By on July 30, 2018

2017 Buick Encore - Image: Buick

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.

2017 Buick Encore

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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22 Comments on “In a Worse-case Trade Scenario, Buick’s Fate Hinges on a Tiny Crossover...”

  • avatar

    The days of excess profits paid for with the depressed wages of middle America may finally be coming to an end.

    Tariff-free trade should be reserved for other 1st world countries, with tariffs on imports from developing countries based on wage/environmental/safety laws.

  • avatar

    I am an apostate of the Church of Free Trade because theory should be quiet when data speaks. We’ve had nearly 40 years to judge the Church of Free Trade. When this started, I remember the Democrats yelling that Pres. Reagan was going to get us to $1 Trillion in debt, but the response from the Supply Siders was that it was all internally held, so that was OK. We no longer are in that position at $21 Trillion.

    People will scream “correlation does not mean causation” because they fail to think that statistical tools can ONLY show correlation. At best, you can get the implication of causation, but it’s always deniable.

    Yet, these things have happened at the same time. Something clearly went wrong so that real wages died some time when Pres. Carter was still in office.

    As to South Korea, they are our reliable friend and ally. They sent troops to Vietnam when the Canadians refused. Unless something goes horribly wrong with the negotiation with North Korea, South Korea should have no fear on the trade pact.

    As to Buick, the Envision is not setting the world afire, and it is most definitely not a Baby Enclave.

  • avatar

    The only thing I can say is “more crossovers”. I would also think that since China is really Buick’s market, anything you are selling in the US should really be the same vehicle sold in China, only way you can justify the development costs……except in the case of the Enclave. I probably read the same article as the author, GM is selling Enclaves as fast as they can build them, as I recall, the statistic was over 1 in 4 Enclaves sold are in the Aviner trim. That is no doubt a tidy profit at $55k ish each.

    That is what Buick will be regardless of the brand desires of the corporate overlords. Vehicles built for the Chinese market and a few rebadges. Remains to be seen if that turns out to be a horrible thing….it doesn’t have to be.

    • 0 avatar

      I keep hearing that Enclaves, although selling well, are only doing so because of good discounts.

      Customers are coming into GMC-Buick dealers intending to buy a GMC Acadia and then, when given a larger discount on the Enclave, they leave with one.

  • avatar

    Stop the Invasion, Boycott Envision.

    tell them to keep their Commie Car Mr President.

  • avatar

    The Riviera, the deuce and a quarter, the Grand National….the Envision. Wow.

  • avatar

    Of course a radical solution to getting around the tariffs temporarily would be… sell the other things on your lot. I was going to try to look up total 2018 Regal inventory but my employer has and Autotrader blocked.

    I’ll imagine most Buick/GMC dealers are like my local one where the inventory skews roughly 75% GMC – 25% Buick at any given time.

    I’d wager most Envision customers would be better served by a Terrain or the slightly shrunken current gen Acadia.

    • 0 avatar

      “I’d wager most Envision customers would be better served by a Terrain or the slightly shrunken current gen Acadia.”

      A couple of years ago, on a whim, I stopped by the Buick dealer and discovered the Envision. I absolutely love the car itself, but I won’t buy a GM car that’s built in China. Sorry, Charlie. And then they tried to tell me it was a $48K vehicle. I laughed out loud.

      Next to it on the showroom floor was an Acadia in Denali trim. Absolutely gorgeous vehicle, with a very smart and minimal interior that showed class. I asked to drive one; what they brought out was a lower trim model with an absolutely wretched whorehouse interior, nothing AT ALL like the restrained Denali. It was one they wanted to sell, and they didn’t listen at all when I talked about loving the Denali on the floor.

      In a world where Toyota Highlander exists, I say, good luck, GMC/Buick slimy dealer.

  • avatar

    “In 2018, just 31 percent of Buicks sold in the United States were actually built on home soil.”

    Whose fault was that again? Brilliant was the plan to turn Buick into Chevrolet-Opel-Daewoo-SAIC.

    “Still, trade pacts aren’t as ironclad as they once seemed.”

    Hahaha so clever but the President is right in that NAFTA/GATT decimated the US workforce. I’m glad he’s sewing chaos on this front. Funny how “free trade” is allowed to include import tariffs and VAT taxes from other nations on US exports.

    Oh and please remove the “prove your humanity” prompt until things are fixed. Please.

  • avatar
    Peter Gazis

    In the story of the 3 little pigs. Mary Barra tells the big bad Trump. My house is made of bricks. Huff-n-Puff-n-Blow all the Russian dictators you want.

  • avatar

    Too bad Deadweight hasnt commented yet!

    The Envision is absolutely ridiculous and only the most die-hard globalist can justify GM importing such an expensive car from China.

    I dont see the Regal lasting more than a generation with PSA buying Opel.

    Would it really cost more to build the Trax/Encore in Lordstown which has a dying product?

    • 0 avatar

      I’m sure it will be fairly easy for GM to come up with a new Regal using the Malibu platform, but with different sheet metal and a higher level of interior trim. At least for the Chinese market.

      OTOH, maybe this is a car that Buick will want to discontinue like it did with the Verano or like Ford did with just about everything.

  • avatar

    Everyone mocked the Encore when it came out. Who wants to drive a tippy underpowered hi-top sneaker? Lotsa people, it turns out. I’m not a fan of the seats, which look cheap and feel confining, but otherwise the car has its egg-shaped charms.

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