gtjeff

I was one of approximately 90 guests invited by GM to a Product Technology Event on August 9 & 10 in MI. We toured the Heritage Center Sunday evening. The collection there is an awesome sight, a 1953 Corvette is currently in the lobby. None of the cars are even roped off!! On Monday, we visited the Design Center, Design Dome, Volt Pre production operations in Warren and the Milford Proving Grounds. No pictures were allowed in Warren for obvious reasons. We saw new product for all four brands, more about that later. They took the Volt for maybe three laps around the black lake. We got over near the Volt as they mentioned the car had to return to Warren. I wish I would have been able to have taken a ride in it.

CEO Fritz Henderson spoke to almost everyone personally as we test drove cars on the black lake. I was very impressed with him, he is very customer orientated. I asked him about Pontiac, he said it was a tough decision. At the ride and drive, GM had employees out asking us for our comments, suggestions and opinions after driving the cars. I was surprised to find out one of them was a designer. Even their Vice President's were taking notes of what we said during the tour!

This was a first class event, like visiting a Disneyland for Cars. People flew in from all over the country. GM paid for everything. They had a cross section of people which represented the population of the US well. We were told people were selected from many sources: GM employees, Fastlane bloggers, people on twitter and other social media, suppliers and companies that had relationships with GM among others. I was told I was selected because of posting on Fastlane, however, I wonder if the BusinessWeek article I wrote in May about Pontiac's recent marketing strategy may have had something to do with it as well. Link to article:
http://www.businessweek.com/bwdaily/...521_339302.htm

Right now, I'm kind of busy, so I wont have time to reply to questions. I will post more about what I saw, when I have time.

GM is ready to listen to customers, I saw it firsthand. Why not send them an email telling them to bring back Pontiac. Here are almost 200 pictures of the event at Milford, I am pictured in photo 127 with my sister talking to Fritz. Photos will take a minute to load, since there are so many.

http://gallery.me.com/stevefechtphoto#100225

AdioSS

very cool! I'm interested in seeing what you are allowed to post about the future cars!

poSSum

Sounds like a large scale Camaro Enthusiast Summit.

OutsiderIROC-Z

Did he try to sell you an Equinox?

DAKMOR

ehh, you want to save a dead brand?

gtjeff

Realistically, Pontiac is hardly a dead brand, I have heard 60% of BPG sales in
the midwest are Pontiac. If I owned a dealership that was only Buick GMC, I would be very concerned about my future profitability.

I am sure someone will mention that Pontiac lost money recently. I would argue decisions made led to the brand's decline. No volume replacements for volume cars like the sedan and coupe Grand Prix, I would bet they lost money on the G8. Importing cars in low volumes is not a sustainable business case, just a stop gap measure. The alphabet soup names led to the brand's decline. How does the G3 fit in with Pontiac's performance image? Chances are good many Pontiac buyers will bolt to another companies products.

Aaron91RS

GM's excuse is they can't have that many brands.
I say that's BS and they can't have that many total cars.
And once they come off the assembly line it doesn't make a damn bit of difference cost wise what badge you put on the nose.
Prove me wrong.

Josh452

Closing Pontiac isn't an excuse - it's Government mandated. I hate it, you hate it, and hundreds of thousands of other buyers hate it.

I asked Fritz how they plan to replace Pontiacs volume.....I couldn't believe his answer.

AdioSS

what did he say?

guionM

Government mandated??? Care to elaborate???

I've been under the impression that Pontiac closed because it was a brand that outside of the Solstice, the G8, and to a lesser extent the Vibe, upwards of 70% of all vehicles sold by Pontiac were money losing fleet sales to rental companies.

I recall Bob Lutz himself (rightfully) calling the brand damaged no less than 5 years ago.

I also recall the other Jason here getting so fed up with Pontiac's lineup that he jumped over to sell Chryslers.

But I haven't seen any "Government Mandate" that required GM to shut down Pontiac.

Can you provide a link or something for us to set us straight?

Pretty please?

Z28Wilson

What's disgusting is that Pontiac was damaged, no, destroyed by GM itself.

I don't recall seeing another brand fall so far, so fast. Grand Ams were never great cars but they resonated with their target market in ways G6 couldn't dream of. The GP redesign was awful and sealed the deal.

Aaron91RS

yes GM out of the goodness of their heart sold pontiacs to rental companies at a loss per vehicle

I swear I get sick of people spewing this crap no matter if it's GM, Ford or anybody else.

Fleetsales are profitable or they wouldn't happen period.
They may not be as profitable per car as individual sales, but you make it up in volume.

No company out out there is going gee I think I'll sell you this car that costs me 10K to make to you for 8K.

OutsiderIROC-Z

+1?

guionM

It's not crap Aaron, it's fact.

Losses may not be a big deal with old cars still in production (ie: Crown Victoria, the old Malibu after the new one came out, the last year Taurus, or anything else whose cost has long been covered), but with everything else, it certainly is.

Car makers reasons for selling to rentals at a loss is it's cheaper to have a factory produce a vehicle at a small loss than to lay off workers and temporarily shut down a factory because of excess stock. All 3 automakers have done it. All 3 automakers have tried to get away from it. Automakers in return have focused on making up the loss by selling large profit SUVs and trucks.

To use your example, it costs me 10K to make a vehicle and I'm not selling enough to keep my factory going. Am I going to entice volume by selling it at 8K to volume purchasers (at a 2K per car loss) keeping my workers making something I can sell and pay bills, or am I going to shut down my plant pay my workers 80% of their salary, health care, social security and unemployment insurence, continue paying all the taxes and the bills on that plant, have that plant making absolutely nothing of value to recoup that expense, and in the end wind up losing, say, 4-5K per vehicle overall if not more?... especially if I feel I can make up the difference elsewhere in my model lineup?

Pretty simple decision.

Making up $2K is easier than making up $4-5K.


Ford has come the farthest in getting away from this practice, but taking the hits early on by shutting plants & buying out workers. Well before Alan Mulally came aboard, Ford decided to abandon efforts to maintain high volume, and focused on overall profit. One of the biggest moves was the decision to shut down one of the Taurus plants. Ford once needed 2 large plants to meet the demand for the Taurus. But since Taurus in it's later years was selling mainly to rental agencies, Ford moved production to a single plant, cut production, and wound up clearing more money on Taurus on fewer sales.

The business model for the Pontiac G8 was similar.

The Grand Prix was selling roughly 110-120K annually. Between 60 and 70% of Grand Prixs were low-to-no optioned models (whose money making ability was even farther gutted by being sold at lower fleet prices) going to rental and government agencises. The G8 business plan was based on GM selling as many G8s at retail as they sold Grand Prixs at retail (about 30-40K annually), running a single factory at capacity without the need to sell models simply to keep the factory running.

GM started funneling huge amounts of money to rebuild Cadillac 10 years ago to increse margins to offset the thin margins and losses due to their pursuit of higher volume via incresed fleet sales of lesser models.


Chrysler also has come a long way as well. Last year, before the bottom dropped out when fuel prices were sky high, Chrysler was undergoing an effort to cut back on fleet and rental sales because they weren't selling enough money making Rams and Minivans to counter the losses they were taking on some of their fleet sales.

Even today, a law enfocement agency can negotiate a deal with Chrysler to buy a Hemi Charger ($32K last time I checked) for as low as $28K. There certainly isn't $4K worth of deleted items left behind. The CHP bought my 2002 Camaro for under $20K a pop.


Fleet sales are the type of sales that as an automaker, you want to avoid.

If Fleet and Rental sales made money, you see a huge rush to do more of these sales, not a mad dash away from it (even at the expense of sales volume).

Aaron91RS

so they had 10 years of excess grand prixs to get rid of.

Weird I think I'd start making a different car if that were truely the case.