Buick Sales Epitomize GM’s Woes
Buick was the seed from which General Motors Corp. sprouted. And for generations, the luxury car line was one of GM’s most bountiful divisions.
The Buick brand filled a crucial niche for the auto giant, attracting well-heeled consumers who wanted more than an Oldsmobile but weren’t comfortable with the flash of a Cadillac.
For the record:
12:00 a.m. April 6, 2006 For The Record
Los Angeles Times Thursday April 06, 2006 Home Edition Main News Part A Page 2 National Desk 1 inches; 33 words Type of Material: Correction
Buick’s decline: A front-page article Sunday on Buick and parent General Motors Corp. said the automotive brand was founded in 1903 by William Durant. Buick’s founder was David Dunbar Buick. Durant formed GM.
Now as GM faces the threat of bankruptcy, Buick has emerged as an emblem of the auto giant’s broader woes. GM sold nearly a million Buicks in the U.S. in 1984. By last year, sales had sputtered to 282,288, a 70% decline over two decades, the biggest of any major auto brand.
Buick has broken down in U.S. showrooms for the same reasons that Americans deserted GM brands such as Chevrolet, Pontiac and Olds in favor of Toyota, Honda and Nissan.
Buick offered bland designs and ignored consumer demand for pickups, minivans and SUVs. Buyers’ shift toward snappier styling, snazzier features and -- most of all -- higher-quality cars left Buick vulnerable in the late 1980s when Lexus, Infiniti and other foreign luxury models invaded its home turf. Even using golf superstar Tiger Woods as pitchman hasn’t helped Buick.
Warnings that GM’s luxury car stronghold was about to collapse went unheeded as the automaker clung to the conviction that Americans really would rather have a Buick.
“I remember being told by a GM executive ... that they’d never worried about Buick because as people got older and richer, their asses would get fatter and they would always buy Buicks to sit ‘em in,” said Dan Gorrell, vice president of San Diego market research firm Strategic Vision, which has done consumer studies for GM.
In the mid-1980s, a Burbank market research firm hired by the automaker warned that European and Japanese rivals were revving up to leave GM in the slow lane.
“The sounds of heavy armor can be heard in the suburbs, in what may be the final assault on General Motors’ long-time stronghold, the luxury car market,” the report from Vista Group said. If GM didn’t satisfy car buyers’ tastes for smoother handling, sleeker designs and fewer but more luxurious options, Buick would start losing customers to the new competitors. The Vista report proved prescient.
The failure of Buick and its sister brands has thrown GM into a tailspin.
After losing $10.6 billion last year and with its U.S. market share at an 80-year-low, GM’s chief executive, Rick Wagoner, recently offered buyouts to 125,000 hourly workers.
Many Wall Street analysts are increasingly concerned about GM’s finances. Some believe the world’s largest automaker might file for bankruptcy protection, a move that -- because of GM’s size -- could convulse the entire U.S. economy.
In the end, analysts say, GM’s corporate hubris led to Buick’s descent.
“They had this arrogant belief that when baby boomers turn 50, ‘they belong to us,’ and that just didn’t happen,” Gorrell said.
GM executives insist that Buick is still a “relevant” brand.
“I’m convinced Buick’s turnaround has already begun,” said Bob Lutz, GM’s 74-year-old vice chairman for product development. “We are now focusing on its original role as an affordable near-luxury car that isn’t just a Chevy or a Pontiac with a different name badge.”
To succeed, GM would have to win over consumers like Myron Wozniak. That could prove difficult.
Wozniak, 46, a Northrop Grumman engineer in El Segundo, has owned three Buicks and an Oldsmobile. “I was raised in a ‘buy American’ family,” he said.
But Wozniak and his wife harbor unpleasant memories of replacing the alternator in their Buick Skylark; the alternator, several electronic ignition controllers and the air conditioning compressor and anti-lock brake system controller in their LeSabre; and the entire automatic transmission in their Oldsmobile Intrigue.
That was enough to drive the Wozniaks into the foreign camp. Their last three purchases have been a Honda Accord, a Toyota pickup and a Lexus sport coupe.
“All we’ve had to do with them is change oil,” he said. “My next new car sure won’t be an American car, I don’t care what kind of incentives they offer.”
Last year, Lexus -- the luxury division of Toyota Motor Corp. -- gave Buick the final push off its perch, outselling it for the first time.
Buick was founded in 1903 by a marketing genius named William Durant, who gobbled up the competition. Five years later, he formed GM. His successor, Alfred P. Sloan, crafted the strategy of offering a car brand “for every purse and purpose.”
“Buick was known for decades as ‘the doctor car,’ ” said Jeff Taylor, curator of the Alfred P. Sloan Museum in Flint, Mich. “It was for professionals who just weren’t comfortable with the flashiness of a Cadillac.”
Buick prospered by building big cars with powerful engines and often stunning styling. They scored hits with the sporty 1953 Skylark convertible and the knife-edged 1963 Riviera.
But Buick seemed to have lost its way during the 1970s gas crunch and the demands in the ‘80s to meet new safety standards.
“Designers at GM were used to wider, lower and longer,” said Charles “Chuck” Jordan, vice president of GM Design from 1986 to 1992. “It took us awhile to learn how to hide safety bumpers” that looked like steel I-beams.
In the 1980s, Roger Smith, then GM’s chief executive, bought Hughes Aircraft Corp. and Electronic Data Systems Corp. Cash that could have gone into the design and marketing of new cars was used to finance these acquisitions. GM produced look-alike cars because it no longer could afford to do different designs for each brand, Jordan said.
“I remember when you could look at a Buick Park Avenue, an Olds 88 and a Caddy El Dorado and not be able to tell much difference,” said Brad Willingham, part-owner of the Boulevard Buick-Pontiac-GMC dealership in Signal Hill. “It’s tough to sell someone a car like that.”
Young, wealthier customers who wanted better cars and more luxury went to the Japanese, “while Buick just kept on being Buick,” said auto historian Ken Gross, former director of the Petersen Automotive Museum in Los Angeles.
As with other GM divisions, Buick suffered from corporate shortsightedness.
In the mid-1990s, for example, Buick sought a new V-8 engine to recapture its reputation for powerful cars. After internal wrangling, GM bosses granted the engine to the Oldsmobile division because it was ailing even more and needed an image boost.
Olds is the only other GM division that has performed worse than Buick. GM killed it in 2003.
As they struggled to make quality vehicles, GM executives had a more difficult time marketing them.
In the early 1990s, then-GM Chairman John Smale brought some of the practices he learned as president of Procter & Gamble Co. One idea was to put different labels on essentially identical cars -- the “sporty” Pontiac Grand Prix and the “luxurious” Buick Regal -- then market them to different audiences. It didn’t work.
“Some of those ideas, from people who thought car marketing was the same as toothpaste marketing, didn’t help,” said former Buick General Manager Ed Mertz, an engineer who joined GM in 1960 and ran Buick from 1986 until his retirement in 1994.
Since 1999, Buick has used Tiger Woods, whose name and face are known globally. But the golf tournaments that carry Woods’ endorsements don’t reach out to young buyers because they are largely watched by older men, some of whom might already gravitate to Buicks.
“While you can sell a hot car designed for younger buyers to an old guy, you can’t sell a stodgy old car to a young guy,” said Bill Porter, Buick’s design chief from 1980 until 1996.
“The average Buick buyer is 69, the oldest demographic in the industry, and there aren’t many new buyers coming in to replace them,” said George Peterson, president of AutoPacific market research in Tustin.
GM scored a small public relations coup in 1991 when the LeSabre won top domestic car honors in the widely watched J.D. Power Initial Quality Survey. Buick has received a number of quality awards since, but has been unable to turn them into an effective marketing tool.
Last year, Buick introduced its first minivan, the Terraza, 21 years after Chrysler’s Dodge minivan hit the market. It wasn’t worth the wait. Car & Driver said the Honda Odyssey minivan offered more power, a newer transmission and better fuel economy at the same price. Consumer Reports gave the Terraza a poor reliability rating, writing off the vehicle as “outdated.”
There are some signs that there still might be life at Buick.
A pair of new sedans, the LaCrosse launched in late 2004 and the full-size Lucerne introduced in December, though not runaway hits are selling well and receiving positive reviews. Critics also praise the sleek look of the Buick Enclave, a sport utility due later this year. When that happens, Buick dealers will have only three models to sell.
Lutz, GM’s vice chairman, says that’s part of GM’s new strategy to eliminate competition among brands. By offering only a few upscale models and combining Buick dealerships with Pontiac and GMC truck franchises, the Buick brand can have a long life, he said.
GM’s goal for Buick shows how far the once mighty has fallen: Company officials say they’re now aiming to become the American Lexus.