General Motors (GM) is poised to overtake Toyota as the best-selling automaker in the world, according to Bloomberg. If it succeeds, that will be, at least in part, due to the excellent job it has done in counteracting Buick's AARP image over the past few years. To say that Buick is big in China is an understatement. The brand just hit 3 million in sales since GM introduced it in China a decade ago. But more than a million of those came in just last year.
As a result of the market's importance, China actually has gotten Buick models and technology before the U.S. sees them.I'll reserve comment on whether China, with a command-and-control economy and a looming inflation problem to go along with the white-hot growth numbers, is really more economically powerful than the U.S. But I will discuss why this is both good and somewhat bad for GM.
That may be smart by GM: A February Gallup poll found that even in America, more people rate China as the world's top economic power than pick the USA.
When one brand takes over
GM has four core brands now -- Chevy, Buick, Cadillac, and GMC -- but Buick is by far the Chinese leader. The General builds Buicks in partnership with Shanghai Automotive Industry Inc. (SAIC) -- outside carmakers have to do joint ventures with local firms -- and, if not for the brand's extreme success in China, might have had to kill it in the U.S.
The brand used to make up a large portion of GM's North American sales, but an aging customer base and some uninspiring vehicles saw Buick decline to point where then GM product czar Bob Lutz labeled Buick and stablemate Pontiac "damaged."
Buick has always led GM's China business, going back to pre-communist-revolutionary days when it was the emperors ride of choice. Now of course it seems to making up most of GM's China business. This is great for now, but GM would probably like to establish some other brands, especially Chevy.
Buick, and everything else
If you translated the million plus Buicks GM sold in China in 2010 into U.S. market share, the brand would have captured 10 percent of buyers -- with one brand! That's better than Chrysler and Nissan.
In China, that sales levels comes in at slightly under 10 percent, in a market that did around 13 million in sales. However, close to 10 million of that was sedans -- and Buick has plenty of sedans. By any analysis, these are impressive numbers.
Leveraging the brand, just not the usual way
Given the way that GM has managed its brands in the past, Buick's status is China is unusual. The traditional GM point-of-entry has been Chevy. Buick functions as "mid-luxury," while Cadillac is top-of-the-heap.
GM has had some success growing Cadillac in China. But as the market rapidly expands -- it could be 40 million by 2020 -- it's going to be increasingly important to get Chinese customers to buy a Chevy rather than creating smaller and cheaper Buicks for them to purchase.
Of all the major Western automakers, however, GM has the strongest presence in the Middle Kingdom. It would appear that despite the ups and downs of dealing with the U.S. market, in China it would hard-pressed to screw up.