Your grandfather's Buick is hot in China, but maybe not for long
One of the hottest automotive brands in China is the one your grandparents may have driven: Buick.
Buick's (GM) success in China remains what many industry observers say is key to the survival of the brand, which still seems to be struggling on its home turf in the U.S. — just a decade after it was saved from the chopping block during the financial crisis.
But a combination of Chinese regulations, increasing competition from Asian automakers and rising trade tensions with the U.S. have some wondering whether Buick's luck in China — the world's largest auto market — will soon run out.
About 80 percent of Buick's global sales last year were in China, and nearly a third of GM's sales in the country came from that brand alone. About 64 percent of Buick's sales in China come from vehicles it doesn't sell in the U.S., such as the Excelle sedan, the GL6 and GL8 minivans, the Velite 5 hybrid and the Verano compact car.
There really are a variety of reasons for this, say industry experts. First the Buick name is famous in China. It was the vehicle of choice for many famous Chinese figures in the middle of the 20th century, including some of the country's best-known political leaders.
When GM wanted to begin producing vehicles in the China in the 1990s, the Buick name was the one that most resonated with consumers and the country's decision-makers. GM has also had a fruitful relationship with its local manufacturing partner, Shanghai Automotive Industry Corp.
That all gives the brand a reputation in China that doesn't exist in the United States.
"Buick has a reputation in China as an exclusive, almost elite reputation," said Michael Dunne, CEO of ZoZo Go, a firm that advises automakers on doing business in China. The average age of a Buick driver in China is 32 or 33. "In the U.S., it is something like twice that," he said. "They did a great job of positioning of positioning Buick as a premium brand."
The Chinese auto market is large, selling roughly 28 million vehicles last year compared with about 17 million in the U.S. — but relatively young. GM and other foreign automakers didn't started entering the market in the 1990s.
However, for members of certain generations in the United States, Buicks are among those American brands that lacked the styling, value and quality of competitors coming out of Europe and Japan.
"Our data here in the U.S. says that Buick has been doing a really good job on quality and has been for a number of years," Betts said. "All of our quality metrics say they make really good cars. They also have really good service. But at the same time, it is difficult for them to conquest these customers that have an opinion based on older data."
The age of the average U.S. buyer is also an issue for the brand, something Buick has been trying to address. While many of those buyers are loyal, Betts said, there simply aren't enough of them for the brand to grow. The vehicles are also priced a bit higher than other brands with the same name power.
"When they come back to the used market, that hurts their residual value," he said.