Last year, I opined that 2019 would be the year of the “brand.” That predication partially came true. Brands increasingly relied on their heritage to sell cars, and automakers continued to revive older nameplates like Blazer, TrailBlazer, Passport, and Supra. But my forecast did not account for the rise of subbrands. Subbrands are basically extensions of one particular model. Or in GM’s case, they’re distinctive trim levels with their own unique identity. The Denali’s popularity and America’s thirst for adventurous looking utility vehicles prompted GMC to create the AT4 trim. Combined sales of both trims will soon represent about half of GMC’s sales. These subbrands are extremely profitable for GM and a boon for dealers. And they just might signal how automakers further refine their products in a hyper competitive market.
The AT4 subbrand – which is meant to encapsulate all-terrain, four-wheel drive vehicles – isn’t a revolutionary concept. Automakers have included similar trims and packages in their lineups for years. Ford offers the FX4 package on the F-Series, Ranger, and even the Expedition. But GMC’s Denali and AT4 trims are much more than a special set of options buyers can check off on an order form. They’re relatively easy to identify and not limited to GMC’s trucks. As a result, the brand broadened its appeal to buyers who wouldn’t normally consider a GMC:
“Customers who might be traditional luxury buyers will happily buy a Denali or, increasingly, AT4,” Aldred said at a media event in the mountains of Colorado last week. “And similarly, people who are historically mainstream buyers would aspire to get into an AT4 or a Denali.”
The average AT4 buyer is new to GMC and younger and more adventurous than other GMC owners. Many have young children and a high household income.
In addition to conquest sales, the new AT4 subbrand didn’t step on the Denali’s toes. Instead, it simply attracted a different demographic. GMC sold 142,000 Denali-branded vehicles in 2019, an all-time high. Those sales are highly profitable too: the average transaction price on a Denali-equipped GMC is just under $60,000. The AT4 subbrand created its own niche too, and about 20% of buyers opt for the trim regardless of model.
GMC’s strategy likely represents the way forward for mainstream automakers with diverse lineups. The AT4 emulates the Big Three’s truck lineups by offering nominally better off-road capability, desirable tech, and a unique aesthetic for a decent price. But unlike option packages of the past, GM’s subbrand strategy reduces cost by existing as its own thing instead of operating within a preexisting trim level. And that offers a better opportunity for higher profits. Additionally, the GMC brand is starting to resonate with more customers. Buick and Cadillac have the opposite problem.
The success of the subbrand might depend on how those trims build on the larger brand they represent. Either way, this new trend of specialized, brand wide trims will soon compete with a more explicit form of subbrand. Ford will most likely apply the Bronco name to an off-road oriented, Escape-based crossover. And the Mustang gains a new member with the Mach-E. Both types of subbrands carry their own set of risks and rewards, but for now it seems like we know which approach is working.
Since luxury trucks that haven’t come from truck brands have been flops (Lincoln Mark LT) and GMC’s been using “Professional Grade” as a tagline for years, I wonder what GM’s policy of giving their resurgent medium-duty line to Chevrolet only will have on GMC’s image long-term, especially as memories of Astro COE and General longnose Class 8 big-rigs fade.
Your curiosity parallels what I was wondering – perhaps such a move was intentional so the focus of GMC is more specific and, for want of a better term, prestigious. It seems one of their new medium duty trucks branded as a GMC sitting on the lot near one of these Denalis, or going to U-Haul and renting a new GMC, may project a more vocational image than what GM wants from GMC.
That said, I have in the not so distant past seen some rather plain half-ton GMCs sitting on the U-Haul lot awaiting a renter.
I mean, as long as you can still get a basic Sierra W/T or Savana cargo van it won’t be a specifically upscale brand, and I don’t see Buick-GMC dealers wanting to give up the volume of fleet sales.
At least around here, the only Escalades I see any more are in livery service. Seems like folks around here who want a fancy Suburban skip the Caddy store and head straight to GMC for a Yukon Denali XL. And why not? The GMC is a few grand less than the Caddy, and I think I’d be more trusting of GMC techs working on my honkin’ big SUV than I would Cadillac techs.
No matter how badly a company wants to attract a certain demographic to its brand or sub-brand, it will always be the customers who ultimately make that decision, and it may not be the one the manufacturer wanted. One of the problems with these sorts of mission statements is that everyone wants to believe their brand will appeal to whatever is perceived as a more desirable audience. I’m reminded of something I read awhile back in an article dissecting the Edsel debacle; it was promoted as “the smart car for the younger executive or professional family on its way up.” As the journalist noted, who would position their new entry as “the dumb car for the family on its way down”? More recently, Toyota wanted Scion to pull in a breed of young, urban hipsters who were ignoring Corollas, but despite edgy brochures filled with modded SEMA entries and CDs of obscure alternative-rock bands, the cars seemed to appeal more to people who were older than the targeted demographic but who liked the practicality, easy entry and exit, and good outward visibility from the tall rooflines. GMC can wish all they want as to who will buy AT4s, but I think it will be awhile, if ever, before “AT4” gains any significant, uh, traction…
While I don’t really disagree with you, it appears that the AT4 is selling well. That may or may not be due to marketing, it may just be a happy coincidence for GMC. I don’t think that AT4 is really resonating prior to seeing one on the dealer lot, but I am not in the market for such a vehicle, so it may be a justified exercise. It makes me think about Buick using Avenir as a subbrand, rather than using that name from the show car, and I don’t think they are really marketing it either. Until you see one beside a lesser model on the dealer lot, it doesn’t seem to be a selling point advertised anywhere.
But GMC is really trying to thread the needle between Chevy and Cadillac, and is having success doing so right now. The cost factor for a similar Cadillac, plus the fact that these GMCs fly under the radar for people trying not to be considered ostentatious, makes these a good choice for many.
“The cost factor for a similar Cadillac, plus the fact that these GMCs fly under the radar for people trying not to be considered ostentatious, makes these a good choice for many.”
Say, wasn’t that Buick’s message when it was the number 3 brand in America?
It was. Today Buicks and GMC (exclusively) share a showroom, and with the discontinuation of the Regal, Buick is now a crossover-only brand in North America making it’s continued existence even more tenuous. Its only remaining purpose seems to be convincing the Chinese that Buick is still a popular upscale American brand, and I’m inclined to think that won’t be enough to keep it going much longer. Except in China of course, where about 80% of modern Buicks are sold.
I’ve long noted that GMC Denalis sell to the same sorts of people who, generations earlier, would have bought an Olds 98 or Buick Electra instead of a Cadillac to appear less ostentatious. Only now its an Escalade instead of a DeVille.
I half thought AT4 represented the age of the average buyer.
Or was that the average sale price in thousands.
It’s so confusing.
I’m sort of a truck guy. I’ve owned four pickups, including my current daily driver, and one BOF SUV. I started my engineering career at a heavy-duty truck manufacturer. And I’m causally considering upsizing from my current Tacoma to a full-size, and GM’s new 3.0 diesel six is very appealing. But in spite of all that, I can’t really see myself owning a GMC-branded vehicle. Chevy, no problem; after 40 years my Vega ownership memories are rose tinted. But GMC makes me think of Astro cabovers and Army trucks, and coupled with their current upscale marketing it’s a blend that comes off all wrong for me.
The Denali name has certainly paid plenty of dividends for GMC. The whole sub-brand thing is interesting. I wonder if it is by design, or if something catches fire with the market and they scramble to put that name on more variations. Like Cutlass or LeBaron a generation ago.
I am another who keeps wondering about the Chevy/GMC split going forward. How long until someone decides to save money by cutting duplication? But then as long as both are selling well, a case can be made for keeping both, particularly if they are not going to fold Chevrolet and Buick into a single dealer channel.
Just going off at a tangent here, I’m amazed at the front end design. Especially just after reading the feature about that ’66 Chevy flatbed. Anyone notice something missing?
This thing is supposedly a truck. Yet there is no bumper of any sort, just a very expensive looking melange of panels, trim, lights and grillwork. You can’t tell me today’s drivers are more careful of rigs, theirs and others’, than those of the sixties. So why is there no bumper protection on what is ostensibly a truck? Especially in AT4 form – accidents happen when you’re off road. There are these things called rocks and trees which could seriously , expensively reshape the front of this thing. Especially with that high hoodline restricting your view of them.
Are Ford and Ram as bad? Possibly, probably. As an Aussie I’d need to look them up. But coming off the ’66 Chevy truck article, this just grabbed me. From solid steel bolted to the frame to….this.
I’m not advocating a return to the bad old days of the seventies with those 5mph bumpers, but just bemused that two generations later we seem to be making the same mistakes on trucks as car designers did back in the late sixties.
Rant over, resume normal programming.
Well I can tell you from experience that modern steel truck bumpers aren’t any tougher or more durable than plastic bumpers. In fact, they are probably more easily damaged. So frankly, I really wouldn’t care one way or the other.
You can buy useful bumpers on the aftermarket, but they are much heavier. Combined with the need to be part of a crush zone for safety, I’d imagine that’s why you don’t see them anymore.
Thanks Phil. And bumper stock steel, once bent, stays bent. Still seems an awful lot of easily-damaged trim down there. A plain, unadorned plastic impact panel would make more sense.
Wikipedia says: The name “Denali” is derived from the Koyukon name and is based on a verb theme meaning “high” or “tall,” according to linguist James Kari of the Alaska Native Language Center at the University of Alaska Fairbanks, in the book “Shem Pete’s Alaska.” It doesn’t mean “the great one,” as is commonly believed, Kari wrote.
GMC Denali: high or tall? Check. The Great One? Not.
I realize I am old and out of touch, but to me this seems again like a typical domestic industry strategy to pretend you have something new and exciting to offer your customers while actually giving them the same old warmed-over…um…product, but with flashier, more aggressive styling & a little tech fairy dust.
The constant ads on TV for huge gas & diesel powered trucks seem sad and ominous to me. What goes through my mind is ‘What are they thinking?’. In 10 years, if not before, my guess is that no one will want them, and the economic pain for companies that are not adapting will start to be felt before that. GM may have a good branding strategy for the ‘end times’, but I wouldn’t buy their stock.
Just my opinion.
The Escalade, Corvette and GMC lines are about the only GM’s not bought on strong discount. I consider GMC the most attractive of the divisions, but then I’m not a GM fan.
GMC is one of those brands that seem to have a lot of loyalty.
When I worked at a Chevy/GMC/Buick/Pontiac/Isuzu dealer back in 1998, there were a lot of folks that came in to buy a GMC Jimmy or Yukon or a pickup truck. They would get angry if the dealership tried to show them a Chevy Blazer or Tahoe or a pickup truck even though they were almost the exact same vehicle. The funniest ones to watch were those folks that wanted a GMC Suburban and the dealer was out at the moment so the dealer would offer them a Chevy Suburban and they would get angry (even though it was the same truck)