Can an automaker make more money by merging three brands into one? General Motors will soon find out. Having combined Pontiac and GMC some 10 years ago, GM is now quietly folding in ailing Buick to create what it hopes will be a more competitive and profitable sales channel, Buick-Pontiac-GMC.
The transition is now about 60-percent complete and should be at 80 percent by 2008, say B-P-G officials. But it won't ever reach 100 percent, because some multi-brand GM dealers are doing fine. So if your town has, say, a thriving Chevrolet-Buick- Cadillac store or a Pontiac-GMC- Hummer dealer, you likely won't see any change. The days of stand-alone Buick dealerships are numbered, however, as are wide product lineups at all three brands.
"Right Sizing" Again
The world's largest automaker sees B-P-G as one of many "right sizing"
moves to help it get off the financial ropes after years of falling
sales and revenues. Time is of the essence. In 2005, GM lost $8.2
billion on its North American operations. While the losses partly
reflect huge outlays for employee health care, pensions, and lay-off
pay, GM is still saddled with too many models, too few customers, and a
surplus of dealers.
The situation is particularly acute for Buick dealers, who averaged 102 sales each in 2004--fewer than 12 a month--by far the lowest count among GM's eight brands. Only Mercury and Lincoln score worse among domestic makes. Pontiac fares better with 157 yearly sales per dealer, GMC better still at 240. Yet even they can't match the likes of Audi, Land Rover, Volvo, and other brands that are not high-volume sellers but make more profit per sale.
The B-P-G Strategy
GM expects combined B-P-G
dealerships to save money through shared "back office" functions at the
corporate level and to earn money through combined dealerships that can
be more profitable than separate Buick and Pontiac-GMC points. GM now
has almost 14,000 dealers in all, way too many for its much-reduced
sales volume and market share. B-P-G is intended to help reduce that to
a realistic level in an orderly fashion.
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Many B-P-G dealers will be remodeling showrooms, customer waiting areas and other facilities around an identifiable new look. More significant to consumers are the trimmer lineups planned for Buick and Pontiac, which will no longer try to be everything to everybody. As Pontiac-GMC general manager John Larson explains, the B-P-G strategy aims to "focus the lineups on the core models that embody the best of each brand."
GMC will thus keep on truckin', while Pontiac will mainly offer cars with "passion and performance." Buick, according to general manager Steve Shannon, will specialize in "graceful styling, appropriate use of functional technology, and simple, intuitive driving controls," plus Buick's traditional smooth-riding quiet and near-Cadillac luxury. "We are proudly not a youth brand," he says. "We think of Buick as the car for grownups, though we obviously still need to bring in [younger] customers." True enough. Buick's average buyer age remains one of the highest in the industry.
New Models, New Hopes
Though still a work in progress, B-P-G has already yielded some
positive results. According to Shannon, half of midsize LaCrosse sedan sales are going to non-Buick
owners, and the new Lucerne large sedan is attracting interest from
style-conscious younger buyers, which might push that buyer age down
below Medicare eligibility.
Newer Pontiac models are also conquesting sales from competitive brands. Larson says they're running around 50 percent for the Solstice sports car, 45 percent for the small Vibe crossover wagon, and 40 percent for the midsize G6 line. So, both Buick and Pontiac seem to be attracting needed new eyeballs and wallets.
Meantime, all three brands have sensibly jettisoned slow sellers in the last year, notably the Buick Park Avenue, GMC Envoy XL and XUV, and Pontiac Bonneville. Next to go is Pontiac's SV6 minivan, which dies after 2006. It just doesn't fit Pontiac's more-focused new mission, Larson says. In a combined B-P-G dealership, that minivan buyer can purchase a Buick Terraza.
Unlike past "brand realignments," GM seems truly serious about B-P-G, suggested by several new models that are confirmed for the next couple of years.
| Buick |
 Buick Enclave |
Buick: Already previewed in "concept" form, the 2008 Enclave large crossover wagon is due in the third quarter of 2007 as a replacement for the Rendezvous. It's Buick's answer to the Infiniti FX, Lexus RX, and Lincoln's upcoming MKX, among others.
Built on the same new 119-inch-wheelbase Lambda platform as the Saturn Outlook from GM's sister division, Enclave will offer V6 and perhaps V8 power, front drive and all-wheel drive, an upscale interior with three-row seating, and new-wave Buick styling complete with faux hoodside portholes, a retro touch already seen on Lucerne. Hard on its heels comes a semi-sporting 2008 LaCrosse Super with a 5.3-liter V8 and projected 0-60 mph acceleration of less than 6 seconds.
| GMC |
 GMC Yukon |
GMC: A redesigned GMC Sierra large pickup arrives this fall. You can guess what it will look like by imagining a redesigned 2007 GMC Yukon SUV with a cargo box replacing the wagon rear end.
Following soon after is the GMC Acadia large crossover wagon. It is basically Buick's Enclave, though Buick-Pontiac-GMC officials promise Acadia will differ enough to appeal to different buyers. We'll see.
| Pontiac |
 Pontiac Solstice GXP |
Pontiac: For now, this brand spells sales relief G-X-P. That's the badge on the upcoming 250-hp turbocharged version of the Solstice roadster, as well as a planned G6 performance model with GM's so-called "high feature" 3.6-liter V6 making around 270 horsepower.
Also coming this fall is the G5, an uplevel sister of the compact
Chevrolet Cobalt coupe. Pontiac admits it's
something of a stopgap, but says it's needed to attract entry-level
buyers to B-P-G showrooms. G5 will be offered as a $14,990 base model
with a 2.2-liter 4-cyl engine and as a sportier $17,490 GT with a
173-hp 2.4-liter version.
Detroit's rumor mill is saying Pontiac may eventually offer nothing but
rear-wheel-drive cars. These reportedly include a new midsize sedan to
replace today's front-drive Grand Prix; a concept preview is slated for
the 2007 Detroit Auto Show this January. There's also likely to be a
new-generation GTO "muscle car" for 2009; the current slow-selling
coupe dies with model-year '06.
Can It Work?
GM obviously feels that uniting Buick and Pontiac-GMC will help it
conquer more of the U.S. market. Can it work? We think it has a chance.
Though some dealers will grumble at being asked to splurge for
facilities remodeling--and reportedly to make do with slimmer profit
margins on upcoming products--the plan does stake out clear market turf
for each brand by eliminating model overlap at long last. The one
exception is crossover SUVs, where Pontiac may be reluctant to cede the
Torrent to GMC, as is being rumored.
But assuming such snags are resolved, B-P-G seems to be shaping up as a solid new GM franchise that might just steal some sales from popular "full-line" brands like Nissan, Toyota, Dodge, Ford, and Chevrolet. The next couple of years should tell the tale
