Few auto brands had a better 2016 than Buick. For dealers who stuck with Buick through grim times, the accolades it's racking up and new customers it's attracting have completely changed their business from only a few years ago, says Robert Morris III, chairman of the Buick-GMC National Dealer Council.
Last fall, Buick became the first Detroit 3 brand to rank in the top three on Consumer Reports' vehicle-reliability survey. It also ranked No. 1 among mass-market brands on J.D. Power's 2016 sales-satisfaction study.
Buick and GMC have taken advantage of the industry's shift toward crossovers, SUVs and pickups, with Buick expanding its lineup to include three crossovers of various sizes, and GMC overhauling the Acadia to be smaller, lighter and more agile.
Dealers expect the brands to keep gaining momentum in 2017, with redesigns coming for the Buick Enclave and GMC Terrain. They're also excited about the potential for Buick's upcoming Avenir high-end subbrand, having seen how Denali has increased demand and transaction prices for GMC, said Morris, president of Morris Cadillac-Buick-GMC in North Olmsted, Ohio.
Morris, 47, spoke with Staff Reporter Nick Bunkley about Buick's growing list of awards and the rosy prospects for Buick and GMC in 2017.
Q: How was 2016 for Buick and GMC dealers?
A: 2016 was an exciting year. We launched a number of new products and we continued to grow our sales along the growth plan that Buick and GMC laid out. Overall the year was not without challenges, but we finished pretty strong.
What were those challenges -- just the overall market flattening?
Yes, just dealing with overall market conditions, things like the election and general uncertainty within the market. But overall, as it applied to Buick and GMC, we did very well.
Buick has scored well on some reliability and satisfaction surveys. Are dealers starting to see the effects of that recognition?
Yeah. Things like that create further awareness and interest and gets Buick and GMC on people's radar and on their shopping lists. Very similar to the successful campaign that Buick ran [in 2016] -- "That's not a Buick." Starting with the Super Bowl ad that we ran [last] year. That was a first for Buick. We had never run a Super Bowl ad before. That started the year with excitement and momentum to carry throughout the year.
What problems do Buick and GMC dealers face?
All year long the Essential Brand Elements program was probably the No. 1 item on dealers' minds. Waiting to see what the next generation would look like -- EBE 2.0 that debuted in Q4. Now that that has essentially migrated to an annual program, that's going to be and remain at the forefront of dealers' minds since it's such a huge component of our business model now. Second to that is the Standards for Excellence program. For Buick and GMC, that has evolved into SFE Elite, as we call it, and that's also a critical component to our business model. So that is always at the forefront of our minds, in terms of how it's tracking, how it's being tabulated, how it's being paid out, for 2017.
Is the revised Standards for Excellence program working for dealers?
Overall, yeah. It's extremely lucrative. Like any other stretch objective plan, dealers want to be able to hit it and hit it consistently. Those months that you don't, all of a sudden it tends to generate controversy. But overall, it's extremely positive. It's a substantial improvement over the previous versions of SFE in years past. Overall the dealer body is extremely pleased with it and anxious for it to continue. That's where a lot of the anxiety comes from -- what will it continue to look like and how will it continue to evolve in the future. Because it is so important. Dealers like the sales objective. They like coming to work and pushing for every sale. At least most dealers do.
How has Essential Brand Elements 2.0 been going?
The EBE 2.0 is a huge win for dealers. It was something that the dealer executive board this year spent a lot of time on -- a lot of discussions back and forth with GM leadership and the dealer body was essentially able to maintain and keep the payouts consistent with the past. So we did not go backward in that regard. We continually work to improve the dealer body, and some of the different components within the plan itself are all things designed to make us better, not just hoops to jump through.
Is there any concern that at some point GM may want to pull back on those programs?
You can never speak long term or get too far down the road, but the important thing is that it works for General Motors, obviously, or it wouldn't have lasted this long if it didn't derive the benefit GM wants. I believe GM has unprecedentedly updated their entire dealer network, or 90-some percent of it. So they're definitely happy with those results and it continues to drive the right behavior and updating and modernizing not only the facility but also in terms of how we go to market with things like improved technologies within the showroom and the sales staff and the service lane. It's a win-win for the dealers financially. It's a win for General Motors, because it drives the right behavior. So as long as it continues to win for both parties, I don't see any reason why it would change or go away.
On the product side, Buick's lineup has grown significantly. Are there more products dealers want?
The automobile business is a product-dominated industry. Sometimes we tend to lose sight of that and get caught up in other factors. But at the end of the day, if you have great product and attractive cars that goes a long way toward being successful. In 2016 Buick launched a number of new products, with the new Envision, the midcycle enhancement to the Encore, which has been Buick's best-selling vehicle, and now it's even better with a redesigned exterior and a new interior. We launched the Cascada, which again is designed to change the way people think about Buick. We have the all-new Buick LaCrosse as the flagship sedan. That came out in Q3 -- took that design and modernized it to make it more attractive.
Down the road, you'll continue to see exciting new product that forces people to change the way they think about Buick.
So dealers are making a more successful business out of the lineup than before?
It's more relevant. We now have, as Buick calls it, a three-SUV strategy, with Encore, Envision and Enclave. They are all of a sudden approaching almost 70 percent of our business volume. As the industry overall migrates to SUVs and crossovers, we're now positioned to be right in the middle of it with different sizes, different price points, different treatment levels to have a wide appeal to almost anybody in the marketplace. If you don't have that, if you're a manufacturer that is dominated by sedans, you're going to struggle, because that's not where the marketplace is going now.
How much is that helping dealers given the SUV market right now?
It's been great. GMC is almost the crown jewel, so to speak, of General Motors. It certainly has one of the highest brand values within General Motors. The brand equity in GMC just dominates the segment.
Denali is a tremendous success story. Denali sales account for almost 30 percent of all GMC sales. That's what has led Buick to go in the direction of Avenir -- creating Avenir as a subbrand similar to what Denali has accomplished for GMC. We'll start to see that in 2017.
Are dealers looking forward to Avenir?
We are excited about it. We haven't seen a whole lot of details, but we're definitely excited by the concept. And I've seen some of the initial passes of it and it's exciting. It should work just like Denali did for GMC. It's a great look, it helps modernize it and makes it more premium.
How has the reaction to the smaller Acadia been?
Tremendous. It's done great. Acadia Denali in particular has blown away all the initial forecasts. People love the new size and the way it drives, the fuel efficiency of the available four-cylinder, the look and trim of the Denali. It just has that wide range and wide appeal because it comes in so many different configurations. We're very excited about Terrain, because that's a huge piece of our business. In the leasing markets, it's an attractive entry lease that gets people introduced to GMC. And hopefully as they go through their life they move through GMC's product portfolio, and it all starts with the Terrain.
Has the Envision coming from China been an issue?
None. It's really been no issue. People realize it's a global economy. It's a global marketplace. The Japanese imports have cars that are built here in the United States. General Motors has cars built over the world -- Europe, South Korea, China. It doesn't have the stigma anymore that it may have had. People realize that all of their iPhones are built in China. They're almost built right up the street from the Envision plant. It really has been no issue.
Buick's sales declined in 2015 but increased in 2016 when the rest of GM was down. Why?
The new products have certainly helped. The increased attention and drive toward the Buick SFE Elite plan, which started in the second half of '15, but '16 was the first full calendar year of it. For the dealers who truly participate in that program, it drives business and it drives volume. It's something that they focus on every day. When you have that level of engagement, it can't do anything but drive sales. I put a lot of it on the success of that program as well as the new product and the successful advertising of the "That's not a Buick" campaign.
Buick and GMC have had the same marketing campaigns for a while. Are they still effective?
They have been very effective, and they continue to evolve. GMC with its "Precision" campaign and Buick with "That's not a Buick." They continue to evolve, and in 2017 we'll start to see some of the next generations of the advertising, and I'm excited to see what's next.
When will Buick's marketing no longer have to be about separating itself from the past reputation?
Frankly I think we're there, with the awards that Buick just won. We're getting the recognition that we've worked really hard for. We have the product that differentiates and is nothing like the product we had even three or four years ago in the showroom. I don't know if "rebirth" is the right word, but Buick's rejuvenation is essentially complete, and we're seeing the results of it with the increased sales. That's something that we make a lot more of internally than with the public. In the public's eyes, Buick has already come a long way. We're just a little more sensitive to it.
Are high inventories becoming a concern, and are dealers short in some segments?
I think we have a pretty good balance overall. There's obviously different pockets around the country that have various shortages. Most of the country could use more Sierra production. That's one of the side effects of low fuel costs. The Acadia launch has gone very well. We were able to ramp that up very quickly to where our ground stock is almost where we were with the old generation.
Envisions are coming pretty efficiently considering that they're coming from overseas -- same as Encore. They've made great strides in trying to iron out the peaks and valleys of availability of that product, given the longer transit times.
What more do you hope to accomplish as dealer council chairman?
My priority continues to be things that drive and increase our franchise value. The more that we can increase the franchise value for Buick and GMC dealers, the better off everybody is. That means we're selling more vehicles, we're being profitable. Everything funnels down into franchise value. The way you get there is consistent and solid communication with the leadership, open dialogue about incentives and some of the factory programs like EBE and SFE -- things that dovetail directly into sales and profitability.
Will leasing increase in 2017?
I'm a firm believer that leasing drives volume, and not only drives volume but repeat business and increases retention and loyalty. Because you can sell them a new vehicle every two and a half to three years, as opposed to one every six or seven, and you greatly decrease the risk of defection. I'm a strong proponent of lease pull-ahead campaigns, lease loyalty and aggressive lease payments that attract people to our brands and keep them there.