In a Worse-case Trade Scenario, Buick's Fate Hinges on a Tiny Crossover

Steph Willems
by Steph Willems
in a worse case trade scenario buicks 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]

Comments
Join the conversation
5 of 22 comments
  • NJRide NJRide on Jul 30, 2018

    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?

    • Johnster Johnster on Jul 30, 2018

      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.

  • HotPotato HotPotato on Jul 30, 2018

    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.

    • See 1 previous
    • Focus-ed Focus-ed on Jul 30, 2018

      @28-Cars-Later One can't take seriously a turd in high heels. GM's designers could do better than this (unfortunately Ford seems to follow the trend).

  • Nrd515 I bought an '88 S10 Blazer with the 4.3. We had it 4 years and put just about 48K on it with a bunch of trips to Nebraska and S. Dakota to see relatives. It had a couple of minor issues when new, a piece of trim fell off the first day, and it had a seriously big oil leak soon after we got it. The amazinly tiny starter failed at about 40K, it was fixed under some sort of secret warranty and we got a new Silverado as a loaner. Other than that, and a couple of tires that blew when I ran over some junk on the road, it was a rock. I hated the dash instrumentation, and being built like a gorilla, it was about an inch and a half too narrow for my giant shoulders, but it drove fine, and was my second most trouble free vehicle ever, only beaten by my '82 K5 Blazer, which had zero issues for nearly 50K miles. We sold the S10 to a friend, who had it over 20 years and over 400,000 miles on the original short block! It had a couple of transmissions, a couple of valve jobs, a rear end rebuild at 300K, was stolen and vandalized twice, cut open like a tin can when a diabetic truck driver passed out(We were all impressed at the lack of rust inside the rear quarters at almost 10 years old, and it just went on and on. Ziebart did a good job on that Blazer. All three of his sons learned to drive in it, and it was only sent to the boneyard when the area above the windshield had rusted to the point it was like taking a shower when it rained. He now has a Jeep that he's put a ton of money into. He says he misses the S10's reliablity a lot these days, the Jeep is in the shop a lot.
  • Jeff S Most densely populated areas have emission testing and removing catalytic converters and altering pollution devices will cause your vehicle to fail emission testing which could effect renewing license plates. In less populated areas where emission testing is not done there would probably not be any legal consequences and the converter could either be removed or gutted both without having to buy specific parts for bypassing emissions. Tampering with emission systems would make it harder to resell a vehicle but if you plan on keeping the vehicle and literally running it till the wheels fall off there is not much that can be done if there is no emission testing. I did have a cat removed on a car long before mandatory emission testing and it did get better mpgs and it ran better. Also had a cat gutted on my S-10 which was close to 20 years old which increased performance and efficiency but that was in a state that did not require emission testing just that reformulated gas be sold during the Summer months. I would probably not do it again because after market converters are not that expensive on older S-10s compared to many of the newer vehicles. On newer vehicles it can effect other systems that are related to the operating and the running of the vehicle. A little harder to defeat pollution devices on newer vehicles with all the systems run by microprocessors but if someone wants to do it they can. This law could be addressing the modified diesels that are made into coal rollers just as much as the gasoline powered vehicles with cats. You probably will still be able to buy equipment that would modify the performance of a vehicles as long as the emission equipment is not altered.
  • ToolGuy I wonder if Vin Diesel requires DEF.(Does he have issues with Sulfur in concentrations above 15ppm?)
  • ToolGuy Presented for discussion: https://xroads.virginia.edu/~Hyper2/thoreau/civil.html
  • Kevin Ford can do what it's always done. Offer buyouts to retirement age employees, and transfers to operating facilities to those who aren't retirement age. Plus, the transition to electric isn't going to be a finger snap one time event. It's going to occur over a few model years. What's a more interesting question is: Where will today's youth find jobs in the auto industry given the lower employment levels?
Next