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NINETY EIGHT REGENCY

GM Crossover Trio Lures Drivers

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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

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.

[Chart]

Brian MacDonald is one driver attracted by GM's new crossovers. An investment-fund manager in California, Mr. MacDonald has driven nothing but BMWs and Mercedes-Benzes for the past 20 years. But last month, with the lease on his Mercedes ML-Class winding down, Mr. MacDonald leased a $45,000 Enclave, the most luxurious of GM's three models.

"If someone had told me a few months ago I'd be driving a Buick, my reaction would have been 'no way, no how,' " says Mr. MacDonald, 46 years old. The Enclave, he said, offers the roominess to haul around his three young children and the styling and interior comforts he was accustomed to with the Mercedes. Because the Mercedes ML sells for about $30,000 more than the Enclave, his monthly payment on the Buick was almost $300 lower.

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.

SOURCE:

http://online.wsj.com/public/article/SB118...0902916287.html

Edited by NINETY EIGHT REGENCY
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I sure hope they Chevy is differentiated enough that it doesn't kill the whole "they don't need incentives" thing.

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"GM trio" "GM trio" "GM trio" - we desparately need to get away from this and re-center the focus on the individual divisions. Keeping the parent corporation in the forefront only enables those who love to toss around "rebadges" as if they knew what that meant.

Oh, and a Chevrolet Lambda is a 100% bad idea: over-saturation. Just no.

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I'm not so sure I like the idea of the Chevrolet Lambda....

I fear that Lambda will become the new GMT360.

I dunno.... Hopefully it's not too much like the others. Why doesn't GM just make a minivan version for Chevrolet? Sure, it's not the coolest thing in the world, but it be nice to have a SERIOUS entry in that market and on Lambda it'd be a sure fire success. (Maybe Lambda is too big?)

Edited by FUTURE_OF_GM
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agreed... Chevrolet has a way of trying to do volume that the plant, cannot provide, and has a reputation of discounts, where as denali, buick, and maybe saturn buyers are unfamiliar... chevy buyers presume a reduction in price of 5k is a sustainable out the door figure...

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I'm not so sure I like the idea of the Chevrolet Lambda....

I fear that Lambda will become the new GMT360.

I dunno.... Hopefully it's not too much like the others. Why doesn't GM just make a minivan version for Chevrolet? Sure, it's not the coolest thing in the world, but it be nice to have a SERIOUS entry in that market and on Lambda it'd be a sure fire success. (Maybe Lambda is too big?)

Once again....it's a problem of GM having "too many divisions."

Chevy HAS to get a Lambda. We all know that the market is moving away from BOF SUVS (Trailblazer) and towards crossover SUVs. For GM's largest division to not have an entry in that segment would be suicide.

But you all know my opinion.......GMC Acadia is the redundant one. Chevy needs a Lambda.....probably Saturn needs another one.....and Enclave makes sense as an upscale alternative for Buick. So if GM's mission is to combine Buick, Pontiac, and GMC divisions into one dealership, then why will we effectively have one dealer selling two Lambdas?

Doesn't make sense to me. Chevy should have it....GMC should not.

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Once again....it's a problem of GM having "too many divisions."

Chevy HAS to get a Lambda. We all know that the market is moving away from BOF SUVS (Trailblazer) and towards crossover SUVs. For GM's largest division to not have an entry in that segment would be suicide.

But you all know my opinion.......GMC Acadia is the redundant one. Chevy needs a Lambda.....probably Saturn needs another one.....and Enclave makes sense as an upscale alternative for Buick. So if GM's mission is to combine Buick, Pontiac, and GMC divisions into one dealership, then why will we effectively have one dealer selling two Lambdas?

Doesn't make sense to me. Chevy should have it....GMC should not.

i think the point is... Chevy already has some 20 vehicles... where as a company like GMC, can not be left to dry forever...

chevy already has inventory problems... because of too many models many smaller dealerships have trouble keeping a nice variety of everything... even at our dealership we had approximatly 400 tahoes and 400 silverados at all times, and maybe 100 misc. models... but at any given moment... people as it were would walk off our lots because we didnt have the tahoe in the color, and option group they prefered... same with the silverado, but the silverado has less options so it would happen less often...

its suicide for GM to assume that Chevy can handle every model sold at all other 7 brands... GM has had their model count up in the 80's dont know where it is now... but for Chevy to have the same thing that every other brand has is stupid...

but currently, the lambda is selling in the 12,5 mark.. per month... 5k to gmc, 4k to buick and 3 k to saturn...

if chevy sold had that product...5k would barely be 1 per dealership, talk about inventory problems... i think its good to have GMC and buick have one... get people to the gmc lot, and show them the arcaida, then they might see that enclave on the floor... and like, never thought i would like a buick but i'll take it...

GMC can provide customers for buick... although its canabolizing itself, these customers are really coming from the imports anyway...

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Chevy NEEDS a lambda SUV. The crossover market isn't a niche market, and it is growing. The Trailblazer sold 300k+, and is on it's way out. Chevy should have an entry in all the high volume segments. 7 seat crossovers is a high volume segment.

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NO CHEVY LAMBDA.

There are three already, there's absolutely no need for another one...it would just be redundant at this point. Retool Spring Hill for some unique product and leave the Lambda trio alone.

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Keep in mind the GMT360s were highly regarded when they first came out. The inline-six was innovative, and the Envoy took MT's Truck of the Year. But then came brand overlap, ambitious pricing, lack of updates, and newer competitors. Hopefully the Lambdas won't suffer the same fate.

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I'm with O.C. on this one (GASP!): P-B-GMC are under one roof up here, and for them to have TWO lambdas on the same lot is just silly. The Trailblazer is a dead dog and the Tahoe is too big.

Perhaps American stores need 400 Tahoes and 400 Silverados on the lot at one time: I doubt any Canadian dealer has sold that many Tahoes since the current body style came out over a year ago!

Either give Chevrolet an exclusive minivan (and how about a good one this time around?), or transplant the Acadia. I am not a big fan of this badge engineering, but clearly Detroit miscued the market on this one.

We are selling every Uplander and Equinox we can get our hands on, but both are becoming long in the tooth.

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I'm with O.C. on this one (GASP!): P-B-GMC are under one roof up here, and for them to have TWO lambdas on the same lot is just silly. The Trailblazer is a dead dog and the Tahoe is too big.

Perhaps American stores need 400 Tahoes and 400 Silverados on the lot at one time: I doubt any Canadian dealer has sold that many Tahoes since the current body style came out over a year ago!

Either give Chevrolet an exclusive minivan (and how about a good one this time around?), or transplant the Acadia. I am not a big fan of this badge engineering, but clearly Detroit miscued the market on this one.

We are selling every Uplander and Equinox we can get our hands on, but both are becoming long in the tooth.

well i doubt most american stores do the volume we did, exspecially when we were around 30th place on GM's sales roster... and 5th for CSI scores... and to put that to shame, we were neighbors with the worlds largest yukon dealership, donno how we placed with tahoes or silverados...

we were well regarded, but i'm no longer with them, their sales have dwindled as the city took over the property of the storage lot...

but in california, where all the green people are, we were a nitch store, selling massive amounts of full sized vehicles to people who didnt speak english, but had large enough families to support the demand for the most fuel efficent 5-9 seat SUV...

but as it is... chevy has too many products to support another... the dealerships are already competing with eachother... if GM would appoint certain dealerships to sell only cars, only trucks... have exclusives... then GM could probably pick up some market share rather then just consolidating their dealerships...

its imposible for the chevrolet dealerships to advertise all 20+ vehicles...

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if acadia and enclave get a v-8... that helps. if saturn gets a hybrid, that can help. chevy could use a nice, but few less entry options as the saturn/acadia and only the 3.6L/6speed combo. aka just LS and LT trims at most, not even sure if it should have awd option.

would this scenario brighten your day some if chevy has to have a lambda?

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Thinking more about it, I think Chevy does need a Lambda. Current sales numbers put it at 150k per year. That's decent, but not really getting much return for what they've invested in the platform. They just need to be sure to differentiate it enough that the Chevy takes away from the others too much (Buick probably the least, since it is the most different in price & package, assuming the Chevy is the value leader). Would be nice to sell 100k Chevy Lambdas a year without killing off the GMC and Saturn models through lost sales.

As for getting rid of a Lambda, the GMC seems to make the most sense... except that it's selling the best! My guess is that the Saturn would be the best one to get rid of, since it's selling slower than the GMC and the two are so similar. Still, Saturn needs the Outlook to a large degree, and since it shares so much with the GMC, it's cheap to keep. I'd say don't get rid of any of them, and just be sure the Chevy is different enough.

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A friend's wife recently traded her '02 Merc ML on an Outlook (the ML was too tight with twins, etc). He's looking at trading his '01 X5 on an '08 CTS. They are hard-core yuppies living in a very yuppified neighbourhood, have been driving imports for years (DINKs until last Nov).

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See what happens when you make all-around amazing vehicles? Just make sure to keep them fresh.

I understand that Chevy needs a large crossover but it pains me to realize it comes at the expense of the current Lambdas. How about chopping off the third row and calling it the new Equinox?

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I've actually been seeing quite a few of the Buick and Saturn ones here in sunny SoCal... :cheers:

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Tahoe face, sliding rear doors, minivan ass

drop uplander

problem solved.

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and Saab can have the new 9-6x

and Hummer can have the new H8

and Olds can have the Bravada Regency

and Isuzu can have the Assextender

and Opel gets the Cub Kadet

and Holden gets the Jackaroo

and Pontiac can get the Wisconsin

and Daewoo can get the SXP9000siV

and Chevy Middle East gets the Nomad

and....

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Tahoe face, sliding rear doors, minivan ass

drop uplander

problem solved.

That will still make a "CSV" and a pretty lame minivan. The floor would be too high.

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