Why do some automakers sell cars under multiple brand names? It happened by accident at first, but it famously became a strategy in the 1920s. And that strategy fell apart in 2023.
This year, General Motors’ mainstream brand sold cars for higher prices than one of its luxury brands. In the third quarter, the average Chevrolet buyer spent $48,074 on their new car. The average Buick buyer spent $36,590.
The numbers come from Kelley Blue Book parent company Cox Automotive’s third quarter sales reports, pointing to some strategy confusion at America’s largest automaker.
The ‘Ladder of Success’
General Motors pioneered the brand structure in the 1920s under the leadership of famed auto executive Alfred P. Sloan. GM had, by mergers, assembled a portfolio of brands. Initially, automotive makes like Oldsmobile and Pontiac were each regionally famous. As the industry grew national, GM needed to either find a rationale for selling cars under many brands or start shuttering brands.
Sloan responded with the “ladder of success.” Chevrolet, he argued, built reliable cars at affordable prices for everyone. GM would offer them fancier and fancier cars as workers grew in their careers and their salaries increased. Pontiac offered a bit more performance and panache than Chevrolet; you’d buy one when you got a raise.
Buick was for middle management, which came with a few more creature comforts. Cadillac was the pinnacle of success, the “standard of the world.”
The system has broken down a bit over the years — GM notably shuttered Pontiac and Oldsmobile in the early 2000s. Today, the company still operates four brands: Chevrolet, GMC, Buick, and Cadillac.
Rungs Out of Order
In the third quarter, however, the ladder shuffled. The average Chevrolet buyer outspent the average Buick buyer by nearly a third. That’s mostly the result of one vehicle.
Buick’s lineup today is small, and third-quarter sales were dominated by its Encore GX subcompact SUV. The average Encore GX buyer spent just $29,725 last quarter.
Chevrolet has several more affordable cars, including the sub-$25,000 Trax SUV. But its volume leader is the Silverado pickup, which sold for an average of $61,033 last quarter.
So, the switch isn’t necessarily a problem for GM. But it’s worth noting that Buick’s lineup has dwindled to just four models for 2024 – the Enclave, Encore GX, Envision, and the all-new Envista. All but the Enclave start under $40,000 — hardly the entry-level luxury of Sloan’s vision.
The Trax almost outsold the Buick brand all by itself last quarter. It did outsell the Cadillac brand, though that’s arguably less of a problem as the highest-end luxury brand on a ladder of success should be exclusive.
But, it raises questions about the identity of the Buick brand.
An Identity Problem for Buick or a New Normal?
The heart of a ladder of success approach to sales is shared components. Many Buick models share most parts with Chevrolet models. The Buick version of the car still sold for more money than the Chevrolet version in Q3. The Enclave, for instance, sold for an average price of $52,294, while its Chevy Traverse platform-mate sold for $44,657.
GM could introduce a more robust Buick lineup to try to switch their positions. But we’ve seen no evidence of plans for that. It may simply be time to accept it: Buick is the heartbeat of America. Buick buyers hope someday to be able to afford a Chevrolet.
