Buick dealers want an Encore
Orders for compact crossover more than quadruple GM's forecast
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DETROIT -- When General Motors opened the order bank this fall for the Buick Encore compact crossover, GM had expected an initial allocation of about 2,000 units. Dealers requested 9,000.
The brisk response reflects Buick dealers' pent-up demand for a crossover smaller than the full-sized Enclave, which since its 2007 debut has anchored Buick's lineup.
"This gives us a rock-solid five-passenger crossover that really anticipates what customers want right now," says Mark Whibbs, a Buick-GMC dealer in Pensacola, Fla., citing the Encore's styling, fuel economy and versatility. So far, he has ordered nine.
But gauging future demand for the Encore, which will hit showrooms in January, could be tricky. Not only does its petite size make it an unusual vehicle for Buick, it's also different from anything on sale in the United States.
The Encore is built on the same platform as the Chevrolet Sonic subcompact and priced starting in the mid-$20,000s, packaged with optional premium touches such as a heated steering wheel. Market watchers cite several imperfect comparisons: the Mini Countryman or Nissan Juke (cheaper); the BMW X1 (pricier); the Volkswagen Tiguan (bigger).
"GM is putting something in the market that doesn't really exist. There is no tiny luxury crossover like this," says Aaron Bragman, a product analyst at IHS Automotive.
Bragman says the Encore, developed and built in Korea, was conceived more for China, Europe and other overseas markets than for the United States. It hit showrooms in Europe in October as the Opel Mokka and goes on sale in China in December as the Encore.
"It's going to be something of an experiment for GM in terms of how it does in the U.S. market," Bragman says.
Buick has succeeded with new entrants into U.S. "white space," says Brian Sweeney, Buick-GMC's vice president of U.S. sales and service.
Sweeney cites the Verano, launched a year ago as a premium compact sedan priced starting in the mid-$20,000s -- higher than mass-market compacts but below luxury sedans. Through October, GM sold 32,648 Veranos, on pace to exceed the 2012 forecast of low-30,000s set by outside forecasting firms.
Dealers' brisk early demand for the Encore could pose an inventory crunch. GM is shipping the vehicles from its Bupyeong, Korea, plant, one of its largest factories. The Encore and Mokka, the Chevrolet Aveo, Trax and Malibu and other vehicles are assembled there.
"I think we're going to sell everything that we can build," Sweeney says. "We're looking for ways" to boost production for the United States.
Buick dealers hope healthy demand for the Encore will help Buick bounce back next year. Through October, Buick sales slipped 1 percent, to 150,646 units, while the U.S. market was up 14 percent. A 37 percent drop in sales of the mid-sized Regal has hurt overall sales.
Tim Fitzgerald, general sales manager at Bowser Buick-GMC in Pleasant Hills, Pa., near Pittsburgh, has ordered more than 20 Encores. He thinks the vehicle will appeal particularly to baby boomers looking to downsize but keep the premium touches.
"Downsizing seems to be a real theme today," Fitzgerald says. "This vehicle is going to be ideal."
You can reach Mike Colias at mcolias@crain.com.
