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

Steph Willems
by Steph Willems

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]

Steph Willems
Steph Willems

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  • 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).

  • Honda1 The FJB Inflation Reduction Act will end up causing more inflation down the road, fact! Go ahead and flame me libbies, get back to me in a few years!
  • Cprescott Fisker is another brand that Heir Yutz has killed.
  • Dwford Every country is allowed to have trade restrictions except the US.
  • 1995 SC Are there any mitigation systems that would have prevented this though? We had a ship hit a bridge in Jacksonville a few years back and it was basically dumb luck it didn't collapse. This looked like a direct hit.
  • Cprescott Oh, well.
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