When is a great review from an influential source not good news for an automaker?
When it indirectly disses another of the automaker's key products.
General Motors (NYSE:GM) found itself in that situation this past week, and it has to be causing some head-scratching at GM headquarters in Detroit.
On the one hand, it's a coup for GM: Influential magazine Consumer Reports -- not always a fan of the General -- absolutely loved the Buick Regal, rating it very highly in a new review. The reviewers lavished Buick's sporty sedan with praise, calling it "thoroughly developed and satisfying" and rating it above big-name competitors from the likes of Mercedes-Benz, Audi... and GM's own top-of-the-line luxury brand, Cadillac.
As you can see, it's a mixed blessing. In this short video, Motley Fool senior auto specialist John Rosevear digs into the review and explains the conundrum: The Cadillac ATS might have been designed from the ground up to compete with German luxury sedans -- but in a way, the Canadian-built Buick actually is a German sedan.
A transcript of the video is below.
John Rosevear: Hey Fools, it's John Rosevear, senior auto specialist at Fool.com. Consumer Reports came out with a new review this past week of the Buick Regal sedan, and the results have to be giving General Motors executives some really mixed feelings. The good news for GM is that Consumer Reports really liked the Buick Regal. They gave it a very high rating in a category that includes things like the BMW (NASDAQOTH:BAMXF) 3-Series and Daimler's (NASDAQOTH:DDAIF) Mercedes-Benz C-Class.
Here's the key quote from their review: "If you still think of Buick as a brand only for octogenarians with a taste for whitewall tires and vinyl roof treatments, the Regal will change your mind in one test drive. It's a thoroughly developed and satisfying midsized sports sedan that's more reminiscent of an Audi A4 than a softly sprung luxo-barge."
They gave it 83 points, which is good enough for third place in its Luxury Compact Car rankings, and they gave it the "Recommended" designation, which if you read Consumer Reports you know what that means, they think it'll be a reliable choice.
The only things to beat it were two different versions of the BMW 3-Series, and only one of those got the "Recommended" label. The Buick beat the Mercedes-Benz C250, it beat the Acura TSX, it beat the Audi A4, it beat the Infiniti Q50, it beat the Lexus IS 250, and here's the big thing that has to be giving GM some headaches. It beat the Cadillac ATS, which is a car that GM designed from the ground up specifically to compete with the BMW 3-Series.
Now, that's not to say the magazine completely dissed the ATS, it got 79 points on the Consumer Reports scale. That's still ahead of the Audi and the Infiniti and the Acura and some other cars that are regarded as pretty good, but the purpose-built Cadillac compact premium sedan got beat by a Buick in Consumer Reports' testing.
So how is this possible? Well, here's the thing. The Cadillac ATS was designed to compete with German cars, but the Buick Regal really is a German car. Yes, it's built in Ontario, not Germany, but it's essentially a twin of the Opel Insignia, Opel is GM's German subsidiary, and under GM's current global product plan the Buick and Opel brands are closely conjoined, there are several shared models that are sold as Opels in Europe but have different grills and badges and are sold as Buicks in the U.S. and China.
The Regal is one of those, but it doesn't seem to get a lot of attention in the U.S. So far this year at least in the U.S. the Cadillac ATS has outsold the Regal, about 15,000 to 12,000 through the first half of 2014. But that might change soon, the Regal was refreshed for the 2014 model year and sales are up almost 40% this year, while the ATS is down 22%. It'll be interesting to see if this new review from Consumer Reports will give it another sales boost. Thanks for watching.
John Rosevear owns shares of General Motors. The Motley Fool recommends BMW and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.