Luxury buyers have begun to move in the same direction the greater auto market has in recent years. More luxury-vehicle drivers are purchasing premium pickups than ever, and they’re ditching their BMW, Mercedes-Benz, or Lexus sedan for a big ol’ pickup truck.
That isn’t more evident than at GMC. The New York Times reported last Thursday that a shift from luxury cars to luxury trucks is well underway. Tom Libby, an industry analyst from IHS Markit, said the shift is now prominent in consumer behavior as dealers take in trades on luxury sedans and pickups leave dealership lots.
The news couldn’t be better for General Motors and the GMC brand. In 2017, the brand accounted for 11.3 percent of domestic sales. A small number, but it’s not so insignificant when looking back five years ago; GMC accounted for just 0.1 percent of domestic sales in 2012.
During an investor conference, GM President Dan Ammann said there are plans to produce more Denali variants of its GMC vehicles, which hold an average transaction price of $56,000.
“This thing is a money machine,” Ammann said regarding the Denali sub-brand.
Profits should continue to soar as GMC prepares to unveil the 2019 Sierra next month alongside a new Sierra Denali. GM previously said the new pickups will be even more profitable than the current vehicles.
Comments
It is not just trucks as the Denali name is increasing ATP in all the GMC products.
No matter the model the Denali adds a few things exclusive that adds more to the price than the cost and it is like printing money.
The key though is the name equity of the Denali name. It has taken GMC over 20 years to build this equity but it is really paying off.
I now have two Denali models and in my case I got a good deal on both. I was looking to buy just SLT models but was able to go Denali due to special pricing at the time of my purchase. What I have noted since I bought the Denali models are the name recognition and the way people perceive the Denali models. The value of the Denali name is worth a lot to the GMC line.
The Denali name value is just what Cadillac needs to win back with their name. People see Denali as a high value or premium name. Many tell me oh now we know who is making the money. Well Not really but that is what they think.
The SLT 2 models are just as good and a better value but as long as the brand equity can get buyers to move up more power to GMC, job well done.
Buick is now trying to do similar and they may or may not succeed. It will take time to build this up and gain name recognition. It will also take the right products to pull it off.
The thing GMC has going is not only are the Denali models seen as a premium brand but they have a model for nearly everyone in all price ranges from the Yukon XL Denali to the Terrain Denali. This opens the door to many in the middle price range undercutting the Benz and BMW SUV model and on truck neither offer.
Doing a luxury truck is difficult for a true luxury brand. Often the price gets way out of hand and few people buy in. Lincoln did it twice and failed, The others are not even in the segment. Most times the Chevy and Ford lines suffice but in the case of GMC they are in a place they can just push it a little more and still reap the reward without going over the top.
Lets just be clear, its domestic sales OVER 60,000 dollars(11.3%). I’m so glad to see this brand finally get the recognition it needs beside sitting in the shadows. I remember some people saying GMC should follow in Jeeps footsteps but I think Jeep might just follow in theirs.
This article right here is why I think Chevy completely dropped the ball with the upcoming Silverado interior. I mean they hit a Grand Slam with the exterior and took risks but then went full vanilla in the interior.
No Panoramic Sunroof, no full leather wrap for the whole dash even on the High Country version, no 10 inch or even bigger infotainment screen, no other shift mechanism besides the 1940’s column shiffter. I simply just do not understand this strategy at all from GM. Why not offer more to customers and just charge more like every other manufacturer are doing right now. Customers desperately want high end right now.
couldn’t agree more. they make a fortune on these trucks and you get the same screen you get in a chevy cruze, with a plastic dashboard in a 60k truck. no push button start, no exclusivity with the higher super expensive trim levels
I think Scott has it exactly right . Even with my Terrain Denali , people will look at it and say ” oh it’s a Denali ” , which is exactly music to GMC’s ears . That name has meaning and an Image of the best of the division . Even though a SLT-2 is almost a Denali , it’s just that little extra that people are willing to pay for . Plus if the price is right , why not .
Buick so want’s their sub-brand Avenir to work the same magic , it may take time but it just may work as Buick has a good reliability image form most editorial journalists and consumer comments .
Cadillac has work to do , it ain’t going to be easy or quick , but they need a new foundation to build from to help contribute to GM’s bottom line .
Labels with image = income and profits. People today like to stand out and there is profit in that.
Buick and Cadillac can do it but it takes time and investment. GMC did not do it in 1 year or even 10 years. But they did do it. It is a fo4mula that can be repeated.
Most M and AMG buyers spend more. Benz even takes a AMG and adds Black Series to it to make on the upscale.
In reply to your excellent comment regarding Cadillac…
I am a Certified GM Guy, and Car nut also…and I have had a passion for the Cadillac brand, for as long as I can remember. Most of my friends are Car
guys also, and like myself, grew up loving GM and Cadillac. The one thing,
that continually comes up in our Cadillac conversations, is the bland, vanilla
model designations ??
Cadillac built its Status on model names, that stated you have Arrived, you are
Successful..De Ville, Fleetwood, Eldorado, all implied better than, the ultimate, you have an Olds 98, I have a Coupe De Ville ? Even Car collectors like myself,
get much more enthused when a 50s or 60s Coupe De Ville crosses the Auction
block, than an XYZ.
Even the beautiful GM Concept Cars, from Buick and Cadillac, have beautiful names, like Avenit…that attract the buyer, to take a closer look.
Just like the GMC buyer, who goes to look at an SLT, and buys a Denali…like we did, when we purchased our Yukon XL ? Their was Just Something about That Name!!
Dennis I think you have it backwards. You appear to thing the name makes the car but in reality it is the car that makes and defines the name.
Take the Deville name. It was well thought of back in the 50’s and 60’s then the car in the 80’s became a steaming pile of FWD downs sized crap. The car destroyed the equity of the name. Today Deville means little to most buyers today as the name was damaged in a major way.
On the other hand the greatest Cadillac made was called V-16 series 452 or a Series 90. They were works of art and defined what a luxury car was in the 30’s to 1940.
In fact most of the best Cadillac cars ever built were Series cars with no name but the cars defined the number.
The same even for names they can be defined by the car and many have been. But like the Deville and Eldorado the names have been damaged heavily by some really poor cars and that is difficult to over come.
Even in the case of the Denali. It is defined by the grille, extra stitching and added content. It is seen as the top model and that defines the name.
If you just slapped a Denali name on a Work truck that is not going to cut it and if anything damage the name to the point it may hurt the sales of the top end models.
Equity in a name or number is made by the compelling design and high quality that create desirability. But it can be lost or damaged in just one major mistake like the down sized FWD models.
Even names could not save the worst models like the Catera and Cimarron.
The first Denali appeared in 1999 as an option package on the Yukon. It was not a big seller but it was profitable since it was mostly made up out of the Escalade parts bin. It took time more compelling design and good marketing to bring it up to where it is today. Also a little luck played in as this segment came to GM for once vs. them going to it. For once they were in the right place at the right time.
I know many like to cling to that romantic idea that a name will make the vehicle but the truth is the vehicle defines the name.
Just like those Art Fizpatrick Pontiac ads of the 60’s that romanticized the cars they would still have not worked if the cars were what they were in the first place.
I think if you look at the history of the greatest models ever made you will find they were a mix of names and numbers but none were defined by the name as you could pry the number or name plate off and people still would have been drawn to them.
The key is when you define that name and number it is a challenge to protect it and not damage it as the magic could ever be lost on the future buyers. Magic is hard to catch in a bottle once twice damn near impossible.
One last Example. Cutlass. I would think you would agree the name may have been one of the most successful names not only for Olds but the industry.
Yet GM took the name and tried to apply it to FWD cars like the Cutlass Calais and Ciera and both failed.
They then killed the RWD model and tried to put the Cutlass Supreme on a FWD that only hastened the death of Olds as it failed.
A great name can not make or save a bad vehicle no matter how good the name. It is the vehicle that matters not the name.
This Denail talk is funny. Prestige branding is for suckers. If you really want me to think you’re the shinola because the word Denali is on your vehicle — umm — you’ve got small hands.
People are image conscious and vain. If GM can make money with it more power to them.
Those who can do.
Those who can’t mock.
Now there is where the real satisfaction comes in making the bitter insignificants even more so. I can see appeal and why some can enjoy that.
As for me it was the $13,000 off sticker and the cooled seats and heated wheel that appealed to me. Not to mention the added trade and resale value. Careful shopping can make for some better value deals.
Hello, If you read the Reply above, from Undefined, that’s me ☺️ I attempted to Edit a couple of typos, and correct a comment, and ended up Undefined…
It’s not about the credit, that I’m posting again, it’s just that my car friends, and I are very
passionate about our GM product, you won’t find us looking at Ford or Mopar product, and
Definitely not anything but American, especially when it comes to trucks and SUV’s…As a
matter of fact, we drove Mercedes and BMW cars, for decades, but we now proudly have a
2015 Silverado LTZ 4×4 Crew Cab, and a 2017 Impala Premier Sedan In our Garage ?
When somebody asks what we’re driving these days, we happily say we parted with our
S500 a couple years ago, and purchased a new Silverado…and last December, we added a
beautiful Siren Red Impala Premier, to our Garage ☺️ and you know what, they recognize, and Respect the quality, and integrity those names represent ?
PS: We have a gorgeous 2002 MBZ SL 500 with only 21,000 miles in our Garage, our last European car..We have decided to part with it this Spring. We are going to Replace it with
either a 1955 Bel Air Hardtop, or a GM Certified Corvette…American made, and Names that
Instantly say Quality, Class, Style ??
Yet you could put the Bel Air name on the present Impala or Malibu and it would move the sales needle no where. Great name but needs the right car under it.
What they did in 1955 matters little outside the collector circles. FYI I love the 55 and you will have a lot of fun. Enjoy.