GM Death Watch 172: Buick's Enclave

In 280 BC, King Pyrrhus took on the might of the Roman Army– and won. In one of history’s most insightful strategic assessments, the King surveyed the corpse-littered battlefield and concluded, “one more such victory shall undo us.” Since then, the term “Pyrrhic victory” describes a conflict in which a force expends so much energy winning a battle that it loses the war. It’s a lesson General Motors seems determined not to learn. The latest chapter in this continuing saga of self-delusion: the Buick Enclave. The Enclave is a false promise that illuminates GM’s strategic poverty, and its resulting weakness.

By now, Buick should be dead, its resources folded into the remaining GM brands for the greater good. The fading tri-shield is an icon for retirement home parking lots. The average buyer’s age is 65. U.S. sales have tumbled to just under 186k vehicles in 2007, falling by more than 50 percent in five years. In fact, Americans purchased fewer Buicks in 2007 than in 1937, during the Great Depression. Even Oldsmobile was moving more metal when it was axed in 2000.

But a funny thing happened on the way to the graveyard: last year’s launch of the Buick Enclave. The crossover garnered the sort of positive buzz that was once unthinkable for a Buick. The Lambda-platform CUV has earned accolades usually reserved for luxury imports, with waiting lists and inventory shortages to match. It’s not just the fanboys– even the Wall Street Journal, Automotive News and the Guardian has trumpeted its success.

Some of the resulting optimism for the Buick brand is understandable. Enclave buyers belong to a highly coveted pool, sporting an average age of 53 and median annual household incomes of $130k. By appealing to high earners, the Enclave generates substantially higher revenues than its fellow Lambda triplets. J.D. Power reports recent average transaction prices of $38,479, $3500 greater than the mid-tier GMC Acadia and more than $5600 above the Saturn Outlook. Thanks to Enclave’s sales performance, Buick’s overall transaction prices increased 16.1 percent over the year, substantially outperforming the industry average of 0.6 percent.

The actual sales figures, however, are less inspiring. At its current sales pace of about 45 – 50k units per year, Enclave deliveries lag behind such rivals as Lexus RX and Ford Edge, as well as its badge-engineered brother, the GMC Acadia. Those hoping for a Lambda-based home run will need to find another ballpark.

A closer look at the much-ballyhooed inventory shortages reveals that the General botched the Enclave’s launch. The CUV’s initial scarcity was not caused by staggering demand, as GM had boasted. Rather, a parts shortage was the culprit, suggesting a mismanaged supply chain. Moreover, Buick’s previous CUV experience could be a bad omen for the new kid in town. The Rendezvous also initially outperformed expectations before it fell off the charts, fell into a rat hole and died.

Buick’s ongoing plunge is dramatic enough to make the Titanic look seaworthy. Buick’s sedan lineup is speeding toward irrelevance. Sales in 2007 tumbled 23 percent, as the Lacrosse and Lucerne both posted double-digit declines. 2008 promises to be a repeat; year-to-date March deliveries are down almost 15 percent from last year.

This hemorrhaging poses a palpable threat to the Enclave’s future. The Enclave delivers high-potential customers who are all dressed up with no place to go. The brand is effectively a one-vehicle outpost, incapable of exploiting Enclave’s boomer appeal.

Consequently, Buick’s future rests squarely on the shoulders of the upcoming 2010 Lacrosse sedan. The new car must win over youthful import buyers if the badge is to escape its malaise. Easier said than done. After all, it is the failure of the current Lucerne and Lacrosse that created this dilemma in the first place. A Vegas craps table would offer better odds.

The Enclave is a good soldier, but it was drafted by the wrong army for the wrong battlefield. With its stylish looks and near-luxury positioning, the Enclave embodies just about everything a Cadillac should be. Meanwhile, Cadillac is set to update the SRX and add a second CUV. All this while Chevrolet introduces a fourth Lambda-based CUV that looks remarkably like… the Buick Enclave.

For cannibals craving barbeque, the buffet will not be lacking for choice.

So it’s déjà vu all over again. Instead of acting decisively to rebuild their supreme marque and take it into battle against Lexus, BMW, Audi and Mercedes, GM is dedicating scarce resources to wage a civil war. The Enclave represents an obvious return to the not-so-distant past, when the domestic automaker garbled its branding to grab every sale possible, long-term consequences be damned.

GM can’t afford this kind of success. In their efforts to rescue every badge, GM is winning some battles– and losing the war. If The General is to survive, it must bury Buick, marshal its forces and move on.