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GM Crossover Trio Lures Drivers

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Old Sep 3, 2007 | 10:10 PM
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Default GM Crossover Trio Lures Drivers

GM Crossover Trio Lures Drivers
Away From Asian-Brand Vehicles
Offerings Are Bright Spot
Amid U.S. Sales Decline;
Dealers Can't Get Enough
By NEAL E. BOUDETTE
September 4, 2007; Page A3

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

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

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

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

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

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

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

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

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

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

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

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

Write to Neal E. Boudette at neal.boudette@wsj.com
so all GM needs to do to sell vehicles is build vehicles that don't suck, too bad it took 20yrs for GM's managment to figure that one out.
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Old Sep 4, 2007 | 06:45 AM
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"...but they are lighter, have a smoother ride and get better gas mileage than SUVs."

Oh reeeeeeeeeeeeeeeally
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