June Buick sales dropped 5.5% to 16,575, which makes it among General Motors Co.’s (NYSE: GM) smallest brands by unit sales. It has become a niche brand, and one which offers extraordinary discounts to move cars of lots. The most aggressive of these is a 20% cash back offer on the MSRP of certain models. It is hard to imagine how parent GM makes money on this, and perhaps it does not.
The discount is currently available on certain versions of the brand’s 2016 Enclave, Encore, Lacross, and Regal. As an example, the MSRP for the Enclave is $52,685. Cash back to the buyer totals $10,537, just a bit less than the price for the least expensive new car sold in the U.S.–the Nissan Versa at $12,825.
The Buick offer comes with some fine print. The car has to be in inventory. Some of the other qualifications are difficult to find.
Are there any hints about why Buick would be so aggressive? By one standard measure, “no”. One yardstick of how quickly dealers sell cars is “days to turn”, the amount of time a car is on the lot from the delivery from the manufacturer until when it is sold. The figure for Buick was 76 days in May according to Edmunds. The industry average was 69. Not enough of a difference to account for massive discounts.
Another possibility is that Buick is trying to make room for 2017 versions of its models which will arrive this fall. However, the two models which fit this bill are Encore and Envision. Those are not enough of the full like of Buicks to account for discounts across so many other models.
Among the puzzles about why Buick has made such extraordinary offers is whether GM loses money on them, and why? Only a few people know that, probably not beyond GM employees and Buick dealers. Perhaps the dealers want help dumping these models, and GM has decided to help them
Car discounts meant to drive sales are nearly universal. But, the Buick ones are close to crazy.