GM's solution to slow Regal sales: Raise the price to $29,900

[rimtrim]

http://www.autoblog.com/2012/08/30/2...standard-eass/

If this strategy makes sense to you, send your resume to Dan Akerson, because you're both apparently abusing the same substances. This stuff only makes sense in the context of being a strategy to drive Buick sales so low that they have an excuse to cancel the brand. If this car were a Chrysler 200 competitor (luxury looks, Camry price) it would be a smash hit. The body is different enough from the new Malibu that nobody except a few pompous Truth About Cars writers would accuse them of cookie-cutter rebadging if they took that approach. Instead, they seem to want to cram the Regal into a niche so small that they drive monthly sales down into the dozens.

-Andrew L

[DIAF]

Anecdote that isn't necessarily applicable, but maybe is.

I recently sold a bicycle on Craigslist, listed for $500 which was more than fair. I would have taken $450.

I got a lot of bites, but a lot more lowballing. Nobody serious stepped up to buy.

I relisted it at $550, still willing to take $450.

I sold it a couple of days later for $500.

[Mike!]

Losing sales to one of your other models can be looked at as a good problem to have.

With the Verano covering the low end so effectively, why not find a niche for the Regal?

[whitejeep1989]

http://www.autoblog.com/2012/08/30/2...standard-eass/

If this strategy makes sense to you, send your resume to Dan Akerson, because you're both apparently abusing the same substances. This stuff only makes sense in the context of being a strategy to drive Buick sales so low that they have an excuse to cancel the brand. If this car were a Chrysler 200 competitor (luxury looks, Camry price) it would be a smash hit. The body is different enough from the new Malibu that nobody except a few pompous Truth About Cars writers would accuse them of cookie-cutter rebadging if they took that approach. Instead, they seem to want to cram the Regal into a niche so small that they drive monthly sales down into the dozens.

-Andrew L

A $2K price hike? What's the big deal? The LaCrosse uses the eAssist package as it's base engine and it's sales have been unaffected. The Regal will be moving up in price to allow room for the Verano, which is a good idea, IMO. The Regal is no longer Buick's entry level sedan.

In the next go around, Buick needs to find a better spread between its 3 sedans or eliminate the Regal in the middle. This will clear up some of the price point clutter. It would probably help if the LaCrosse became slightly more expensive, bigger and RWD, or if the Regal became a sport-oriented RWD sedan.

[rynodyno312]

That's a pretty misleading thread title. They didn't just raise the price, they also added the $2000 e-assist option as standard equipment. So yes, the price did go up, but so did the feature content and mpg.

[Señor Peligro]

I just want to make sure I've got this straight....it's still essentially in the TSX price class, right?

[Lwize]

The price increase just means larger incentives to sell them.

[PlatinumGLS]

I don't see a problem with this. Buick is dropping the base 4-cylinder model and replacing it with eAssist. Did anyone really think the eAssist was going to be free? Buick made a similar move with the LaCrosse before and Lincoln as well with the MKZ.

It now positions the Regal up higher above the Verano.

[HerrGolf]

Is the e-Assist hardware somehow cheaper than the turbo engine's componentry? It's a pretty uncompetitive system and it makes far more sense to make the Regal turbo only for the price increase.

[GTRaavv]

In the next go around, Buick needs to find a better spread between its 3 sedans or eliminate the Regal in the middle. This will clear up some of the price point clutter. It would probably help if the LaCrosse became slightly more expensive, bigger and RWD, or if the Regal became a sport-oriented RWD sedan.

I don't know if either needs to switch to RWD, but certainly a bigger size disparity and/or price/feature disparity needs to occur.

But at the end of the day, Regal sales be damned, Buick is in a much better position sales wise then it was 3 years ago. The LaCrosse debuted selling for under $27,000 and now it is selling in similar quantities starting at $30,000. It is outselling what the Lucerne used to sell at the Lucerne's old pricepoint without huge rental fleet discounts. The Verano is shaping up to be a big hit. The Regal provides good brand image even if it doesn't really have a place in the current line-up.

[jay3737]

misleading thread title is misleading!

[rimtrim]

misleading thread title is misleading!

I don't think it's misleading at all. Regardless of features, price matters. If you take a standard FWD midsize sedan and price it out of the market, you're going to have a problem, especially when competitors have similar MPG without the need for a hybrid system.

For me, bottom line is this: I'm an old-school GM guy, partially I'm nostalgic for the day when Centurys were as common as Camrys, and I'm frustrated that GM doesn't want to make Buick a volume brand again. I would be willing to forgive them if their current strategy appeared to be working. But looking at the numbers each month, it doesn't appear to be consistently working. Each time they add a new model, it just grabs sales from another model, instead of increasing the size of the pie. It just reminds me so much of Oldsmobile circa 1999.

-Andrew L

[Minority5]

I don't think it's misleading at all. Regardless of features, price matters. If you take a standard FWD midsize sedan and price it out of the market, you're going to have a problem, especially when competitors have similar MPG without the need for a hybrid system.

For me, bottom line is this: I'm an old-school GM guy, partially I'm nostalgic for the day when Centurys were as common as Camrys, and I'm frustrated that GM doesn't want to make Buick a volume brand again. I would be willing to forgive them if their current strategy appeared to be working. But looking at the numbers each month, it doesn't appear to be consistently working. Each time they add a new model, it just grabs sales from another model, instead of increasing the size of the pie. It just reminds me so much of Oldsmobile circa 1999.

-Andrew L

While your issue is understandable, I think there are a LOT of factors that aren't acknowledged here. Buick will never be a Toyota-type volume marque, and frankly, GM wouldn't want them too.

[tonycd]

So they really didn't raise the price at all; they just deleted the former base model.

Yes?

[dunhamjr]

while they did raise the price.

they didnt JUST raise the price. the put in tech that significantly improves FE.

Still, Buick hopes that buyers will be drawn in by the improvement in fuel economy. While last year's base Regal returned EPA fuel economy numbers of 19 miles per gallon city and 31 highway, the standard eAssist four returns 25/36. Scroll down for the full press release.

going from 19/31 to 25/36 in a Regal is a HUGE improvement.

should they have tried to do it without jacking up the price? IMO, no. more features, better FE, mre costs on their end. price needed to go up.

should e-assist be standard? nope.

[ChiTownA34DR]

We don't sell a lot of "base" Regals anyways. The only trim moving out the door right now is the turbo and GS models.

Base is more of a rental fleet vehicle.

The Verano is the best deal in the Buick line right now anyways. $190 zero down lease for 24 months. Can't keep enough "base" models on the lot.

GM knows what it is doing.

[warren_s]

I don't think it's misleading at all. Regardless of features, price matters. If you take a standard FWD midsize sedan and price it out of the market, you're going to have a problem, especially when competitors have similar MPG without the need for a hybrid system.

eAssist isn't a full-fledged hybrid system like you see on competitve cars like the Fusion Hybrid. It's unable to motivate the car forward by itself, for instance... it's just a different way of doing an alternator. It provides a little bit of extra power (15hp / 79 tq) while accelerating, recharges itself through regenerative braking, and has a decent start/stop mechanism so that the car uses no gas while stopped. That's it. The battery is a lot smaller than what you see on full hybrid setups, so it's lighter and the major wear item doesn't cost so much to replace.

The standard calculation people make with cost recovery is that the $2,000 additional cost pays itself off after 45,000 miles of normal driving. Most cars last a lot longer than that these days, so it's pretty much a no-brainer if you don't suffer from short-sightedness.

[curvedinfinity]

We don't sell a lot of "base" Regals anyways. The only trim moving out the door right now is the turbo and GS models.

Base is more of a rental fleet vehicle.

The Verano is the best deal in the Buick line right now anyways. $190 zero down lease for 24 months. Can't keep enough "base" models on the lot.

GM knows what it is doing.

interesting...

[rimtrim]

The standard calculation people make with cost recovery is that the $2,000 additional cost pays itself off after 45,000 miles of normal driving. Most cars last a lot longer than that these days, so it's pretty much a no-brainer if you don't suffer from short-sightedness.

Well, that would explain why the 2013 Malibu Eco has been such a smash hit. Wait, never mind that.

The problem with eAssist is two things: (1) Competing cars get similar mileage without a hybrid system and (2) Price matters. By your logic, Toyota should cancel all models of the Camry except the Hybrid XLE, because it has such great features and mileage, why would anybody want anything else?

-Andrew L

[afrost]

$190 zero down lease for 24 months seems really good for a new reliable car.....it's so NOT my taste though that I couldn't do it

[rimtrim]

The Verano is the best deal in the Buick line right now anyways. $190 zero down lease for 24 months. Can't keep enough "base" models on the lot.

The great lease deals are an interesting phenomenon. I think it's an indication that the automakers are expecting used-car prices to stay high for the next few years. They're basically giving these leases away because they expect really high residuals when they come off lease. If they're wrong about that, they're going to take a bath on all these lease returns. But I think they're probably right. A big drop in used-car prices would require a big boost in new-car sales to take the pressure off the used market, and I don't see that in the cards soon.

-Andrew L

[warren_s]

Well, that would explain why the 2013 Malibu Eco has been such a smash hit. Wait, never mind that.

This has largely been because GM dealerships have been working through inventories of 2012s. GM has said that August will be the first month where 2013s should outsell 2012s.

The problem with eAssist is two things: (1) Competing cars get similar mileage without a hybrid system

Yes, they use other techniques like high-pressure turbos. The Malibu Eco does not have a turbo.

and (2) Price matters.

Didn't I just tell you that the $2,000 extra cost pays itself off after 45,000 miles, and then returns cost savings for the rest of the car's lifetime?

Also, this is a $30,000 entry-level luxury car. People for whom "price matters" are not spending this much on a car... they'll be off buying $16,000 Fiestas instead.

(or maybe not, given how poorly the Fiesta is selling... so much for Muallay being a business genius, huh?)

By your logic, Toyota should cancel all models of the Camry except the Hybrid XLE, because it has such great features and mileage, why would anybody want anything else?

Huh?

That's some pretty dumb sh-t you just said there. Knock it off.

I'm not presenting you with "my logic". What I'm telling you is that eAssist is not a full hybrid system; it's much closer to a traditional gas engine setup than it is to full hybrid systems like in a Toyota. The hint is right there in the name: eAssist. E. ASSIST. The Electric motor assists the gas one. It does not replace it! It's not at all like a Prius where the electric motor can move the car on its own.

You really ought to know this already. This is old news.

[Nourdmrolnmt]

when you show me the data you based your reasoning that this is a bad move, i'll accept your rant.

until then, i will believe that GM has the data.

if we sell x number of cars with price of xxxx or more, we make more profit than xx cars with price of xxx.

They also have probably discovered that the average transaction price of the Regal is substantially higher than that of the base model, allowing them to bump while adding 'tech' (aka fancy and cheap).

[Minority5]

We don't sell a lot of "base" Regals anyways. The only trim moving out the door right now is the turbo and GS models.

Yes.

[rimtrim]

This has largely been because GM dealerships have been working through inventories of 2012s. GM has said that August will be the first month where 2013s should outsell 2012s.

Yes, but those 2013s will mostly NOT be the eAssist model, they'll be the regular 2.5 model. The eAssist is still a flop.

Yes, they use other techniques like high-pressure turbos. The Malibu Eco does not have a turbo.

The Altima beats the Malibu eAssist with no turbo and no direct injection. The 2.5 non-hybrid Camry comes very close, also with no turbo or DI. Get your facts straight. You could argue that the eAssist may get better real-world mileage, but the window sticker numbers are what sells cars.

Didn't I just tell you that the $2,000 extra cost pays itself off after 45,000 miles, and then returns cost savings for the rest of the car's lifetime?

Or you can buy one of the many competitors that DON'T charge you $2K extra for good mileage. If the base Malibu got 25/35 and the eAssist was at like 29/39, it would make more sense. But it isn't, and it doesn't. It's a crutch for the fact that the new 2.5 doesn't get the mileage it should.

Also, this is a $30,000 entry-level luxury car. People for whom "price matters" are not spending this much on a car... they'll be off buying $16,000 Fiestas instead.

Yeah, it's a $30K luxury car NOW that they slapped a $30K price tag on it I mean look at the sales numbers for this thing, it's a joke. There's no way they have a business case for making a next-gen model if it's going to return these kinds of numbers.

(or maybe not, given how poorly the Fiesta is selling... so much for Muallay being a business genius, huh?)

Well, that's for another thread but...Mulally's a management genius, I'm not sure he's a product planning genius.

That's some pretty dumb sh-t you just said there. Knock it off. I'm not presenting you with "my logic". What I'm telling you is that eAssist is not a full hybrid system...

The argument I'm making is not a technical one. I know exactly how eAssist works...I've been following it since it used to be called Belt-Alternator-Starter back in 2005.

Here's the argument you're making: "They didn't just raise the price by $2K! They added cool features that are worth money! So it's really better!" My point was, that's the same as telling Toyota to cancel all but the top Camry, since the top model has so many cool features. But some people can't or won't pay for those features, regardless of how cool they are. After all, the ~$3-4K premium for a Camry Hybrid will eventually pay off too. But the Hybrid is still less than 20% of sales.

As for the Regal GS being a hot seller...It may be, but it occupies a narrow niche. It's a hot seller compared to the rest of the lineup because they've priced the rest of the lineup out of the market. I'm so tired of hearing reasons why it's good for GM to sell fewer cars, as if the only other option would be to go back to 2002-era money-losing fleet dumping.

-Andrew L

[curvedinfinity]

I think I made a post about how I was figuring the Regal's price was going to go up late last year. I think the LaCrosse will also go up again.

The Verano is ultimately the reason. The previous price points were because Buick needed to fit in the thin gap between Chevy and Cadillac. With 3 models, Buick can justify the overlap with the other brands.

Verano: 23k-32k
Regal: 30k-39k
LaCrosse: 33k-42k

And rimtrim, to answer your questions, all three models are doing great in their segments, so GM can afford to raise their prices. For certain products, including cars, the buying process isn't always heavily based on objective comparison like what you're doing. If someone wants something, the question is more often than not "can I afford it?" not "is there something that meets my needs for less?"

Whether GM is successful or not is yet to be seen, but I think this generation of GM cars is focused on trying to get people to appreciate subjective qualities foremost. I think that is a smart move because when a company makes a product that is designed to be measured against competition, it invites the competition to measure back. Commoditizing a product by making it the lowest priced or best MPG-ed or highest HP-ed devalues the brand of the product because if you are telling people they need to buy because of one of those reasons, what happens when your competitor out does you? Suddenly all of your advertising dollars have gone into convincing your customer to buy your competitor.

The solution is to make a value proposition out of the product being and not the product doing. For cars, I think the rule of thumb ignoring niche markets is to have objective qualities that won't embarrass the owner (which is a big task in itself), and then otherwise focus on subjective qualities.

I have nothing to say about the Malibu ECO in particular because it sounds like GM dropped the ball, but the Regal eAssist is a different ballgame because it is in a market with fewer competitors with good FE.

[samc]

I think Buick should have just added that feature for free to entice buyers. Sure it costs them money but what does it cost them for these Regals to sit on the lot?

[curvedinfinity]

I think Buick should have just added that feature for free to entice buyers. Sure it costs them money but what does it cost them for these Regals to sit on the lot?

They did exactly that. Rimtrim is just being dramatic.

[rimtrim]

They did exactly that. Rimtrim is just being dramatic.

No, they didn't add it for free. They added it and raised the price by $2K.

I don't understand why anyone thinks the Regal is doing so well. What are you measuring it against? The Acura TSX? Talk about niche. The old W-body Regals (which were nice cars in their time) sold many, many times what the current car sells.

-Andrew L

[Nourdmrolnmt]

No, they didn't add it for free. They added it and raised the price by $2K.

I don't understand why anyone thinks the Regal is doing so well. What are you measuring it against? The Acura TSX? Talk about niche. The old W-body Regals (which were nice cars in their time) sold many, many times what the current car sells.

-Andrew L

so did the Camry, so did the Sierra, so did the Accord, so did the Cavalier, so did the Tahoe, so did...

****, I don't have time to list every model currently sold today that was sold in the 90s.

[rimtrim]

so did the Camry, so did the Sierra, so did the Accord, so did the Cavalier, so did the Tahoe, so did...

****, I don't have time to list every model currently sold today that was sold in the 90s.

You prove my point. All those models (or their successors) are still hot sellers today. Why is it acceptable for a Buick to sell 2K a month?

-Andrew L

[Nourdmrolnmt]

You prove my point. All those models (or their successors) are still hot sellers today. Why is it acceptable for a Buick to sell 2K a month?

-Andrew L

no i didnt.

the previous versions of those cars sold several times their current level back then too.


Let's use an example you might get.

Say you have access to 4 different hub cap designs, all for the same car.
You can buy A, B, C, or D in the same quantities.
A costs you $20 and sells for $30 but only sells about 1000 a year.
B costs you $23 and sells for $35 and projected to sell about 1000 a year.
C costs you $25 and sells for $38 and sells about 2000 a year.
D costs you $30 and sells for $40 and sells about 1000 a year but can be directly attributed to 10% of all sub model sales.

Which 3 do you pick?

[rimtrim]

the previous versions of those cars sold several times their current level back then too.

I don't think so. Everybody's sales are down right now, and the popular models you listed probably have lost some market share to new competitors, but it's not nearly on the scale of what happened at Buick. I can probably pull up the numbers if you really want to get technical. Buick passenger car sales are a tiny fraction of what they were just 15 years ago.

Let's use an example you might get. Say you have access to 4 different hub cap designs...

I do understand the basic concept that sometimes it's better to sell fewer items with a bigger margin on each item (though I don't understand what you mean by "can be directly attributed to 10% of all sub model sales" in your example). But I don't think it's that simple in this case. For one, the Regal is a very slow turner, meaning it sits on the lots for a long time. That most likely means GM and the dealers are discounting them heavily to finally move them. That situation, combined with overall low volume that leads to bad economy-of-scale, makes me skeptical that they're making huge profits on these cars.

I think the problem at Buick is they've fallen for the fallacy that if people don't like affordable Buicks, maybe they'll like expensive ones, since expensive things must be better. That strategy only works if you have enough marketing power to create a fashion trend that captures people's emotions and overrides common sense. I don't think Buick is in a position to be successful at that.

It's funny to me that the GM fan boards agree with me more on this issue than TCL does. I think the reason is that the Regal is a very TCL-approved car: Euro-style sports sedan, understated styling, firm ride, high-performance options. Everybody here wants to believe it's a sales hit because you like it and want to see it succeed. But the numbers just don't support that case.

-Andrew L

[curvedinfinity]

Rimtrim, what are you comparing it to? The TSX, TL, CC, MKS, ES, MKZ, Volvos and so on also sell in the 1-5k monthly volume just like the Buicks.

[ChiTownA34DR]

overrides common sense. I don't think Buick is in a position to be successful at that.

It's funny to me that the GM fan boards agree with me more on this issue than TCL does. I think the reason is that the Regal is a very TCL-approved car: Euro-style sports sedan, understated styling, firm ride, high-performance options. Everybody here wants to believe it's a sales hit because you like it and want to see it succeed. But the numbers just don't support that case.

-Andrew L

I am going to jump in here and defend you.

We don't sell a lot of Regals compared to the rest of the lineup. I am not sure if it is the area or the pricing, but I can tell you the interent leads coming into my department show the Lacrosse is steady and the Verano is the new shining star. They need to offer the Regal in a lower trim level with cloth interior for the sales to go up. I have customers who love the car but will not buy leather. A wagon as cool as it would be, would not sell well, but the idea of it might peak interest in the model. A coupe might do the same, but I am rambling now.



Also, I find that the eAssist Lacrosse is outselling the V6 3-1 on my lot. Not a huge margin, but it does very well for a "failure" as it was stated earlier by someone.