STEALTH SUCCESS

Low-profile GMC flying high

2015 GMC Yukon Denali
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As General Motors tries to revitalize the images of Chevrolet, Buick and Cadillac, executives might want to take a page from the playbook of their lowest-profile brand: GMC.

The truck brand has emerged as GM's healthiest since the automaker's exit from bankruptcy five years ago. GMC has outgained the bread-and-butter Chevy brand in market share since 2009, with a fraction of the marketing budget. Its revitalized lineup is commanding the biggest jumps in transaction prices of any GM brand. GMC's high-end Denali trim level has become a juggernaut while cultivating a loyal following among affluent, do-it-yourself types, outselling entire brands such as Lincoln, Jaguar and Land Rover.

GMC, derided a decade ago as a collection of rebadged Chevys, is carving a niche as a premium truck brand - witness the customers lining up to pay $70,000 for the redesigned 2015 Yukon XL Denali. Last month, Kelley Blue Book named GMC the "most refined" brand among nonluxury marques. It has forged a clear brand identity through its "Professional Grade" marketing campaign, in place since 1998, during which time its corporate sibling brands have cycled through many advertising themes.

"We think of GMC as a niche brand for a very specific consumer mindset," says Roger McCormack, GMC marketing director. "But it's a 450,000-unit niche of profitable truck business."

For much of its 102-year history, GMC has padded GM's bottom line by selling trucks built on the same platforms as Chevrolets but priced higher. Until the early 1970s, the higher prices were justified by better powertrains and features not found in the Chevys, says John Wolkonowicz, an independent analyst and automotive historian in Boston.

From the 1970s on, that distinction blurred amid GM's cost-conscious culture, as GMC became essentially a way for GM's non-Chevy dealers to sell trucks, even GM executives concede. As recently as 1999, GMC was marketing its long-wheelbase SUV as a Suburban, not even trying to separate the vehicle from the Chevy Suburban. GMC adopted the Yukon XL nameplate for the 2000 model year.

"GMC has really become the cooler truck for people who care about those extra touches and features."
Sam Slaughter
Sellers Buick-GMC

But GMC's vehicle designs have been diverging from Chevy's since the mid-2000s, Wolkonowicz says. That was punctuated by the introduction of the GMC Acadia large crossover in late 2006 and the Terrain compact crossover in 2009, which differed sharply from their Chevy counterparts, the Traverse and Equinox.

Since 2011, GMC customers have rated exterior styling as their No. 1 or 2 reason for purchase, McCormack says. The chiseled, industrial-looking designs of the 2014 Sierra full-sized pickup that debuted last year and the 2015 Canyon mid-sized pickup due in the fall represent stark departures from their Chevy counterparts.

"The people who buy GMCs are convinced they're getting something special, even though there isn't much difference from the Chevy beyond styling," Wolkonowicz says.

Denali drives growth


GMC's latest entries have climbed so far up the premium ladder that now the brand has to worry less about overlapping with Chevy than bumping into Cadillac. Helen Emsley, executive director of global GMC design, encountered that problem when she lobbied to put real wood interior trim into the '15 Yukon and Yukon XL Denali, launched in February.

"Everybody told me, 'Oh you can't do that. That's an Escalade thing,'" says Emsley, a longtime Yukon XL Denali owner. "I said, 'No. These owners expect craftsmanship, real materials, a hand-stitched look.' We fought for it, and we got it."

Denali - a loaded trim level that often includes a more powerful engine, such as the 6.2-liter V-8 on the Yukon and Yukon XL vs. a 5.3-liter - has driven GMC's sales growth. GM says it accounted for about 20 percent of GMC's 450,901 unit sales last year, while elevating some models into luxury strata.

The demographics of a Yukon XL Denali buyer suggest that the upscale line is pulling in a different breed of customer. Average household income: $188,000, vs. $134,000 for owners of non-Denali Yukons, GM says. Average age: 46, the youngest of any GMC model. Average transaction price: about $68,000.

Those figures suggest that there isn't much keeping those buyers from stepping up to an Escalade, which starts at $72,690, including shipping, for the redesigned 2015 model that debuted last month.

But that belies the low-key psychographic of the GMC buyer.

"They don't want to be seen as flashy," Emsley says.

Price producer
GMC tops GM's increases in average transaction prices.
 20092014*Change
GMC$35,915$40,09912%
Chevrolet$28,514$31,30110%
Buick$34,252$33,798–1%
Cadillac$50,307$48,177–4%
Industry average$28,196$31,60712%
* Jan.-April Source: TrueCar

GMC's McCormack: "It's a 450,000-unit niche of profitable truck business."

'Under the radar'


That understated approach has worked in GMC's favor over the years, says IHS Automotive analyst Stephanie Brinley. GMC "has enjoyed natural, organic growth" with relatively little marketing support, she says, allowing GM to funnel its marketing dollars to other brands.

"In the context of high-dollar SUVs, GMC flies under the radar, and so do their buyers," Brinley says. The devoted following of Denali buyers in particular leads to plenty of word-of-mouth advertising, she says. A big advertising push could be a turnoff.

That could be why no GMC marketer has dared mess with the Professional Grade theme, which has been around in one iteration or another since 1998. At the time, GMC took its inspiration from consumer products known to have a following among professionals for their capability and high quality, such as DeWalt tools and Calphalon cookware, says Dave Koziara, GMC's marketing operations manager.

Early advertising featured GM engineers executing then-cutting edge technology, such as full-time all-wheel-drive on the 2001 Yukon XL Denali. GMC has used various tag lines under the Professional Grade theme to crystallize its meaning for consumers over the years, such as, "Do one thing and do it well" and "We build everything to a higher standard."

GMC targets niche media that attract the architect and contractor crowd. GMC has been a sponsor of the "This Old House" TV series since 2002, Koziara says. Other examples include HGTV's "Dream Home" and "Yard Crashers" and National Geographic Channel's "Building Wild."

The shows spotlight "professionals who are exactly who we want to exemplify and attract with our trucks," Koziara says. "They measure twice and cut once."

Clear positioning


Koziara says the staying power of the Professional Grade theme has been a key to GMC's clear brand positioning despite its relatively modest marketing budget.

GMC spent about $244 million on direct advertising last year, not including online videos, mobile ads and some other forms of digital advertising, according to Kantar Media, which supplied limited 2013 brand spending data. Although GMC is the second-largest GM brand by sales volume, it was outspent by Chevy ($1 billion), Cadillac ($279 million) and Buick ($263 million).

Sam Slaughter, owner of Sellers Buick-GMC in suburban Detroit, says he realized the Denali line's cachet a few years ago, when it was added to the Acadia lineup as a higher trim level but without the more powerful engine. Customers snapped it up anyway.

"GMC has really become the cooler truck for people who care about those extra touches and features," Slaughter says. "It's launched us into a premium segment in a way that we never were before."

Dealers say Buick and GMC complement each other in showrooms. But there is overlap between the Acadia and Buick Enclave large crossovers, which share underpinnings. Edmunds.com data from last month show that 13 percent of Enclave shoppers also kicked the tires on an Acadia - the second-highest rate behind the Terrain.

Stand-alone entry?


GM executives know they're onto something with GMC. Product chief Mark Reuss called GMC's brand image "astonishingly strong" and hinted at a stand-alone entry that wouldn't share its underpinnings with a Chevy. Design chief Ed Welburn said this year that GMC's design studio is the company's busiest, including the development of several concept vehicles.

It's unlikely that GMC will veer from its focus on pickups, SUVs and crossovers - Welburn said the vehicles under development are "all trucks." This fall's Canyon launch will try to re-whet the market's appetite for smaller pickups. The crossovers that have helped draw more women to GMC are getting long in the tooth. A Terrain redesign is expected in 2015; an Acadia redesign likely is at least two years off.

It hasn't taken long for GMC's new sales chief, Duncan Aldred, to size up the brand's potential. Aldred, who became vice president of Buick-GMC in March after running GM's Vauxhall Motors in the United Kingdom, says he sees parallels between the Denali line and the earlier days of Audi's Quattro line. He thinks there is room to keep moving GMC up the premium scale.

"The consumer sentiment is there. Denali has become iconic," he says. "We can take this brand wherever we're brave enough to take it."

You can reach Mike Colias at mcolias@crain.com.


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