Why GM would really rather have Buick

copyright GM Corp.

Since GM announced the phaseout of the Pontiac brand, many automotive enthusiasts have been scratching their heads.

"Why oh why", they ask, "is GM keeping Buick, a brand with one foot in the grave and customers to match, while they kick a storied performance brand like Pontiac to the curb?" Their songs of lament are beginning to sound the same.

Verse One usually invokes all the Pontiac patron saints, from the canonized (GTO, Firebird, Trans Am), to the merely venerable (Grand Prix, Bonneville), to the dubious (Fiero). As they don their sackcloth and plop down on piles of ashes, the Disciples of Pontiac start Verse Two, which tells of the recent introduction of the critically acclaimed G8 and Solstice and the justice they've done to the brand's good name. And throwing dust into the air, they flow into Verse Three, mourning the unkept promise of a future wherein Pontiac would become a performance car-only "niche brand". A future with nary a re-grilled Chevy Aveo (G3), Cobalt (G5), or Equinox (Torrent) to be seen. A promise GM couldn't afford to keep. And in between each verse is a rousing chorus of "Why oh Why", sung with crocodile tears flowing. It's getting a little old.

Truth be told, it was a sad day this last April 27th, when GM announced that they were pulling the plug on one of their most damaged, yet storied and dynamic brands.

Started in 1926 by GM as a companion marque to now-defunct Oakland, Pontiac (after the Native chief, and an Oakland County, MI town) enjoyed an 84-season run. In fact, the last arrowhead badge was just affixed to a white G6 sedan, which left the Fairfax, KS assembly line on November 25th, 2009.

Since the late 1940s, Pontiac lived a rung above Chevrolet and below Oldsmobile on the GM brand ladder. By the mid-'60s, they were known as GM's rebellious "We Build Excitement" division, and they had stuff like the GTO and Firebird to back up their claims. But when the oil embargo of 1973-74 hit, fuel prices skyrocketed. And Pontiac began a struggle to stay true to its performance image while offering cars with enough economy to satisfy customer demands. It was a battle they'd eventually lose.

Conversely, Buick was started in 1903 by David Dunbar Buick, and was the company from which General Motors sprang in 1908. Later that year, Buick bought out an independent Oldsmobile, and the new company picked up GMC Truck, Oakland, Cadillac, Chevrolet, and others between 1909 and 1917. Since the founding of GM, Buick has been positioned as an upscale brand, slotting above Oldsmobile and below Cadillac in the GM hierarchy.

Up through the 1970s, Buick enjoyed an enviable reputation as a builder of large, powerful, high-quality, plush cars. They became known as "doctors' cars", as they were often the choice of professionals who appreciated the finer things, but didn't want their clients to think they were making Cadillac-type money off of them. Buick's long-held tagline, "Wouldn't You Really Rather Have a Buick?" perfectly encapsulated the understated, aspirational quality of the brand. And the formula worked for a very long time. Buick sales peaked in North America in 1984, with 1 million cars bearing the tri-shield sold that year.

However, in the years since, GM has seen their market share erode to the imports while the piled on other responsibilities. At one point, Buick was one of 9 North American vehicle divisions GM had to juggle. GM would cope by giving each division the same basic vehicles, in order to hold down costs. Yet each brand had to figure out a way of differentiating their vehicles from their sister brands' in hopes that each brand's lineup would attract a different set of customers and thus prove its worth. But with eroding share, the shrinking pot of money GM had meant that less and less could be allocated to each brand. So the differences between Chevys, Pontiacs, GMCs, Oldsmobiles, Buicks, and Cadillacs became very muddled as GM added Saab, Saturn, and Hummer to the portfolio.

With this business model, Buick became the brand full of sensible shoes, wallowy sedans with bench seats, column shifters, and wire wheel covers. They were cars that were meant to attract the hats-in-the-back-window crowd. And it worked. By 2000, Buick's average buyer age was 67 years old, and sales were less than half of what they'd been 15 years earlier. Since 2000, Buick sales have fallen another 60%, as they managed to move barely 200,000 vehicles in the 2007 model year. The problem with GM's strategy for Buick was that the brand was positioned in such a way that it stopped being relevant to younger buyers. Ignored were demands for console-mounted shifters, bucket seats, alloy wheels, and firmer suspensions that prevented their cars from cornering on their chromed doorhandles. All the while, the customers Buick was attracting were literally dying off.

So it's understandable why some people, particularly the Pontiac faithful, would be confused about why GM kept Buick, but deep-sixed Pontiac. Dig a little deeper, though, and the logic presents itself. Let me explain.

1) Buick actually isn't for old people anymore. While no one was looking, Buick started offering models that younger people and families would actually buy. This started with the introduction of the Rendezvous crossover in 2002 and continued with its excellent replacement, the Enclave, in 2008. Since then, Buick's average buyer age has dropped from 67 in 2000 to 54 in 2009. Toyota's average buyer is 51. Lexus's is 59.

2) Also while no one was looking, Buick became one of the hottest-selling brands in China, now the world's largest auto market. GM isn't about to give that up. Instead, they see vast potential in converging the more successful Chinese Buick lineup with the one offered here in the US. That way, they only have to engineer one Buick for both markets, while building the new Buicks in both countries so they aren't vulnerable to exchange rate issues.

Pontiac, conversely, was only present in the US, Canada, and Mexico, and wasn't growing anywhere the brand was available.

3) Buick has introduced a spate of relevant automobiles, like the aforementioned Enclave, the 2010 LaCrosse, and the just-announced 2011 Regal. All three of these vehicles feature bold designs, phenomenal interiors (no bench seats or column shifters), excellent refinement, high build quality, and fuel efficiency. With all this new, attractive metal, the outlook is good for Buick's image, and therefore sales. And because the new cars are fuel-efficient, they help GM meet the new federally-mandated Corporate Average Fuel Economy (CAFE) standards. And none of the three aforementioned models is a toothy-grilled version of a Chevy, GMC, or Cadillac. GM has differentiated Buick's line because they can afford to make Buicks truly different and more upscale, as Buicks command much higher transaction prices than Pontiacs had.

Pontiac was stuck in a double-bind. GM could spend the money to make Pontiacs that looked and felt totally different from the Chevrolets they were based on. Which is what they did with the G6. But at the low, Chevy-like prices Pontiacs commanded, that tack made for thin profit margins. And the cars that resulted just ended up competing with Chevrolet's own versions of the same cars.

Or, GM could just stick a twin-nostril grille on the front of a Chevy and call it a Pontiac, no matter what it did to Pontiac's image (G3, G5, and Torrent). That way, Pontiac could add incremental volume to Chevy, giving the company slightly better economies of scale, while requiring little investment in unique tooling and parts stocks. But that tack would instantly make Pontiac moribund, giving customers no good reason to buy a Pontiac over a Chevrolet.

They could even try a third option, offering vehicles totally unique to Pontiac, like they did with the Vibe, G8, and to a lesser extent, the Solstice. But the Australian-made G8, while excellent, sold poorly and was difficult to make money on because of exchange rate issues. The Solstice, a 2-seat sports car, never sold in any meaningful volume. It wasn't meant to. And the Vibe was a joint venture with Toyota, sharing engines and an interior with the Matrix. Not exactly a proper enthusiast-pleasing Pontiac, either.

The thing is, Pontiac tried all three options simultaneously and what emerged was neither fish 

nor fowl. Customers were given little reason to go to their Pontiac dealer, and they didn't have a consistent enough product line for the brand to gain favor with the press. In the end, the strategy didn't make GM any real money, nor did it pave a clear pathway to a bright future. And a GM staring down bankruptcy needed to move forward with a plan that did.

4) Buick topped the 2009 JD Power Vehicle Dependability Survey, knocking Lexus off its long-held perch. The results even prompted mention in President Obama's March 30 Press Conference. If Buick has any story to tell, it's one of quality and reliability. That's a story GM wants to pound into the minds of import buyers as Buick wows them with classy styling, quality, refinement, and delightful interiors.

Pontiac was consistently below average in JD Power's reliability surveys. Part of it may have been down to the total inconsistency of the lineup. But most of it was because GM just couldn't afford to put much development money into Pontiac and expect to get it back.

5) Buick was the foundation of the formation of GM in 1908. It's got massive sentimental value to GM. Buick is GM's roots. Pontiac was created out of thin air by GM in 1926 as a companion to a brand they ended up cancelling after 1932.

6) Internally, many of GM's youngest designers have chosen specifically to work on the Buicks in development now. Armed with fresh ideas, they see plenty of opportunity to make their mark, accepting the challenge of restoring the lustre of the proud old marque. So it would appear that Buick's design portfolio may have the bright, exciting future the division needs in order to grow in relevance to today's buyers. With Pontiac, designers weren't going to get excited about sticking a split grille on the front of a Chevy and calling it good. Or having to design a car of compromises on the cheap.

7) While Pontiac has sold significantly more cars than Buick in recent years, Pontiac has been offering more than twice the number of models. So, the Buick line has actually sold better per model than Pontiac's did. And more profitably, at that. Especially since 60% of Pontiac's sales were in low-margin fleets and daily rental agencies. Buick has a higher percentage of retail customers.

8) Buick has a future in the kinds of smaller cars GM needs to build. They certainly have a strong past building and selling smaller cars. The '61 Buick Special/Skylark did nothing if not totally revitalize the brand, which had been through difficult times in the late '50s and early '60s. And Buick sold so many Skylarks from 1975-85, that they consistently outsold their less expensive, but oh-so-similar Pontiac, and Oldsmobile stable mates. Simply put, more success has been found in making economical cars plush and luxurious enough to be proper Buicks than than performance-oriented enough to be considered proper Pontiacs.

"Ah!", Pontiac enthusiasts say, "All that is well and good, but why not turn Pontiac into the performance car 'niche brand' by keeping the Solstice and the excellent G8? Just like GM talked about previously?" For good reasons, actually.

1) Pontiac's true performance vehicles were the G8 and Solstice. As noted before, neither of them sold worth a damn unless huge, profit-sucking incentives were placed on their hoods.

2) Offering more performance models just to keep the Pontiac name alive would only make it harder for GM to hit the required CAFE numbers. And Pontiac would still be competing with Chevrolet's SS line, the new Camaro and Corvette, and Cadillac's line of spectacular V-Series cars.

3) Pontiac is a more damaged brand than Buick. Pontiac is associated with laclustre Montanas, plastic-clad Sunfires and Grand Ams, "Screaming Chicken" decals, and - worst of all - the Aztek.

Buick's cars, though until recently were sedate and associated with old people, have never had Pontiac's reputation for overwrought styling with heaps of plastic body cladding that wrote checks the cars' performance levels couldn't cash. Buick has never fielded a car so embarrassing that they were forced to restyle it after one year (Aztek). They've never sold a warmed-over Chevette (T1000) or Daewoo (LeMans, G3), in America either. 

Rebuilding a respected performance car image for Pontiac was just too tall an order after their all-too-recent cavalcade of craptastic failures. Seen in that light, Buick has far less of a hole to climb out of.

So when choosing which of the two brands to keep, GM decided they would really rather have Buick. Wouldn't you?