Buick and the Detroit Zombies

Andrew Dederer
by Andrew Dederer
buick and the detroit zombies

There’s an often-repeated statistic: U.S. Buick dealers sell just four cars per dealer per month. It’s true, but c’mon; that was last year’s totals. In March, Buick sales slipped to three cars per dealer. Thanks to TTAC’s Frank Williams, I’ve had a chance to examine the exact dealer and sales stats for the Beyond Precision people. Having deconstructed the data, I can declare that this seemingly absurd three cars a month number, while strictly true, isn’t the whole story. The “whole story” is much worse.

First, to be strictly accurate, the 36 cars per Buick dealer per year stat doesn’t include trucks. Add-in Enclave sales and you’re up to 60 sales per dealer per year. (Only Ferrari, Isuzu and Rolls have lower averages.) You may wonder how any car dealer could survive on such meager portions. The short answer is, they don’t. GM’s 90 “exclusive” Buick dealers sell quite a bit more than a car per week. The problem isn’t these Buick stores; it’s the “dualed” and “tripled” Buick franchises; 29 of them for every solo dealer.

To help you wrap you mind around those numbers, there are over 2700 places where you could, if pressed, buy a Buick. That “coverage” includes as many franchises as Toyota, Lexus, Honda and Acura. Combined. All to support numbers slightly larger than sales of Honda’s Odyssey. The scariest part ISN’T that the average Buick dealer sells a car a week (probably less). The bigger problem is that these franchises can survive selling so few.

One of the less-mentioned side effects of The Big 2.8’s massive brand spread and bloated dealer networks: “franchise bloat.” GM, Ford, Chrysler have about 6500, 4000 and 3500 “dealerships” (i.e. buildings) respectively. Toyota/Lexus and Honda/Acura have about 1100 stores each; Nissan/Infiniti 1000. Now, let's talk franchises. Detroit automakers have 13,000, 6800 and 8300 franchises. Toyota clock in at about 1500; Honda and Nissan have about 1200 franchisees.

Franchise glut means dealers are frequently bidding against each other on price, and fighting for product allocation. But there’s an even bigger downside for Detroit: multiple franchises give dealers greater leverage. A dealer receiving cars from two or more streams can concentrate their efforts where it’s most profitable (e.g. on whichever line is getting a marketing boost at the moment). The languishing brands can be milked for limited-allocation cars until a particular model catches fire. Or, in Buick’s case, not.

While it's been argued that single-line dealers lead to too many models spread across too many price points, at least a single-line car dealer can’t play Peter off against Paul at similar price points. In other words, they’re not hurting one brand by helping another.

But the single biggest problem caused by franchise bloat down Detroit way is that it’s made killing brands more difficult, rather than easier.

In theory, bringing in additional lines reduces the damages dealers can claim when you kill a given brand (Chrysler did this when axing Eagle). Yes, but– lopping off brands does nothing to trim the bloated number of dealers. A two or three-headed dealer may not be a money machine, but there is no real way to “starve” it.

So, when you get right down to it, the real obstacle to killing Buick isn’t those 90 stand-alone dealers. They can be bought. It’s the 2600 other guys who will still be selling GM cars when the smoke clears.

Having to pay off 2700 dealers to reduce the “footprint” by less than 100 wouldn’t work even when GM was flush. Ford is in better shape; they at least only have effectively two brands (Mercury does not exist away from Lincoln or Ford). Of course, that makes terminating Mercury completely useless from the “reducing dealers” standpoint. And pity poor Chrysler/Cerberus. It really is a three-headed dog; some 75 percent of their dealerships are multi-branded, often offering all three marques.

Hang on. If franchise glut is such an enormous problem for Detroit, why is GM consolidating their dealer networks (Buick/ Pontiac/GMC; Cadillac/Saab/Hummer)? Hell if I know. The new multi-franchise system leaves GM with the same dealer glut as before. And now, if they really want to cut Buick dealers, they’ll have to kill Buick AND Pontiac AND GMC together.

In the meantime GM will have four competing “mainstream” distribution channels (including Chevy and Saturn). Well, at least sending one or two of these mega-franchises into that long good night is [theoretically] doable. Ford and Chrysler lack even that option.

And so three-cars-per-dealer Buick is, at the end of the day, a zombie. And now that GM (and Chrysler) doesn’t have the multiple billions needed to make these problems go away, there’s only way out of this entire over-dealered, over-franchised mess. But will anyone buy a car from a bankrupt automaker? From Buick NA’s perspective, it doesn’t really matter anymore. Now that’s scary.

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2 of 64 comments
  • Steven Lang Steven Lang on May 03, 2008


  • Adonasetb Adonasetb on May 06, 2008

    Personally I think it's pretty sad - first the Olds disappears and now Buick, Pontiac, and GMC are on the chopping block. I can remember as a kid when seeing any one of those brands parked in a driveway represented a "well-to-do" family. It appears that every domestic auto manufacturer is on the brink of elimination which is another sad fact of life - soon we'll be as totally dependent on imported vehicles as we are on imported petro. I'm struggling to find the silver lining.

  • Bullnuke It may be awhile before these show up on US shores. The MV Fremantle Highway has just started demo/reconstruction in Rotterdam after the large fire when transporting its last shipment of electric Porsche products.
  • Fie on Fiasler Big, fast and thirsty does not equal good. True luxury is not cobbled together by the UAW.
  • Inside Looking Out I see it as gladiator races - only one survives in virtual world.
  • Crown They need to put the EcoDiesel back in the Grand Cherokee. I have a 2018 and it has been the most reliable vehicle I ever owned. 69,000 miles and only needed tires, and regular oil and fuel filter changes.
  • El scotto Y'all are overthinking this. Find some young hard-charging DA seeking the TV limelight to lock this kid up. Heck, have John Boehner come up from Cincy to help the young DA get his political career going. Better yet, have the young DA spin this as hard as he or she can; I'm the candidate for Law and Order, I defied our go-easy office and leadership to get this identified criminal locked up. Oh this could be spun more than a hyper active kid's top.Now I'd do some consulting work for Little Kings Original Cream Ale and Skyline Chili.