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The Business Behind GM's Chinese Import SUV

2265 Views 0 Replies 1 Participant Last post by  Cpt. Foresight

The Buick Envision will be available to US customers later this year, and it will be manufactured entirely in China. This doesn't happen often, so what is the business behind GM's decision to import the Envision to the US from China?

First let's look at the opportunity for sales in the US.

The small luxury SUV segment is a relatively small category, but it is growing extremely fast. Last year the segment accounted for just 305,047 units, but that number represents a 38.6% growth over the number of sales from 2014. That is more than six times faster than the rate of growth for the entire auto industry last year.

The Buick Envision has already proven that it is capable of delivering strong sales numbers. In China, the vehicle sold 147,000 units in its first full year. It will also fill in the gap in the Buick lineup between the Encore and the Enclave.

Buick's US sales fell 2.6% last year, even as the industry grew 6%. Introducing a new model is a known way of boosting sales and can help the brand overcome its 2015 decline.

Second, why is GM building the Envision in China?

For GM the decision is fairly simple. Its Chinese plant has excess capacity, and producing the Envision there for US sale is a way to make use of that capacity. GM will likely move production of the Envision to the US once the Equinox and Terrain come on board.

Customers likely won't care much where the vehicle is manufactured, if they care to find out such information in the first place. The United Auto Workers are likely upset, accusing the Detroit-based company of betraying the American taxpayers who bailed out the company in 2009. That is unlikely to affect sales though.

Forbes Welcome
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