GMC Moving On Up?

[William Maley]

GMC Moving On Up?

William Maley - Editor/Reporter - CheersandGears.com

May 9, 2011

General Motors has been doing a pretty good job of separating Chevrolet from GMC. The Chevrolet Traverse and GMC Acadia is a good example; the vehicles share a lot of under bits, but have their own identity. GM is now looking to extend that separation between the two brands.

GM's president of North America, Mark Reuss did an interview with Automotive News last week. He talked about how GM's approach of using two brands to sell pickups needs to be better executed for the future. Before, GM would price Chevrolet and GMC products similar and have the same incentives. That in turn caused GMC to lose some of its image.

"We need to make sure that we drive the differentiation in the product and the price to create that separation that we know we can on GMC and Chevrolet. I don't think we have the margin opportunity set up quite right with GMC," said Reuss.

GM's plan to move GMC upmarket; leverage the Denali brand.

"I think we can do premium Chevrolets, and take GMC and move it even further up."

If GMC was to go that route, the Denali nameplate would have to be placed on more vehicles. Currently the Sierra, Sierra HD, Yukon/XL, and Acadia have a Denali model in their lineups.

Source: Automotive News (Subscription Required)

[Drew Dowdell]

And the GMC Terrain Denali is on it's way.

[Croc]

How high? Range Rover high? I'm down for that.

[Robert Hall]

How high? Range Rover high? I'm down for that.

They can't go too high without getting into Cadillac's space...they have the bling lux market covered w/ the Escalade..(the Yukon Denali seems to be in the same space).

Edited May 9, 2011 by Cubical-aka-Moltar

[balthazar]

Price difference is secondary to product differentiation, IMO.

In other words, the spread doesn't have to be all that huge, but if there's an Acadia/Traverse level of difference, it should all continue to work well.

Then, the Escalade series needs to keep moving even farther up & away.

[Z-06]

Price difference is secondary to product differentiation, IMO.

In other words, the spread doesn't have to be all that huge, but if there's an Acadia/Traverse level of difference, it should all continue to work well.

Then, the Escalade series needs to keep moving even farther up & away.

Well said. A perfect example is, unfortunately, Hyundai and Kia.

[Croc]

How high? Range Rover high? I'm down for that.

They can't go too high without getting into Cadillac's space...they have the bling lux market covered w/ the Escalade..(the Yukon Denali seems to be in the same space).

Cadillacs aren't really off-roaders.

[Cory Wolfe]

How high? Range Rover high? I'm down for that.

They can't go too high without getting into Cadillac's space...they have the bling lux market covered w/ the Escalade..(the Yukon Denali seems to be in the same space).

Cadillacs aren't really off-roaders.

Perhaps Cadillac should morph the Escalade into X5/Cayenne territory, while GMC can focus on the off-road luxury.

[Intrepidation]

How high? Range Rover high? I'm down for that.

They can't go too high without getting into Cadillac's space...they have the bling lux market covered w/ the Escalade..(the Yukon Denali seems to be in the same space).

Cadillacs aren't really off-roaders.

Perhaps Cadillac should morph the Escalade into X5/Cayenne territory, while GMC can focus on the off-road luxury.

Totally agree.

[Croc]

How high? Range Rover high? I'm down for that.

They can't go too high without getting into Cadillac's space...they have the bling lux market covered w/ the Escalade..(the Yukon Denali seems to be in the same space).

Cadillacs aren't really off-roaders.

Perhaps Cadillac should morph the Escalade into X5/Cayenne territory, while GMC can focus on the off-road luxury.

Totally agree.

X 3

Edited May 10, 2011 by Croc

[Drew Dowdell]

x4

[Intrepidation]

It would back up the "Professional Grade" image better as an off road machine with good on road manners than a something like a X5 M, and turning the Escalade into an SUV with mind bending cornering ability would give it more purpose and credibility than what it is now--a tarted up Tahoe.

[GMTruckGuy74]

One thing you have to remember is that there are a lot of W/T and SL trimmed Sierra models out there, in addition to a lot of SLE Terrain, Sierra, and Acadia models, that don't command the SLT & Denali prices that not all GMC customers can afford. I for one wouldn't be able to afford a new GMC if they went completely upmarket from their position now, and as it stands the Sierra I really want (Denali) is way out of my price range anyway (but a more sensible equipped SLE trimmed model can be on my future horizon).

If GM is to retain the current load of GMC owners, then they cannot move the pricing too far up. A price differentiation that comes along with product/feature differentiation is one thing, such as how the current Equinox and Terrain are priced (Terrain comes "standard" with features at an elevated MSRP that are options on the lower MSRP Equinox). But to make lower-end models not a part of the equation is telling potential GMC custoemrs that we don't want your business.

Now offering a luxury line (Denali) along with an off-road line (All Terrain) is adding differentiation that calls for a price increase. But still continuing to offer the basic and standard models keeps the average consumer sales afloat. Not everyone wants a bling-bling or lifted truck, but offering these niche products at a higher price for those that can afford it and want those things is a win-win deal all around.

Some will disagree with this next statement, but I feel Cadillac shouldn't be offering trucks in their line-up at all. GMC should be the luxury truck offering of GM with their Denali models, and Cadillac should continue to offer upscale, car-based crossovers. I know the Escalade sells well for Cadillac, but the Yukon Denali version brings in more profit for GM (though it sells to a different consumer). Think of how many more Yukon Denali sales could be generated if the Escalade wasn't in the picture, and effectively raising GMC's presence in the marketplace?

[Robert Hall]

How high? Range Rover high? I'm down for that.

They can't go too high without getting into Cadillac's space...they have the bling lux market covered w/ the Escalade..(the Yukon Denali seems to be in the same space).

Cadillacs aren't really off-roaders.

Neither are GMCs.

[GMTruckGuy74]

How high? Range Rover high? I'm down for that.

They can't go too high without getting into Cadillac's space...they have the bling lux market covered w/ the Escalade..(the Yukon Denali seems to be in the same space).

Cadillacs aren't really off-roaders.

Neither are GMCs.

Ah, but they can easily be made into off-roaders, as GMC has shown us with the 2011 Sierra All Terrain HD Concept:

Take the Hummer formula and add it to any of the GMC models currently sold and you've got your answer: re-body the Hummer Hx Concept into a new 21^st century GMC Jimmy, put the chassis of the Hummer H3T pickup under the GMC Canyon and you've got another All Terrain model to sell, apply the same chassis of the Sierra All Terrain HD Concept to the Yukon (regular length model, though you could also give the Yukon XL this treatment too) and viola! - another off-roader. Hell, offer a factory 4x4D model for the Savana, as the aftermarket company Quigley Motor Company does with the Ford Econoline vans, and you've got anotehr off-road vehicle. I would go as far to say that GMC should even up-the-anty on the Terrain and offer an off-road suspension on the Theta platform for a more agressive GMC Terrain model.

See how easily this can be done?

Edited May 11, 2011 by GMTruckGuy74

[balthazar]

By the same token- range rovers aren't off-roaders, either.

Cadillacs 'aren't really off-roaders' because the Escalade runs 22" street tires and Cadillac owners aren't generally disposed to going off-road.

Plenty of GMCs go off-road, and deeply so, and even from the factory you can get decent grip tires that allow such, but plenty of owners swap on real off-road tires, too.

Even if the Sierra All Terrain HD was put into production 100% as is, some wags would still say 'it isn't a real off-roader'.

[smk4565]

We've heard this before, multiple times. Yet GMC has always directly overlapped Chevy in price, and GMC offers work trucks with zero equipment at all, at sometimes prices below the Chevy trucks. The Denali line is the only thing about GMC that is more upscale than Chevy. But to me the Denalis are just body cladding, chrome wheels and wood trim tacked on top of the base model's plastic. It isn't like the GMC Denali's have a really high level of luxury or fit and finish. It is like trying to make a luxury car out of the Impala, no matter how much chrome and wood you add on to the existing Impala, it isn't going to be nicer than a CTS. You have to design it with luxury in mind, not dress up a base model.

[smk4565]

By the same token- range rovers aren't off-roaders, either.

They aren't? What is better off road than a Range Rover?

[smk4565]

How high? Range Rover high? I'm down for that.

Cadillac can't even play there, GMC sure won't be able to. The average income for a Range Rover buyer is around $300,000. Far more than the $129kk income seen for Cadillac buyers, and even significantly more than the Mercedes average income of $174,000. Range Rover is way up there.

[Croc]

How high? Range Rover high? I'm down for that.

Cadillac can't even play there, GMC sure won't be able to. The average income for a Range Rover buyer is around $300,000. Far more than the $129kk income seen for Cadillac buyers, and even significantly more than the Mercedes average income of $174,000. Range Rover is way up there.

Cadillac could if they made anything to sell in that class. GM seems reluctant for some reason of taking any of their brands to the moon in terms of over-the-top luxury.

By the same token- range rovers aren't off-roaders, either.

They aren't? What is better off road than a Range Rover?

Agreed. Not sure what balthazar is trying to get at there...

[balthazar]

^ "By the same token" - no one takes RRs off-road.

This is besides the fact that they, like the Escalade, are not equipped for it with 'rubber band' street tires.

[Croc]

^ "By the same token" - no one takes RRs off-road.

This is besides the fact that they, like the Escalade, are not equipped for it with 'rubber band' street tires.

Oh yea they do. I know several family friends who live a more rural lifestyle but also really, really like nice things. They have a Range Rover, and they definitely take it off-road.

[Drew Dowdell]

Range Rovers may not go off-road as much in the U.S., but you know they are capable of it, and that's part of the reason people buy them..... because they can go through Africa.

[balthazar]

^ "By the same token" - no one takes RRs off-road.

This is besides the fact that they, like the Escalade, are not equipped for it with 'rubber band' street tires.

Oh yea they do. I know several family friends who live a more rural lifestyle but also really, really like nice things. They have a Range Rover, and they definitely take it off-road.

Anecdotal; 99% of relatively new ones never do in the U.S..

Range Rovers may not go off-road as much in the U.S., but you know they are capable of it, and that's part of the reason people buy them..... because they can go through Africa.

Wait- so people buy RRs in the U.S. so they can air-frieght them to Africa and drive on the plains there?

In talking about the Escalade & GMCs, clearly the reference is the U.S. market, as was the 'same token' reference to rangerovers.

And why can't a GMC drive thru largely the same African terrain?

[Drew Dowdell]

Image.

GMC or any Escalade could, but you never see them on the Discovery Channel with a cameraman on the roof sitting amongst a herd of gazelles.

If GMC wants to get in that market, they need that sort of product placement.

[Potluck]

aren't the African RRs all diesels? That would be limitation for the SUVs GMC is selling right there.

[Carguy]

GMC should move up market to become the mid-premium end of the GM truck. Lessen the premium features offered on Chevrolet Trucks at the same time as moving GMC up market. Denali should become the mid range within GMC's offerings with Cadillac just above any GMC. Use the "Professional Grade" moniker for fleet duty GMC models! Let GMC become the full framed Buick of GM trucks!

[GMTruckGuy74]

Buick tried with trucks, and failed. GM doesn't need anymore truck divisions, it should be limited to just Chevrolet and GMC brands only - Cadillac should be crossovers only (move the Escalade to Lambda).

Again with the upmarket suggestions... yes there are a lot of consumers that have the $45K+ needed to buy Denali's and loaded up SLT-trimmed GMCs. But on the other end there are a lot of consumers that have under $35K to spend... why get rid of them? Same with Chevy Truck owners, they'll likely not want to go to GMC for their top-of-the-line trucks if they're Chevy fans (same with GMC owners). Look at how many SLE-trimmed Terrains are sold, and in the past SLE-trimmed Envoys, to see how this market would respond to a large increase in price. You'll drive away GMC's business and give GM enough reason to discontinue GMC without the lower-end models.

So the best solution would to differentiate the two brands further apart. Differences in JUST grilles/headlights can no longer be the mode of GM. Different frontend styling AND different rear boxes are in order (GMC could offer the Pro-Tec beds where Chevies get the metal beds). Give the Silverado/Tahoe/Suburban a different interior from the Sierra/Yukon/Yukon XL (could have been easily done with the 2007 models - two dashes are currently used). Make GMCs come with a standard set of upgraded features that increase the MSRP, whereas the Chevy has a basic set of features that can be upgraded in packages (like the current Equinox and Terrain), and give GMC some luxury options (ex. Heads Up Displays) that you can;t get on a Chevy. Offer different premium seat fabrics and interior colors for the GMCs that you can't get in a Chevy. Heck, I would even make color choices different - basics like white, silver, red, black can be shared, but give the GMCs more premium paint colors that won't be offered on the Chevies (dark reds, grays & blues, metallic black and white).

Basically treat GMC and Chevy Trucks like how Cadillac and Chevy Cars have always been treated and you'll see why some people will prefer the GMC over the Chevy. Also, with today's economy and people's financial woes, you can't make GMC the $50k+ trucks and expect the brand to survive - it just doesn't make good business sense.

[Drew Dowdell]

I'm just curious why every brand wants to move up market when the whole market is moving down.

[SAmadei]

Let GMC become the full framed Buick of GM trucks!

Careful saying that. Next thing you know, it'll be all "Professional Grade" FWD trucks at GMC. GMC knows how to do it... remember the GMC Motorhome.

[Croc]

I'm just curious why every brand wants to move up market when the whole market is moving down.

Well, for one it allows breathing room for each brand so the bloodshed can hopefully cease.

[balthazar]

Image. GMC or any Escalade could, but you never see them on the Discovery Channel with a cameraman on the roof sitting amongst a herd of gazelles.

If GMC wants to get in that market, they need that sort of product placement.

OK- but that's an intangible; I thought we were talking about tangibles.

They don't show cameramen on the roofs of GMCs filming gazelles because there aren't any gazelles in the plains states.

[Z-06]

Didn't Hummer race Dakar Rally and have a placed finish?

[smk4565]

Cadillac could if they made anything to sell in that class. GM seems reluctant for some reason of taking any of their brands to the moon in terms of over-the-top luxury.

When Cadillac tried with the STS-V, XLR and XLR-V to go into the $77-100k price range, they fell flat on their face. This is why the DTS and STS both cost $46k, Cadillac fears that high price class. The Alante tried to go up there years ago, and failed also. The other problem, is GM wants to parts bin everything, and their parts bin doesn't have what a Range Rover (or S-class) type of buyer wants. Cadillac doesn't have the platforms, engines, transmissions, technology or brand cache to attack the ultra luxury classes. GMC also does not have what is needed to go after a Range Rover type vehicle.

[balthazar]

Isn't range rover still coasting on a sold-off Buick engine design from the '60s??

Sorry- but the prime factor in owning a range rover is the sh!tty reliability : years-running as the industry's WORST.

Translation: range rover doesn't have the engines, the transmissions, the technology or platforms to be range rover, only the illusionary, intangible image.

suzuki & mitsubishi build better vehicles.

[Croc]

Cadillac could if they made anything to sell in that class. GM seems reluctant for some reason of taking any of their brands to the moon in terms of over-the-top luxury.

When Cadillac tried with the STS-V, XLR and XLR-V to go into the $77-100k price range, they fell flat on their face. This is why the DTS and STS both cost $46k, Cadillac fears that high price class. The Alante tried to go up there years ago, and failed also. The other problem, is GM wants to parts bin everything, and their parts bin doesn't have what a Range Rover (or S-class) type of buyer wants. Cadillac doesn't have the platforms, engines, transmissions, technology or brand cache to attack the ultra luxury classes. GMC also does not have what is needed to go after a Range Rover type vehicle.

That's what I said--GM doesn't MAKE anything of that class. They can price whatever they want, but if what they manufacture doesn't actually belong in that class, it doesn't matter.

[smk4565]

I'm just curious why every brand wants to move up market when the whole market is moving down.

Agreed. Cadillac could move up market, and should, they are the luxury brand, the top brand and smallest volume brand. Plus they could bring image to GM by being an elite brand. But I don't know why they want to push Buick and GMC up to overlap Cadillac. And GM should look at how the economy is and will be. Unemployment is high, wages are flat, education and healthcare costs rise. Most people can't afford a $35k car, and many in Gen Y are about urban living, walking, and saving the environment. I think the future is more at the low end of the market, the bulk of GM's focus should be there.

[smk4565]

Cadillac could if they made anything to sell in that class. GM seems reluctant for some reason of taking any of their brands to the moon in terms of over-the-top luxury.

When Cadillac tried with the STS-V, XLR and XLR-V to go into the $77-100k price range, they fell flat on their face. This is why the DTS and STS both cost $46k, Cadillac fears that high price class. The Alante tried to go up there years ago, and failed also. The other problem, is GM wants to parts bin everything, and their parts bin doesn't have what a Range Rover (or S-class) type of buyer wants. Cadillac doesn't have the platforms, engines, transmissions, technology or brand cache to attack the ultra luxury classes. GMC also does not have what is needed to go after a Range Rover type vehicle.

That's what I said--GM doesn't MAKE anything of that class. They can price whatever they want, but if what they manufacture doesn't actually belong in that class, it doesn't matter.

Agreed with that. GM never made anything that belonged up there even though they had a few lame attempts.

[balthazar]

>>"GM never made anything that belonged up there even though they had a few lame attempts. "<<

Light years beyond the Lame Rover:

[Croc]

>>"GM never made anything that belonged up there even though they had a few lame attempts. "<<

Light years beyond the Lame Rover:

Who cares? That was 60 years ago. Relevancy?

[balthazar]

Look up the definition of "never".

[William Maley]

Isn't range rover still coasting on a sold-off Buick engine design from the '60s??

No, the last time the Rover V8 (Buick 215) was used in a Range Rover was in 2001. They switch to a BMW V8 when the Range Rover was redesign in 2002, then going to a Jaguar V8 in 2006..

I love that engine for all the vehicles it power for almost 40 years.. especially in this Rover..

[Croc]

Look up the definition of "never".

What counted as "ultra-luxury" in 1957 is hardly comparable to what that term connotes today.

[balthazar]

He still said "never"- the term is not applicable and required correction.

And in fact, the car I pictured is more luxurious in many area of comparison that what passes for that today, but we're getting off topic here.

[Croc]

He still said "never"- the term is not applicable and required correction.

And in fact, the car I pictured is more luxurious in many area of comparison that what passes for that today, but we're getting off topic here.

Oh please. That 1957 Cadillac cost $105,000 in today's dollars, but let's also remember that my $2000 laptop from 2010 would have cost $10,000 in 2004...if it had even been possible to build (nope, would've been much bigger and heavier). As far as I'm concerned, $105,000 isn't really ultra-luxury anyway...That's what an S-Class or a 7er can cost. Those aren't "ultra-luxury" at all.

[balthazar]

Could you come up with a more flawed definition of 'ultra-luxury'? What about the product ???

Even if one goes solely by price, you might consider the EB being the most expensive car you could buy in '57-58 as satisfying your definition quite well.

[smk4565]

An Eldorado Brougham they built for two years, and how many did they actually sell. That was the XLR or Alante of its day. They built an overpriced extravagant car, redesigned it in 59 and it was gone by 1961. So as I said, they never built anything that belonged in that segment. Every generation, Cadillac takes a stab at the Jaguar, high end Mercedes, Maserati strata, and they come up short and give up for 15 years. Let's see Cadillac build a top end car that sells and actually sticks around.

[SAmadei]

An Eldorado Brougham they built for two years, and how many did they actually sell.

Lets see...

1957 400

1958 304

1959 99

1960 101

It was one of a few ultra luxury cars of its day. How many Bugatti Veyrons did they sell last year? 40... in fact, only 291 have been made since 2003. Thats averaging 32 a year... topped out at 81... less than the EB's worst year.

They have sold about 2110 modern Maybachs to date... in 9 years... thats averaging about 234 a year... not far from the 226 the EB averaged over 4 years.

[Robert Hall]

Speaking of Eldorado Broughams, anyone else see the ad for Bridgestone (I think) with the elderly couple hooning around on the salt flats in one?

Edited May 15, 2011 by Cubical-aka-Moltar

[Drew Dowdell]

and... back to GMC.