Buick tweaks its image to appeal to more drivers

— -- What happened to Buick?

Last year, rising sales star in GM's U.S. stable. This year, anchor.

The answer is complex, involving changes in the lineup, an image overhaul, shifts in selling philosophy and a growing global focus on China, where more than three-quarters of Buicks are sold. But for whatever reasons, Buick's U.S. sales continue to lag behind the overall new-vehicle market.

That's making the brand a hard test of parent General Motors' resolve to keep its vows. To boost profitability, GM has promised that its individual brands will continue to reduce deeply discounted fleet sales, trim profit-killing incentives and attract more import-loving and younger buyers.

GM is trying, through what it hopes will be growing sales of better and better cars and trucks, to banish its image as a bloated, inefficient automaker still alive only because of billions of dollars in taxpayer welfare in its government-run 2009 bankruptcy reorganization. Now that GM's down to just four brands, each one needs to perform.

Chevrolet might be GM's signature mainstream and Cadillac its global prestige icon, but Buick — sitting between those bookends and lacking the image of either — could be the truest test of GM's will to survive and thrive.

Buick says the sales slump is temporary, a hiccup due to a product gap between the end of the road for the big Lucerne sedan last June and the arrival of the new, small Verano sedan in showrooms in December.

Also, sales fell as Buick, per GM's overall strategy, backed away from low-profit sales to rental fleets in favor of fewer but richer sales to individual buyers, the so-called retail sales that automakers often emphasize in their monthly reports. Buick says its fleet sales now are 11% of total, down from 19% a year ago.

Cutting back on fleet sales also makes a brand more appealing, economically and emotionally. Your resale value is boosted because the used-car market isn't periodically flooded when rental-car fleets turn over cars. And your well-traveled neighbors are less likely to be dismissive of your Buick if it's not the same car they rented at the airport in Dallas or Milwaukee.

January through May, Buick sales are down 9.4% in a market up 13.4%, tally master Autodata shows. Sales in May were up a strong 19.2% from a year earlier, though they still lagged behind the month's 25.7% rise in overall new-vehicle sales.

Looking ahead, "All the indicators are good," says Tony DiSalle, vice president in charge of marketing for Buick. "We're back to a four-vehicle portfolio: LaCrosse, Regal, Verano and the Enclave crossover."

Buick sales this year have jumped an average 46% at his Buick dealerships in Atlanta and Roswell, Ga., and Nashville, says Mike Bowsher, president of Carl Black automotive. "I think Buick is on the right track. We just need to keep pounding away, one customer at a time," Bowsher says.

Late this year, a very small Encore crossover SUV joins the line. DiSalle says shoppers should be wowed by the subcompact's unusual mix of utility, nimbleness, fuel economy and luxury.

Analysts have their own views of Buick's brand renovation and prospects. "Buick is a brand in major transition, and it isn't going to be immediate. It will take time," says Ed Kim, vice president of industry analysis at consultant AutoPacific.

He predicts inconsistent sales while Buick continues working to shed its image as "a brand for older customers" and takes on the look and feel of "something much, much younger and more image-conscious."

If there's still an image of Buick as a dowdy, older-people's brand, it's not among younger buyers, Bowsher says. "People under 30, it's OK. The stigma is in the middle (age) group. I'm selling 20-year-olds Buicks right and left," he says.

Here are elements in Buick's makeover:

•Small vehicles, illustrated by the Encore.

DiSalle says that's not an overall brand aim. "I wouldn't suggest that Buick is about smaller cars."

Yet its most important new models are down-size, especially by Buick's traditional big-car standards. Encore is based on a subcompact car. Verano, loosely speaking, is Buick's take on the Chevy Cruze compact. Regal is midsize.

"It might be confusing to consumers," many of whom still regard Buick as a traditional, big-car brand, Kim says.

Particularly the coming Encore, which has been previewed on the auto-show circuit. Encore "is really, really small; based on the (Chevrolet) Sonic. It'll be incumbent on Buick to educate consumers on why this is a good idea," Kim says.

•LaCrosse, the only traditional Buick.

Sales of the full-size sedan are up, the average transaction price is rising, the version of LaCrosse with eAssist mild hybrid system is popular in import-loving California — what's not to like, DiSalle wonders.

How about: It took an average 72 days to move one off the lot last month, vs. an industry new-car average 53 days, says Ivan Drury, industry analyst at car-shopping site Edmunds.com.

And its biggest rivals seem to be other Buicks, eroding chances of stealing sales from non-GM brands. Shoppers who considered LaCrosse also seriously looked at Regal or Verano a combined average 26% of the time in March, April and May, Edmunds.com data show. Another 5% weighed LaCrosse against the leftover Lucernes still on lots.

Meanwhile, Toyota's Camry and Avalon combined — often referred to as "Japanese Buicks" — were considered by LaCrosse shoppers only 14.6% of the time, Edmund.com data show.

When people do cross-shop LaCrosse against Camry, the Toyota is "a formidable opponent," Drury says: Camry's price is thousands of dollars less, and its fuel economy is within 1 mpg of the LaCrosse eAssist mild hybrid.

Worse, Toyota shoppers generally don't see LaCrosse as an alternative: Fewer than 2% of Camry shoppers also considered it and an average 9% of Avalon shoppers did, Edmunds.com says.

Never mind Toyotas. Buick's challenging Audis, BMWs and the like, in Bowsher's view: "There's nothing but high-line imports in my (customer) parking lot. We're getting a swing at a brand new customer." The trick, he says, isn't so much attracting them, but providing the service and treatment they expect: "After we get them sold, we need to step up" the level of treatment.

•China, Europe.

Good news, and less-good news.

By using shared basics to create cars for those markets as well as North America — LaCrosse's interior was done in China; Regal's almost entirely a German Opel Insignia — costs are spread across more units.

But is each resulting car truly suited for each market? That's been the challenge of "world car" design: common enough to cut costs, specific enough to suit different markets and buyers.

Buick has "the challenge of not only meeting the expectations of a new type of buyer here in the U.S., but also pleasing" customers in other countries, especially China, where more than three out of four Buicks were sold last year.

In fact, the U.S. could be considered a small-time market for Buick that's getting smaller. America accounted for just 18.4% of total Buick sales January through May, down from 21.2% in 2011 and well off the 34.7% that the U.S. generated in 2007.

The two markets don't share all models. For instance, China gets what's called a Park Avenue that's based on a GM Australia Holden design. Nothing like that is sold in the U.S.

The China impact: Buicks there often are chauffeur-driven, so back seats are lavish. Fronts are for the hired help, so might not get as much fussing. Buick has to monitor that carefully for U.S.-market cars such as LaCrosse mainly designed in China.

The European impact: Euro cars tend to be small, a reaction to $8 gasoline. As a result the Verano, sold in Europe as the Opel Astra, is "a little tight in the rear space," Kim says. But enlarging it for U.S. tastes would wreck the economies of scale Buick gets from basing the car so much on an Opel-size platform.

•"Experience Buick" marketing.

This current marketing effort promotes inexpensive, two-year leases to tempt wary customers who can try a Buick without feeling locked in.

Bowsher says that's been the main driver of his sales jumps.

DiSalle says dealers also have been pushed to raise the level of customer service, so when newcomers walk in to try the short-term lease, they'll be pleased by the treatment they get.

But such consumer coddling is almost the price of entry nowadays, not a salient. The real question is whether the short-term lease will be just a cheap date, ending with the universal lie, "I'll call you." Or will it be the flirtation that turns into a lifelong affair, with the smitten signing up for Buick after Buick after Buick?

"What our retention rate will be, we'll see. I'm not going to put a number on it," DiSalle says.

Soft patch aside, Buick points out that it is outselling premium-brand rivals such as Acura, Audi, Lincoln, Infiniti. When the little Encore arrives late this year, "we'll have a terrific product portfolio," DiSalle says. "A game-changer from an image standpoint."