In a Worse-case Trade Scenario, Buick's Fate Hinges on a Tiny Crossover
The second quarter of 2018 returned pleasing sales figures for General Motors, but there were no champagne corks popping over Buick’s performance. While GM’s sales rose 4.6 percent compared to Q2 2017 (and 4.2 percent year-to-date), Buick sales headed in the opposite direction — down 12 percent in the quarter, and roughly six-tenths of one percent over the first half of the year.
Swirling menacingly in the background of all of this is a threat from President Trump to levy a 25 percent tariff on all automotive imports, a move that would leave Buick especially exposed. As numbers crunched by Automotive News show, the only thing sparing the brand from an emergency overhaul, should such a scenario come to pass, is a subcompact crossover — one which may or may not be exempt from the proposed tariffs.
It’s a vehicle you’ll be reading about shortly in these digital pages: the Buick Encore, sister vehicle to the Chevrolet Trax.
In 2018, just 31 percent of Buicks sold in the United States were actually built on home soil. The aforementioned Encore rolls out of a plant in South Korea, the Envision crossover hails from China, the new-for-2018 Regal liftback and wagon makes a boat trip from Germany, and the rental queen Cascada is Polish by birth. Only the large Enclave crossover and poor-selling LaCrosse see assembly in the U.S.
Currently, the only country seeing a new import levy is China, whose vehicles were saddled with a 25 percent tariff in early July. Threats of new tariffs against Europe and other markets remain just that. Given the uncertainty, the public statements by GM reflect a wait-and-see approach, though there’s surely some hasty calculations going on behind the scenes.
Speaking to reporters during last week’s earnings call, GM chief financial officer Chuck Stevens addressed the tariff threat. “We will have to evaluate, ultimately, whatever plays out and course-correct from there,” he said, “but I think it’s too early to make any brand pronouncements on what we’re going to do from a strategy footprint or otherwise perspective at this point.”
The Enclave crossover’s selling well, with its margins helped by the addition of a new — and apparently quite popular — Avenir trim. The Encore’s selling very well, representing 44 percent of the brand’s year-to-date sales. Together, the Encore, LaCrosse and Enclave make up three-quarters of Buick’s U.S. sales volume, which should be enough to head off disaster in a tariff-filled future, but only if South Korea finds itself exempt. The country managed to side-step steel and aluminum tariffs earlier this year, as the two countries share a free trade pact.
Still, trade pacts aren’t as ironclad as they once seemed.
[Images: General Motors]
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- SCE to AUX The UAW may win the battle, but it will lose the war.The mfrs will never agree to job protections, and production outsourcing will match any pay increases won by the union.With most US market cars not produced by Detroit, how many people really care about this strike?
- El scotto My iPhone gets too hot while using the wireless charging in my BMW. One more line on why someone is a dumbazz list?
- Buickman yeah, get Ron Fellows each time I get a Vette. screw Caddy.
- Dusterdude The Detroit 2.5 did a big disservice by paying their CEO’s so generously ( overpaying them ) It is a valid talking point for for the union ) However , the bottom line - The percentage of workers in the private sector who have a defined benefit pension plan is almost non existent - and the reason being is it’s unaffordable ! . This is a a huge sticking point as to have lower tier workers join would be prohibitive ( aside from other high price demands being requested - ie >30% wage gain request ) . Do the math - can a company afford to pay employees for 35 years , followed by funding a pension for a further 30 years ?
- El scotto Human safety driver? Some on here need a human safety thinker.