`s sake , milk that northstar baby more seriously, what the heck, you can`t even squeeze 300 ponies from a 4.6 dohc engine? where is my buick entry -luxury coupe?. nice concepts won`t cut it. where is my luxo-barge nex gen chrome perversion park -avenue ultra? add new models, for god`s sake, are yopu going to look at those 2 good models forever before you get dumped from fraternity.buick HAS got today even fit and finish. IS it scaring lexus to death? no. Nothing scares lexus. Buick needs to finish boarding school, before challenging Rocket scientists and brain surgeons of car industry. what a pity that buick is slowly becoming just a generic shadow of once famous brand. opel platforms, opel engines, aussie recipes, chinese baking and american ….. memories.
Eh. The grousing about entry level luxury vehicles diluting a brand is misplaced.
When dealing with the mass market brands I think it’s generally accepted that exclusivity is tied to price and the models have an obvious hierarchy. It reflects at the dealership and in the parking lot of your favorite over priced haunt. The C-Class is going into the garage..the SL65 is sitting out front on the lawn with the rest of the “nice” cars.
If exclusivity of “brand” is your concern you don’t buy a Benz, Bimmer, Lexus, etc. anyway. You buy a Rolls, a Bentley, a Maserati etc. Otherwise you settle for the exclusivity of “model” by selecting the biggest and baddest model offered and lord over the proles that obviously aspire to be where you are…but can’t quite get there.
“Buick is so dead in the US it isn’t even worth talking about any more.”
Buick is a dead brand within a dead GM…Buick is dead^2.
GM total yearly revenues about equals the total debt obligations and they can’t make a profit. With June sales melt-down accompanied with a Goldman Sachs “buy” recommendation, the Wall Street deceit dance is obvious. GM is worth far less than nothing…Unless I am missing something…..
If you own GM shares, keep one finger on the “sell” button at all times or use stop-loss…Would be my recommendation. If GM was not a major Dow component, Goldman would have a “SELL!RIGHT NOW!” recommondation.
Most prestige brands have offered an “entry level” luxury model to supplement the true luxury offerings. Lexus isn’t doing anything new.
When Packard was at its peak in the 1920s, it was the six-cylinder models (which debuted in 1920 as the Single Six) that propelled it to the number-one slot among American luxury marques.
The Twin Six (V-12) and straight eights were the prestige models, but the six cylinder models – the prototype for today’s entry-level luxury vehicles – kept the lines running. And the six cylinder did not dilute Packard’s appeal to the wealthy. Packard enjoyed its greatest prestige in the 1920s, on through the mid-1930s.
Even the 120 of the 1930s didn’t kill Packard – it kept the company in business during the worst economic calamity this country has ever experienced. The luxury market basically disappeared.
Unfortunately, Packard became so enamored of the initial profits in the medium-priced market that it let its prestigious Super Eight and V-12 models wither away.
Packard failed to realize that the prestige of the “senior” models were what sold the 120s. Once those models were gone as a reference point, the 120 began to falter.
Packard also failed to keep pace with GM’s styling efforts. By 1940, Packards looked tired and dated next to Cadillacs and Buicks.
Lexus will not have any problems as long as the top-tier models are around to uphold the marque’s reputation, and the styling, quality and performance of all of its offerings keep pace with other brands in the luxury market.
Dynamic,
I think you need to test drive a Lexus. Better yet, get one fixed. Yes the RX and Highlander are close, but the others I think are not so much.
On the matter of why the dealers chose the old platform – it’s parts. A new platform would have to sell a LOT more copies to overcome the cost of expanding the parts inventory. Buicks aren’t selling that well, so having a car that doesn’t share parts with the other GM’s isn’t something the dealers really want.
It came to mind the other day that GM must be run by politicians these days. Keeping the unions, suppliers, politicians, and dealers all happy is a full time job. Anyone who had the urge to try anything innovative would get squashed out of the management ranks at mid level.
GM needs to either find someone so charismatic that he can talk all these constituencies out of their perceived best interests, or someone willing to tell them where to go.
Dynamic, your hypothesis completely contradicts what BMW actually does in Europe. Out there you’ll find a 1-Series that would actuall be a bit lower than a TSX. Over there the difference between lowest to highest is a 500% to 600% increase in price.
BMW’s are also made in America, China and several other countries as well.
GM needs to be broken up. End of story. Trying to fit 7 brands into a 25% market share simply doesn’t work. Particularly when you have the overheads of a corporation with a 50% market share. So please instead of an emasculated “American Lexus” that compares unfavorably with a Korean Hyundai give us an independent American Buick that can beat the European competition on style and comfort and compete hard with Cadillac. It’s not like there isn’t room for two American luxury brands
Dynamic, your hypothesis completely contradicts what BMW actually does in Europe. Out there you’ll find a 1-Series that would actuall be a bit lower than a TSX.
To be fair, I don’t believe that’s a reasonable comparison. The European market for compacts and subcompacts differs from that of the US. In the US, subcompact and compact cars, aside from those that are blatantly sporty or impractical, are going to be inherently limited to the lower end of the market. Very few Americans will pay big money for a small car, and there is a clearer correlation in the US market between size and price.
In contrast, substantially higher fuel prices and limited urban parking space encourage even affluent Europeans to buy smaller cars. Hence, there is a market for the Mercedes A-class, BMW 1-series, etc..
The prestige automakers of Europe can sell a small car to their European customers without tainting their brand images, whereas that is a risky proposition in the US because of the econobox stigma that they could acquire if they did that here. Different markets have different perceptions, needs and wants, and the automakers need to take these into account when packaging their products.
Another great thread, with many well-argued comments. And humor: “Dodge Dodge Dynasties with trombone case red interiors.” Better than Leno!
This editorial poses the question “Buick: The American Lexus (or Not).” The unsurprising consensus: it’s not. Lucernes and LaCrosses aren’t bad cars, but their primary role is to fill space in Buick showrooms.
I would like to suggest that Buick’s problem, which has been developing for forty years, can be summed up this way:
Buick has stopped being America’s Buick.
If BMWs were sold at a thousand mega-dealerships with inflatable gorillas on the roofs and a motley range of badge-engineered me-too products, BMW would stop being Bavaria’s BMW.
If GM is a joke, Buick is the punch line.
I currently own a 1999 Buick. I am not retired. I am a in my mid-40’s. As much as I like the car, the steep depreciation and the constant cost of fixing things on it has made it difficult for me to be able to replace it. After a lifetime of owning GM cars, this Buick is the last GM car I am buying regardless of how nice it looks.
This is a Buick built in N. America (Canada to be exact), and those wanting a Chinese built Buick and are leery of Chinese quality should think twice. My running costs sky-rocketed the day the warranty expired.
The GM Lexus?
I think I’m pretty well qualified to speak on this subject because of the cars I have driven over the past 6 or so years:
1) 2001 Toyota Camry LE (basically a Lexus ES300)
2) 1999 Lexus GS400 (doesn’t share a platform with any north-Amercian Toyota model)
3) 2006 Chevrolet Corvette (a car that is absolutely out of place with the price and status of the rest of the brand)
I don’t think brand image is as cut and dry as some of you make it sound. The jury is still out on whether or not the benefits of selling an upgraded Camry as a Lexus outweigh the drawbacks (I would seem to think the former is true however). While I’m sure an LS460 driver doesn’t like the fact that his car might be confused for an upgraded Toyota (when I had the GS a few people asked me if it was based on a Toyota), the “Lexus” name has enough cachet amongst people who don’t know about cars, and the “LS460” nameplate has cachet amongst people who do know about cars.
A great car can also transcend its brand. Nobody I have come across has suggested my Vette car is ‘just’ a Chevy, and I get far more compliments and looks of awe (I’m only 23) driving a pedestrian Chevrolet than I did when I was driving my ‘luxurious’ Lexus. I doubt any lower-end car from any brand short of Ferrari, Lambo, etc. (maybe Porsche) can outdo the Vette when it comes to image. The car speaks for itself, the only problem is that it still has to be taken into a Chevy dealership for service…
I think we will see a change in the image of nameplates as people become more aware that it is possible to buy a car from almost any ‘luxury’ brand out there for ~$30k. It wasn’t that long ago that Mercedes and Jaguar did not offer lower-end cars at all. Jaguar nearly ruined its image with the X-Type while Mercedes has so far gotten away with selling inferior products like the C230 Coupe but the days where the name ‘Mercedes’ is automatically associated with wealth may be numbered. I know many places where a 3 Series BMW is as highly regarded (and almost as common) as a Camry.
Lexus or not? That would be a NOT!!
Excellent thread and comments. Wonder if anyone at GM reads this stuff (or cares)?
You’ll have to go back several GM Deathwatches ago, but I think RF pegged their positioning best, when he called Buick “God’s waiting room on wheels.”
Brilliant.
I just priced out an Enclave, Acadia and Outlook. All wind up within a few thousand MSRP dollars of each other pretty similarly equipped. I don’t get it. It would be one thing if the Buick was loaded to the gills with luxury stuff and priced at $50k, the GMC was less luxurious but still really nice at $40k and the Saturn more utilitarian at $30k — while still not ideal, that makes more sense than being able to order all three within the same price range, making them direct competitors. It’s nothing new for GM, of course — witness the Terrazza/Uplander/Relay nonsense. Every dealer is going to clamor for their brand’s version of the same car. By listening to them, GM just ensures that too few will be sold. Why not put all the hype around a Chevy or Saturn version of the car, and then throw in a Buick version (priced and equipped $20k better) and ditch the Acadia?
OK, I’m going to take one more shot at explaining myself, then i’ll let this topic go. (I know I said that before, but I’ll try to keep my word this time)
As I was working yesterday, a term bubbled up from my increasingly foggy memory – “Downward Line Extension.” It means selling a premium brand at a mid-market price. Now I’m not a marketing guy, so this isn’t my term. It’s just something I read somewhere, some time ago.
Companies that have produced premium brands and sold a version at the mid-market have usually ended up having the brand identified as mid-market. It takes some time, but it happens.
$30K is mid-market. Keep selling Lexi at that price and at some point you’ll see the high end Lexus buyers go in search of greater snob appeal. The brand will then be prestigious only in the minds of mid-market buyers. Then you either loose the high end of the market, or you have to invent a new brand for that segment.
We’ll see what happens.
Dynamic, your point is well taken. But I would say that while that rule of thumb applies more rigidly for many consumer products, car branding has a bit more leeway.Given the success of BMW, Lexus, Mercedes and the like, the premium brands have been quite able to market “near luxury” sedans without tainting their brands.
More to the point, these entry-level sedans and coupes (BMW 3-series, Audi A4, Mercedes C-class, etc.) are not just gateways to the brands, but are their lifeblood. In the case of BMW and Audi, these are top performing nameplates, comprising the highest percentage of their respective product mixes.
The mainstream brands appeal to price and value; the luxury brands gun for both the affluent (5-, 6-, 7-series) and aspirational (3-series) audiences. In BMW’s case, the 3-series provides the cash flow, while the others provide the halo and the lower volume but higher margin sales.
Above and beyond those are the exotics, who seem to reside in the slot that you are regarding as luxury: Bentley, Aston Martin, Ferrari, etc. These are low volume, high margin products that occupy the highest niche, and must maintain exclusivity for their survival.
I believe that it is here where you are correct. There is absolutely no way that an Aston Martin should be in the business of selling a $30,000 car; you may as well close the doors right now. Since they are not a mass producer, there is no way they could afford to price their products in that price range, and it would damage their exotic appeal beyond recognition.
In the case of Lexus, etc., these $30,000 cars are essential to their survival. Without them, sales volumes of the marque would be extremely low — without a place for the aspirational buyers to find a home, they would go elsewhere and never climb the ladder.
The LS and GS may provide the image to sell the ES and IS, but the ES and IS help to keep the climbers away from BMW, Audi, etc. on their way up the ladder. This is a necessary strategy for selling a product like this, where you can’t afford to maintain several brands and similar products as you could with more banal products such as cereal and tissue. For the latter, differentiation is based more heavily upon price and marketing gimmickry than it is upon costly product differences.
I hope that helps. (And don’t be shy about responding. Say what you will, but this is one addiction that is low in calories and has zero transfats…)
I find it interesting that if you were to translate the 4 Lexus car platforms into the GM hierarchy, you’d get cars that would fit into the descriptions of 3 or 4 different brand.
LS–Caddy
ES–Buick
IS–Pontiac
GS–? Oldsmobile?
I think pch101 and chanman make great points. Also, keep in mind that the ES has been a Lexus model from the very beginning. Lexus is not moving downmarket with the ES, the ES (and RX which is nearly as cheap and is also based off the Camry platform) is an essential part of the Lexus market
The ‘moving downmarket’ argument fits better with Mercedes and Jaguar since at times in the past they were not known at all for making small, cheap models
“I find it interesting that if you were to translate the 4 Lexus car platforms into the GM hierarchy, you’d get cars that would fit into the descriptions of 3 or 4 different brand.
LS–Caddy
ES–Buick
IS–Pontiac
GS–? Oldsmobile? ”
That is interesting. To me, it’s also confusing. Is Lexus a $99K car, or a $30K car. Oh, it’s both. I’ll have the cheap one then, thanks.
I’m sure any marketer worth his or her salt would say one of the last things they’d like to hear about a brand is that it’s confusing.
Of course, I may be the only person confused by the brand.
If I had the choice between a Buick and a Lexus I’d take the Buick. Why? Style. Lexuses are bland and boring, while Buicks at least have some style. And since Toyota’s reliability is overrated, there’s nothing about them that draws me to their cars.
I always love coming back to these hateful and projecting articles YEARS after they were written to illuminate where we are today in relation to where we were at the time this crap was projected. This article, written in 2007, paints the most grim picture of the Buick brand I’ve ever seen in all the years I’ve followed the automotive market. Fast forward to today, late 2013, and what do we have? A Buick brand that has very impressive lineup. A brand that has now outsold Lexus, Acura, and a number of other foreign competitors. A Buick brand that is now a conquest product. A brand that survived the test of time and the disparaging remarks and stigma placed upon it. A brand that lowered it’s average age from 72 to 53 in one year’s time from 2010 to 2011 and continuing to decline as now in 2013 Buick’s average buyer age is hovering around 50 years old.
So, Justin Berkowitz, now that’s it’s 6 years from the point you slung this mud at Buick, would you rather eat it or take a bath in it? You made a bad call, sir! Are you still authoring? I hope not.
Mr. Berkowitz is now on the staff at Car and Driver. His career’s going better than Buick’s!
I’ll applaud him when he has 110 years of a storied career with the same staying power that Buick has had in that time. :-) In the meanwhile, I think anyone who follows the auto industry can see that this article, in retrospect, made several bad calls, and the company didn’t follow Mr. Berkowitz’s expert opinion of their trajectory.
Thanks!
I think your numbers on the age of Buick buyers are incorrect. The last ones I have seen show it dropping from 66 in 2010 to 58 years young for the first half of 2013. Still, that’s something I guess.
Every link gives a different figure. One site even goes so low as citing an average age of 43 (for Regal buyers)…I think that’s a bit of a stretch, but if you run through Google and look at the average age, each source gives something different reflecting different data collection. Regardless, the point here is that 6 years later, Buick made a transformation that no one (not even I) thought possible. Good for them.