The engineered demise of Buick:

There are many indications that General Motors began its plans to phase out Buick long ago, seemingly in the 1990’s, as GM’s product emphasis evolved from cars to trucks.  GM’s brands in the truck segment, which includes sport utility vehicles and vans as well as pickups, have traditionally been Chevrolet and GMC.  Also, in 1990 GM introduced the Saturn car brand, an action that appeared to draw away from the car resources of existing GM divisions.  With an entirely new exclusive dealership network across the U. S., part of Saturn’s unique brand image was a non-negotiable one-price approach to retailing, made possible by dealers having several dealerships in an assigned market area, thus virtually eliminating competition.  GM brands at the time were Chevrolet, Pontiac, Oldsmobile, Buick, Cadillac, and the new Saturn.

GM’s phase out of car divisions began with Oldsmobile, with clues of the division’s dismantling beginning in the early 1990’s.  In the 1990 model year, the Silhouette van was added, and in 1992, the Bravada mid-size SUV (sport utility vehicle) was added.  Both were rebadged versions of models offered by other GM divisions.  On the surface, it would seem that this expansion of the model offerings would have a positive effect, but whether intended or not, in reality Oldsmobile’s entry into truck market blurred the image of the well-established brand. 

In about 1992, GM reduced Oldsmobiles’ dealer markup between the Manufacturer’s Suggested Retail Price (MSRP) and the dealer invoice by about 5 percentage points, thus removing nearly half of the profit potential, and nearly all ability to give customers the discounts they expected.  As GM’s only division suffering this totally unfair action, Oldsmobile dealers were livid about this intrusion into the their realm of return on investment.  While many expressed this anger, Oldsmobile management ignored their comments and continued with the reduced markup.

As the 1990’s progressed, GM eliminated model names with decades of brand equity that had been part of Oldsmobile’s highly successful years, in many cases the number three selling brand in the industry behind Ford and Chevrolet.  During the 1990’s, the well-established model names of Toronado, 88, 98, and Cutlass were replaced by Aurora, Intrigue, and Alero.  These new and unfamiliar model names only added to the blurred image created by the two new truck entries, Silhouette and Bravada.

As early as the mid-1990’s, there was widespread anticipation of Oldsmobile’s ultimate demise.  Sales were dropping drastically, as were dealers’ gross profit per unit due to the reduced markup.  It became increasingly difficult for an exclusive Oldsmobile dealer to survive.  On December 12, 2000, GM announced the closure and three-year phase out of Oldsmobile.  Total Oldsmobile sales in 2000 were 289,172, down from its glory years of over 1,000,000 sales.  Nearly all Olds dealers also sold at least one other vehicle brand, and, based on a formula, at the time of closure GM compensated them for the damage created by the loss of Oldsmobile.  There were very few remaining exclusive Olds dealers, who were compensated a higher amount than dualed dealers.  Many dealers felt the compensation based on GM’s formula was inadequate for the loss they suffered, and took legal action.

Buick appeared to be the second division scheduled for phase-out, but a few years behind Oldsmobile.  In 1993, Buick introduced “value-pricing” with Oldsmobile-like reduced markup in California, then spread it across the country later in 1993 and 1994.  Like Olds dealers, Buick dealers were angered by the unauthorized intrusion into their investments and expressed their feelings.  However, by this time in 1993, a large percentage of Buick dealers also carried the Pontiac and GMC brands as a result of GM’s Buick-Pontiac-GMC channel plan, so the damage from Buick’s markup reduction and ongoing sales declines was becoming less and less of a factor as trucks became the dominant source of sales and income.  Dealers who did not yet have Pontiac-GMC were more heavily impacted due to their higher level of reliance on Buick.

As seen on the Buick brand equity and tagline chart (Excel)   (PDF file), during the 1990’s Buick was steadily reducing the number of model and body styles offered.  As would be expected, this reduction was accompanied by correspondingly reduced sales.  While not shown on the chart, model redesign cycles were extended drastically as GM concen­trated on new models in its truck lines, Chevrolet and GMC.  For example, the Buick Century was redesigned in 1982, then not again till 1997.  The 1997 body continued unaltered until the model name was eliminated after the 2005 model year.  Most manufacturers redesign products every 4-5 years.

Along with the reduction in models and body styles, Buick’s well-established taglines (shown on the brand equity/tagline chart) began changing with increasing frequency, undoubtedly further negatively impacting brand equity.  Since image consistency is important in any business, there can be no logic to support the frequency of changes in recent years.  As GM had done with Oldsmobile, it now put Buick in the truck business.  In 2002, the Buick Rendezvous crossover SUV was introduced, and in 2004 the Rainier mid-size SUV and Terazza van were introduced.  The Rendezvous was based on the Pontiac Aztec body, and the Rainier and Terazza were rebadged versions of models offered by other GM divisions.  None of the Buick truck models sold well, and were eliminated after 6, 4, and 4 model years respectively.  As with Oldsmobile, these three truck models served to further blur the image of the declining brand.

By the 2006 model year, Buick car models were down to two 4-door sedans: the mid-size LaCrosse, and the full-size Lucerne.  The LaCrosse body was new in 2005, with styling that could be described as lackluster at best.  Styling was strikingly similar to the 1996 Ford Taurus, shown below the 2005 LaCrosse in this photo comparison, and thus destined to make no inroads into the crowded mid-size market segment whose sales are dominated by Toyota Camry and Honda Accord.  The new 2006 Lucerne (replacing LeSabre) had styling that was somewhat more appealing, but is in a market segment that literally disappeared.  For years the LeSabre had been in the “Large Sedan” market segment as defined by Polk, along with Chevrolet Caprice, Olds 88, Pontiac Bonneville, Ford Crown Victoria, and Mercury Grand Marquis.  As market segment sales dropped drastically and the other brands were eliminated, in about 2005 Polk eliminated the Large Sedan segment and combined LeSabre into the mid-size category with LaCrosse. 

By 2008, Buick was down to three model and body styles: two car sedans, and one crossover SUV, all with unfamiliar and mostly uninspiring new model names.  The two sedan body styles represented a reduction from eighteen in the mid-1980’s when Buick was a viable stand alone franchise.   Like with Oldsmobile, model names with decades of brand equity had been eliminated.  Buick’s three model and body styles were only half of the six that Oldsmobile offered when its closure was announced. 

Buick sales had been dropping steadily from its peak in the mid-1980’s of over 900,000 units annually.  Following are total Buick national sales in recent years per

  • 2001: 405,678
  • 2002: 432,017
  • 2003: 336,788
  • 2004: 309,639
  • 2005: 282, 288
  • 2006: 240,657
  • 2007: 185,791
  • 2008: 137,197
  • 2009: 102,306

This sales trend is what any reasonable person would expect to result from the destructive model name and tagline changes shown on the Buick brand equity and tagline chart.  It cannot be possible that GM thought that the same strategy that led to Oldsmobile’s demise would be successful for Buick.  So, even if one assumes the unlikely scenario that GM’s Oldsmobile strategy was an honest effort for success and not the engineering of demise, it should have learned from it and not repeated the same “mistake” with Buick.  It is clear that the real strategy was to gradually phase out both brands.

It should be noted that the 102,306 Buicks sold in 2009, of which only about 75% are sold retail and not fleet/rental, represent only about 2 new retail Buicks per month per Buick dealer.  So, while Buick still exists, it has little value to dealers beyond the servicing of the dwindling number of Buicks on the road.

Another interesting aspect of the recent downward sales trend shown above is the fact that in 2005, Buick sales fell below the 289,172 Oldsmobiles sold the year GM announced its closure, and continued to fall much further after that.  On March 23, 2005, at an auto­motive conference, GM Vice-President Bob Lutz stated that Buick and Pontiac were “damaged brands” because of a lack of investment over the years.  He said that if some of its brands fail to meet sales projections, “then we would have to take a look at a phase out.  I hope we don’t have to do that.  What we’ve got to do is keep the brands we’ve got.”  Two days after the statement was made, GM Vice-President Mark LaNeve issued a statement that GM was not planning to eliminate any brands.

It should be noted that, as with Oldsmobile and Buick, model name changes were made with Pontiac also.  Names established for decades such as Bonneville, Grand Prix, Firebird, and Grand Am were eliminated and replaced with new, unfamiliar names.  As it is known now, Pontiac division was closed at the time of GM’s bankruptcy filing in June 2009.  In spite of this fact, and the fact that hardly any Pontiacs were built following the closure announcement, in 2009 Pontiac still outsold the surviving Buick brand by 178,300 to 102,306. 

Based on extremely low sales, and the similar phase-out patterns of the Oldsmobile, Buick, and Pontiac brands, there can be no doubt that GM planned to close Buick at some point.  However, GM apparently decided to keep the brand due to its success in China, which may have come as somewhat of a surprise to GM.  If the Buick brand were eliminated in its home country, it would undoubtedly have a devastating effect on China sales.  In 2008, approximately 280,000 Buicks were sold in China, or twice the number sold in the U. S.  In 2009, 447,011 Buicks were sold in China, or 4.4 times the number sold in the U. S.  Buick’s sales success in China is partially attributable to prestige associated with the Buick name due to the fact that Chinese royalty drove Buicks in the 1930’s.  It is noteworthy that Buick has no similar appeal to Chinese immigrants in the U. S. 

Further supporting the theory that GM reversed its Buick closure decision is the fact that the 2010 LaCrosse is a truly great design, and replaces the 1996 Taurus-like 2005-2009 LaCrosse.  Additionally, in 2010 Buick announced a new model with the revived name of Regal.

In summary, there can be no doubt that GM had intended to eliminate Buick, leaving any dealer who did not also have GMC or Chevrolet doomed.

The Buick-Pontiac-GMC Channel Plan:

GM announced its Project 2000 plan in early 1993, a strategy that had been informally in place for some time before that.  The plan was GM’s goal of dealership location and brand alignment it hoped to be in place by the year 2000.  A major thrust of the brand alignment strategy was to have Buick, Pontiac, and GMC housed together.  The product portfolio of the three would evolve into one that would reduce the number of car models and eliminate overlap as much as possible.  Buick’s focus would be on mid-size and larger cars aimed at older customers, and Pontiac’s focus would be on smaller, sportier cars aimed at younger buyers.  GMC and Chevrolet truck would receive expanded model lines as GM’s focus shifted from cars to trucks, where profits per vehicle were much stronger.  Import dominance in the car segments and absence in the full-size truck and SUV market segments contributed to GM’s shift toward trucks, especially large ones.

GM’s channel plans for the other divisions were to have Chevrolet and Cadillac stand alone as exclusive dealerships wherever possible.  While product breadth and large volume allowed all but the smallest market Chevrolet dealers to be viable as exclusives, due to its low volume there were very few markets that would support an exclusive Cadillac dealership in the 1990’s as imports were continually increasing market share in the luxury car field that Cadillac once dominated.  GM’s channel preference for dealerships needing another brand for viability was to house Cadillac either with Oldsmobile, Chevrolet, or both.  However, the Oldsmobile dual strategy was severely weakened by the fact that, even by the mid-1990’s, multiple signs existed that indicated the phase-out of the division.  In the case of Oldsmobile, Buick, and Pontiac, it appears clear to me that GM designed the channeling process in large part to minimize its liability to dealers when the divisions were ultimately closed.  In other words, each of the car divisions would have a truck division, either Chevrolet or GMC, for survival. 

In February 1996, Buick General Sales and Service Manager Bob Coletta stated that over 60% of Buick dealers were already on channel with Pontiac and GMC.  In March 1997, Automotive News reported that only 10.3% of GM dealerships did not carry trucks.  The dominance of truck volume in GM’s sales mix only continued to grow in the years that followed, while at the same time Buick sales plummeted to a levels that made the brand virtually insignificant.  In short, survival as a GM dealer without Chevrolet or GMC became virtually impossible in all except in a handful of GM-friendly regions of the country.

In the years since Project 2000 was announced in 1993, GM spent huge amounts of money to facilitate the dealership consolidation of Buick, Pontiac, and GMC.  By the mid-2000’s, the vast majority of dealerships selling the franchises were on channel, leading to a point that by 2007 the channel was virtually considered one franchise (hold down “Ctrl” and “Shift” and “+” simultaneously to rotate page in linked document.)  Sadly for GM and for me, it repeatedly rejected my offers to put my local market on channel at no cost to itself.