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Monday, May 03, 2010

Pontiac owners are migrating to Chevrolet

Thirteen of Buick-GMC dealer Kim Borcherding's customers had Pontiac leases that ended in March, but none of them bought or leased another new vehicle from her.

Six of them bought an import. Three bought a Chevrolet, which Borcherding's Cincinnati store doesn't sell. One bought a used vehicle from her, and three bought out their leases.

Those were their only options if they wanted to stay her customers, Borcherding says. Her current inventory is “just nothing that is in their league,” she says, since the lowest priced new vehicle she has costs nearly $25,000.

Like most Pontiac owners, Borcherding's customers need moderately priced sedans not found in the current Buick-GMC showroom.

As a result, General Motors Co.'s retention efforts are shifting most of its former Pontiac owners to Chevrolet.

“They have nowhere else to turn because we don't have anything else to offer,” Borcherding says. “They're not going to wait forever.”

In the year leading up to GM's April 27, 2009, announcement that it would kill Pontiac, 37 percent of owners trading in a Pontiac bought a GM product, according to data from That percentage has stayed nearly flat at 36 percent.

But the preferred GM brand for repeat buyers has shifted. Before GM decided to eliminate Pontiac, the brand competed evenly with Chevrolet for Pontiac owners' next purchases, with each brand averaging 15 percent. And Pontiac won that battle in the months immediately following the death sentence.

But from Jan. 1 -- when GM's supply of Pontiacs had dwindled to 800 -- through March, one-fourth of Pontiac owners chose Chevrolet for their next purchase. To compare, Buick-GMC sales from Pontiac trade-ins have only increased to 10 percent this year, from 6 percent the year before the Pontiac verdict.

That's fine with some Buick-GMC dealers who either own Chevrolet stores down the street or never depended much on Pontiac sales. But for others, the loss of Pontiac and the shift to Buick-GMC's premium image has meant a drop in revenue. Their wait for less expensive sedans continues while Pontiac owners slowly slip away to the local Chevrolet dealer.

“None of them are buying a Buick-GMC because there's nothing really comparable in the Buick-GMC line,” says Mark Frost, general manager of Jim Ellis Buick-GMC outside Atlanta.

The GMC Terrain small crossover, starting at $24,995, including shipping, has the lowest starting sticker price in the brands' lineups, not counting pickups. The least-expensive car, the Buick LaCrosse, starts at $26,995, including shipping.

Dealers will have to wait until the 2012 model year to sell a less expensive sedan: the base version of the new Buick Regal. A premium-trim-level Regal is on its way to dealerships with a $26,995 price tag, and the base level will cost less than that.

Frost also manages a Chevrolet store, and 10 of the 14 Pontiac trade-ins he has seen since November have been for Chevrolets. His dealership group took over the Buick-Pontiac-GMC franchise a year ago, so it has never really depended on Pontiac sales. But he still advertises service to Pontiac owners through the updated “free agent” lists GM provides to all its dealers.

GM has also offered Pontiac owners four free oil changes and $1,000 off a new GM vehicle.

“The loyalty rates of Pontiac owners are in line with our expectations,” GM spokesman Tom Henderson says. He declined to give data on retention rates or efforts to keep Pontiac customers in the GM fold.

One dealer sees used cars as a way to retain Pontiac owners. New York dealer Mike Mullaney's Buick-GMC store doesn't have inexpensive new products for his Pontiac customers, so he's trying to put them in late-model used Pontiacs. That way, he hopes he can keep from losing his customers to the local Chevrolet dealer and maybe be able to offer them a smaller, less expensive Buick in a year or two.

Says Mullaney: “If we can maintain that customer for one more product cycle, we'll be in good shape.”

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