GM Said to Study Shedding Saab, Saturn, Pontiac to Win U.S. Aid
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GM Said to Study Shedding Saab, Saturn, Pontiac to Win U.S. Aid
http://www.bloomberg.com/apps/news?p...efer=worldwide
By Jeff Green and Greg Bensinger
Nov. 26 (Bloomberg) -- General Motors Corp., working to cut costs to win $12 billion in government loans, is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer, people familiar with the matter said.
Selling or dropping brands would save money and reduce overlap as the biggest U.S. automaker struggles to avoid running out of operating cash by year’s end, said the people, who didn’t want to be identified because no decision has been made. GM’s other U.S. brands are Chevrolet, GMC, Buick and Cadillac.
The review of the 82-year-old Pontiac division, one of GM’s earliest, shows the scope of the survival plan being given to Congress on Dec. 2 to show GM can repay federal aid. GM also seeks to cut debt levels and reduce costs for active and retired union workers, people have said.
Chief Executive Officer Rick Wagoner is under a deadline set by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. Congress has scheduled a Dec. 5 hearing on a $25 billion auto-industry rescue and may vote the week of Dec. 8.
A GM spokesman, Steve Harris, declined to comment on what may be included in the Detroit-based automaker’s plan.
Directors are scheduled to review a proposal Nov. 30 and Dec. 1, people familiar with the plans said. The automaker will prepare a 10- to 12-page public document and a private, more detailed plan of about 80 pages with background material, the people said. GM said Nov. 7 it may be short by year’s end of the $11 billion minimum in cash needed to pay monthly bills.
Prodding From Congress
Members of Congress such as Republican Senator Bob Corker Jr. of Tennessee have suggested the automakers might benefit from being able to shed some of their dealers.
GM’s eight U.S. brands are the most among the domestic automakers, compared with four at Ford Motor Co. and three at Chrysler LLC. The Hummer sport-utility vehicle unit was put on the block in June. GM agreed to eliminate the 103-year-old Oldsmobile brand in 2000 because of declining sales.
GM has 1,071 outlets for Pontiac, 400 for Saturn and about 105 for Saab among its 6,400 dealers, said Susan Garontakos, a spokeswoman. GM has been trying to combine Cadillac/Hummer/Saab and Pontiac/Buick/GMC brands into consolidated dealerships that would benefit from greater sales and lower marketing costs.
GM, which turned 100 this year, established the Pontiac division in 1926. The brand’s sales peaked at 896,980 in 1978, according to trade publication Automotive News. That was the year GM sold 9.55 million vehicles worldwide, the highest ever, and came at the end of an era when Pontiac attracted notice for sports coupes such as the Firebird.
This year, Pontiac sales are down 21 percent, compared with a 15 percent industrywide decline through October.
Very Surprised
Combining Buick, Pontiac and GMC dealerships has “been working very well,” said Randy Marion, owner of Randy Marion Chevrolet-Pontiac-Buick in Mooresville, North Carolina, and a member of GM’s National Dealer Council. “I would be very surprised if they had any intention of getting rid of Pontiac.”
GM established the Saturn brand in 1985, five years before selling the first vehicle. Most of the U.S. dealers are stand alone, according to GM. Sales reached a peak in 1994 at 286,003 units, according to Autodata Corp. in Woodcliff Lake, New Jersey. This year’s deliveries are down 19 percent.
GM made its initial investment in Sweden’s Saab in 1990 and took full control in 2000. Its sales climbed to a record 47,914 in 2003. In 2008, they’re down 31 percent through October.
Cash Burn
Declines across GM’s brands are adding to losses of almost $73 billion since the end of 2004. After burning through $6.9 billion in cash last quarter, GM said Nov. 7 that it had $16.2 billion as of Sept. 30. GM has said a bankruptcy filing would be a “disaster.”
GM gained $1.25, or 35 percent, to $4.81 at 4:15 p.m. in New York Stock Exchange composite trading.
The company’s 8.375 percent bonds due in July 2033 rose 5 cents to 19 cents on the dollar, yielding 43.9 percent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.
GM said Nov. 24 that its nine-year marketing accord with Tiger Woods, the world’s top-ranked golfer, will be discontinued next month by mutual agreement. GM has also delayed incentive payments to dealers, extended holiday shutdowns and announced plans to cut about 3,600 jobs early next year as production slows.
To contact the reporter on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net; Greg Bensinger in New York at gbensinger1@bloomberg.net
Last Updated: November 26, 2008 16:44 EST
Nov. 26 (Bloomberg) -- General Motors Corp., working to cut costs to win $12 billion in government loans, is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer, people familiar with the matter said.
Selling or dropping brands would save money and reduce overlap as the biggest U.S. automaker struggles to avoid running out of operating cash by year’s end, said the people, who didn’t want to be identified because no decision has been made. GM’s other U.S. brands are Chevrolet, GMC, Buick and Cadillac.
The review of the 82-year-old Pontiac division, one of GM’s earliest, shows the scope of the survival plan being given to Congress on Dec. 2 to show GM can repay federal aid. GM also seeks to cut debt levels and reduce costs for active and retired union workers, people have said.
Chief Executive Officer Rick Wagoner is under a deadline set by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid. Congress has scheduled a Dec. 5 hearing on a $25 billion auto-industry rescue and may vote the week of Dec. 8.
A GM spokesman, Steve Harris, declined to comment on what may be included in the Detroit-based automaker’s plan.
Directors are scheduled to review a proposal Nov. 30 and Dec. 1, people familiar with the plans said. The automaker will prepare a 10- to 12-page public document and a private, more detailed plan of about 80 pages with background material, the people said. GM said Nov. 7 it may be short by year’s end of the $11 billion minimum in cash needed to pay monthly bills.
Prodding From Congress
Members of Congress such as Republican Senator Bob Corker Jr. of Tennessee have suggested the automakers might benefit from being able to shed some of their dealers.
GM’s eight U.S. brands are the most among the domestic automakers, compared with four at Ford Motor Co. and three at Chrysler LLC. The Hummer sport-utility vehicle unit was put on the block in June. GM agreed to eliminate the 103-year-old Oldsmobile brand in 2000 because of declining sales.
GM has 1,071 outlets for Pontiac, 400 for Saturn and about 105 for Saab among its 6,400 dealers, said Susan Garontakos, a spokeswoman. GM has been trying to combine Cadillac/Hummer/Saab and Pontiac/Buick/GMC brands into consolidated dealerships that would benefit from greater sales and lower marketing costs.
GM, which turned 100 this year, established the Pontiac division in 1926. The brand’s sales peaked at 896,980 in 1978, according to trade publication Automotive News. That was the year GM sold 9.55 million vehicles worldwide, the highest ever, and came at the end of an era when Pontiac attracted notice for sports coupes such as the Firebird.
This year, Pontiac sales are down 21 percent, compared with a 15 percent industrywide decline through October.
Very Surprised
Combining Buick, Pontiac and GMC dealerships has “been working very well,” said Randy Marion, owner of Randy Marion Chevrolet-Pontiac-Buick in Mooresville, North Carolina, and a member of GM’s National Dealer Council. “I would be very surprised if they had any intention of getting rid of Pontiac.”
GM established the Saturn brand in 1985, five years before selling the first vehicle. Most of the U.S. dealers are stand alone, according to GM. Sales reached a peak in 1994 at 286,003 units, according to Autodata Corp. in Woodcliff Lake, New Jersey. This year’s deliveries are down 19 percent.
GM made its initial investment in Sweden’s Saab in 1990 and took full control in 2000. Its sales climbed to a record 47,914 in 2003. In 2008, they’re down 31 percent through October.
Cash Burn
Declines across GM’s brands are adding to losses of almost $73 billion since the end of 2004. After burning through $6.9 billion in cash last quarter, GM said Nov. 7 that it had $16.2 billion as of Sept. 30. GM has said a bankruptcy filing would be a “disaster.”
GM gained $1.25, or 35 percent, to $4.81 at 4:15 p.m. in New York Stock Exchange composite trading.
The company’s 8.375 percent bonds due in July 2033 rose 5 cents to 19 cents on the dollar, yielding 43.9 percent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.
GM said Nov. 24 that its nine-year marketing accord with Tiger Woods, the world’s top-ranked golfer, will be discontinued next month by mutual agreement. GM has also delayed incentive payments to dealers, extended holiday shutdowns and announced plans to cut about 3,600 jobs early next year as production slows.
To contact the reporter on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net; Greg Bensinger in New York at gbensinger1@bloomberg.net
Last Updated: November 26, 2008 16:44 EST
Registered User
Joined: Mar 2004
Posts: 4,306
From: Jersey Shore
Shesh...Saturn? Ugh, thats a bad move that I cannot even imagine.
Pontiac...eh alright
Saab, bad
Hummer, its image is high end, but also destroying the Earth. Had GM been proactive in Hummer's image, it could have turned it into GM's Land Rover.
Pontiac...eh alright
Saab, bad
Hummer, its image is high end, but also destroying the Earth. Had GM been proactive in Hummer's image, it could have turned it into GM's Land Rover.
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Joined: Jul 2001
Posts: 3,132
From: Santa Clara, CA
Unless they manage to find a way around the franchise laws, I imagine that they won't be getting rid of brands.
It's possible that they're studying it, so they can present hard data why it's a bad idea.
I've seen rumblings that if they had it to do over again, they would not have shut down Olds.
If Olds were still around, they could sell an unmodified Commodore as an Olds Cutlass. Then those of us who don't want fake hood scoops would have an option. As it is, I'll live with them.
It's possible that they're studying it, so they can present hard data why it's a bad idea.
I've seen rumblings that if they had it to do over again, they would not have shut down Olds.
If Olds were still around, they could sell an unmodified Commodore as an Olds Cutlass. Then those of us who don't want fake hood scoops would have an option. As it is, I'll live with them.
Registered User
Joined: Nov 2000
Posts: 2,712
From: Ontario
Exactly ... I think Pontiac has more relevance in the North American marketplace than Buick does, GM's attempts at assisted suicide notwithstanding. Keep Pontiac and for god's sake focus this time on targeting youth performance instead of getting distracted with badge engineering.
I realize GMC is high volume / low development cost, but tough times call for tough measures. Ford does just fine with only one truck brand, there's no reason GM can't.
I realize GMC is high volume / low development cost, but tough times call for tough measures. Ford does just fine with only one truck brand, there's no reason GM can't.
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Joined: Nov 2000
Posts: 2,712
From: Ontario
I've heard that too, but I would imagine they learned a lot about what to do and what not to do. And if they can get the above help from Washington ...
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Joined: Dec 2006
Posts: 191
From: Rensselaer Polytechnic Institute
No more Pontiac Saturn Saab or Hummer?
http://www.reuters.com/article/ousiv...4AQ07520081127
Definitely not cool. Not gonna lie but I'm going to be seriously upset if GM kills Pontiac and Saturn and lets freakin' Buick live!!!
I haven't seen anything good come out of Buick in years and Pontiac now has the G8 and Solstice, both of which I believe to be awesome.
Even Saturn is bringing high quality Opels to the states.
Saab and Hummer I admittedly dont care about though haha.
I understand that GM needs to act now to get these loans but with lackluster brands like Buick and the rebadged Chevy trucks of GMC surviving its disappointing that two of the better brands would have to die.
I hope it doesn't come to this
Definitely not cool. Not gonna lie but I'm going to be seriously upset if GM kills Pontiac and Saturn and lets freakin' Buick live!!!
I haven't seen anything good come out of Buick in years and Pontiac now has the G8 and Solstice, both of which I believe to be awesome.
Even Saturn is bringing high quality Opels to the states.
Saab and Hummer I admittedly dont care about though haha.
I understand that GM needs to act now to get these loans but with lackluster brands like Buick and the rebadged Chevy trucks of GMC surviving its disappointing that two of the better brands would have to die.
I hope it doesn't come to this
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Joined: Jul 2001
Posts: 3,132
From: Santa Clara, CA
Perhaps, hopefully, this can be part of the negotiations. "Here's the drastic plan you wanted, Congress, but we need your help with some regulations."
I've heard that too, but I would imagine they learned a lot about what to do and what not to do. And if they can get the above help from Washington ...
I've heard that too, but I would imagine they learned a lot about what to do and what not to do. And if they can get the above help from Washington ...
There's a good reason for the franchise laws, btw. If I invest in a dealership, and suddenly my franchise gets pulled, I'm out that investment. So you don't want the franchiser to just be able to do this arbitrarily.
Of course, GM could just offer every Pontiac franchise a Chevy franchise. But then that violates the terms with the current Chevy franchisees over having too many dealers in a certain area.
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Joined: Apr 2000
Posts: 2,224
From: CNY
Aren't the franchise laws state laws? And probably different from state to state. If so, I'm not sure what Congress could do about those.
I could see this being a contentious issue ending up in the court system.
And it's a shame to ax Pontiac. They HAVE lost their way since the '60s & early '70s. But I think they could be more relevant in today's market than GMC or Buick. If only GM would let them get back to doing what they do (or did) best.
I could see this being a contentious issue ending up in the court system.
And it's a shame to ax Pontiac. They HAVE lost their way since the '60s & early '70s. But I think they could be more relevant in today's market than GMC or Buick. If only GM would let them get back to doing what they do (or did) best.
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Joined: Apr 2001
Posts: 3,698
From: USA
GMC is way worse than Pontiac in terms of being "overlap". Pontiac buyers normally want more expressive cars than say a Chevy. Kinda like why people buy a Mazda v. a Ford. If you close Pontiac that is a lost sale....a G8 or Grand Prix buyer is not gonna get an Impala. IMO GMC should go, and Buick should become China only. Hummer/Saab I can't see costing GM any real money closed or not. This whole thing is dumb....because take $10 Billion from the governement will reduce GM to a bit player moving foiward. First rule of business is you can't shrink yourself better.
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Joined: Aug 2001
Posts: 388
From: Racine, WI
Anyone know a dealer principal from a Buick/Pontiac/GMC store? I am curious if there is anything mentioned in their franchise agreement if GM decides to stop selling one of the channel brands?
Pontiac has great potential, Lutz has driven the brand into the ground with his renaming, the same thing happened at Buick. He doesnt understand the customer base or the value of the brand's heritage. How is Pontiac going to increase market share when the 100k per year Grand Prix is cancelled even after winning back to back JD Power Initial Quality Awards and replaced by an imported 25,ooo unit G8? The G3 is a joke. The ute would make an excellent El Camino, as a Pontiac it is a failure in the making.
Pontiac has great potential, Lutz has driven the brand into the ground with his renaming, the same thing happened at Buick. He doesnt understand the customer base or the value of the brand's heritage. How is Pontiac going to increase market share when the 100k per year Grand Prix is cancelled even after winning back to back JD Power Initial Quality Awards and replaced by an imported 25,ooo unit G8? The G3 is a joke. The ute would make an excellent El Camino, as a Pontiac it is a failure in the making.
Last edited by gtjeff; Nov 26, 2008 at 09:14 PM.
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Joined: Aug 2005
Posts: 553
From: British Columbia, Canada
While I don't agree with eliminating Pontiac due to its history and new life in its new vehicles, Hummer has such a negative image associated with it so personally I feel it needs the axe. I NEVER see Saabs around, so it may be time for it to go. As for Saturn... How about a Chevy Sky...?
As for the Pontiac/Buick/GMC dealers, I feel that they would just end up being Buick/GMC dealers. That is what happened to the local Chev/Olds/Caddy dealership in my hometown.
As for the Pontiac/Buick/GMC dealers, I feel that they would just end up being Buick/GMC dealers. That is what happened to the local Chev/Olds/Caddy dealership in my hometown.