GMC Review

GMC Review.

Houston, Texas, June 2007

General Motors was built by marketing a series of stair-step nameplates to an upwardly mobile 20th century America.

GM divisions of the early period, before the Asian invasion of the luxury segments, had enough product differential that buyers believed the upper brands worth the price premium.

Every market segment had its own "brand."

This business model has devolved into a series of weakly differentiated products, few of which have little purpose other than bureaucratic inertia.

Management has for decades pursued a policy of deferring costs into the future; promising the unions future benefits instead of wage hikes, relying on finance and marketing for cash flow, creative accounting, avoiding product development costs by retaining obsolete technology, and worst of all - creeping badge engineering.

Ignoring customers who fled to imports, GM became a financing and marketing company while the product portfolio lagged the competition.

The GMC Premium

GMC is a division of General Motors that sells "premium alternative" trucks and SUVs.

There is still a group of pickup buyers who want upgrades on their truck, and will pay extra for the difference.

Hey, that's OK, but that premium is what makes GMCs more profitable than Chevies.

GMCs and Chevrolet trucks are nearly identical otherwise. And with Buick moving to SUVs with some actual extras, mostly noise insulation, where is the premium in not-so-different GMC SUVs?

GMCs' pickups sell about half the volume of their Chevy badged cousins, and the barriers to terminating the brand are considerable.

Since 75% of full-sized pickup owners use their trucks for business, sales were supposed to have a support level different from SUVs.

Not true. Big pickups aren't going away, but this is a rapidly declining market segment.

Even Toyota is struggling in the heavy pickup segment, with rising incentives needed to move the San Antonio built Tundras.

As pickup/heavy SUV sales continue to decline, General Motors has chosen not to kill the still profitable brand, but to consolidate Pontiac, Buick, and GMC into one distribution channel.

The problem is there is no product development to support GMC. Buick has some new models, Pontiac has imported Holdens from GM Australia, but GMCs are still redundant copies of Chevy and platform sharing with other GM products.

Chevy dealers and executives form a vocal lobby against future investment in the GMC channel.

When the Lambda platform crossover SUV triplets (GMC Acadia/Saturn Outlook/Buick Enclave) sold well, there was pressure to add a fourth badge (Chevrolet Traverse), so the Chevy channel could share these high margin sales.

Dealer Network Condensing

GM is consolidating Buick, Pontiac, and GMC into maybe 1,600 "BPG" dealerships.

With Buick struggling and Pontiac trying to restore its performance identity without real new products, GMC trucks and SUVs will be the main profit centers of this channel.

For consumers the most important thing about the automobile business is: the deal is with the dealer, not the auto manufacturer.

What will the new dealer network amount to?

This plan means many models sit neglected on the tarmac rather than in the showroom.

Pontiac's demographic represents some of the youngest buyers in the auto industry, with an average age around 40.

How does that core demographic fit GMC's slightly upscale pickups, and Buicks for old golfers?

Overlapping brands in the SUV space compete for "floorplan" space and money.

During a recent visit to one such BPG dealer, I saw a large force of obviously inexperienced high-turnover salespeople, and no customers.

A sharp Pontiac Solstice dominated the showroom with a $4K dealer additional markup sticker on the windshield.

Dealerships that can't move new cars must resort to other tactics or go out of business. Used cars are a possibility. But the service department takes on a new personality when new cars are not moving well.

To me, this is the single biggest factor in the decision to buy GMC: how stable is the dealership and what is the quality and cost of after sale service?

GMC Dealer Profiles

David Taylor Cadillac Buick Pontiac GMC Houston

Casa Pontiac GMC Buick Baytown

Don Davis Pontiac GMC Buick Lake Jackson

Gay Pontiac-Buick-GMC Dickinson