Z284ever

GM May Shrink Pontiac Lineup to One Model From Six (Update1)
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By Greg Bensinger

Dec. 18 (Bloomberg) -- General Motors Corp. peddled Pontiacs for years with the slogan “We Build Excitement.” To stay afloat, it’s producing fewer thrills -- and models.

The company may shrink the Pontiac division to a single model from six following a drop in sales every year since 1999. “It might be just one model,” Mark LaNeve, GM’s North American sales chief, said in an interview.

GM joins Chrysler LLC and Ford Motor Co. in trimming brands as U.S. sales sag amid the biggest financial crisis since the Great Depression. GM has said it will run out of cash by the end of the month and is seeking financial aid from the government to avoid a collapse.

While GM told Congress on Dec. 2 that it would shrink the number of models it sells, including at Pontiac, it hasn’t said previously that it might jettison all but one Pontiac brand.

Paring Pontiac to a lone model would deprive GM of its third highest-selling brand after Chevrolet and GMC, and almost 2.2 points of U.S. market share accounted for by Pontiac’s sales of 358,022 vehicles in 2007. GM’s market share has dwindled to 22.1 percent from a peak of 51.1 percent in 1962.

Sales of GM vehicles are down 22 percent through November of this year from the year-earlier period, including a 23 percent plunge for Pontiac to 250,902 units. Only Pontiac’s redesigned Vibe small car has increased sales this year.

Gaining by Losing

Jettisoning the Pontiac brands would help GM by cutting jobs and production costs, trimming advertising and eliminating lower-margin vehicles, said Efraim Levy, an equity analyst at Standard & Poor’s in New York.

“GM can get more bang for their buck,” said Levy, who rates the Detroit-based automaker as “sell.” GM shares have fallen 82 percent this year through yesterday. They lost 14 cents, or 3.2 percent, to $4.23 at 10:50 a.m. in New York Stock Exchange composite trading.

The company, which scrapped the Oldsmobile line in 2000, said in its request to Congress for help that shrinking brands would result in 20,000 to 30,000 fewer U.S. hourly and salaried workers.

GM already plans to eliminate its Pontiac Torrent sport- utility vehicle, said Debbie Frakes, a spokeswoman. GM gave no estimate of cost savings or worker reductions at Pontiac.

The one remaining Pontiac would be a car to be sold alongside Buicks and GMCs, on a scale similar to its Corvette available in Chevrolet showrooms, LaNeve said. GM sold 33,685 Corvettes last year.

‘Lost Its Way’

While LaNeve wouldn’t name the remaining Pontiac, he described it as “a very high-appeal, performance-oriented model as opposed to a mainstream high-volume model.” It would be less expensive than the Corvette, which starts at about $50,000, LaNeve said.

That most likely means the Pontiac G8 sedan, introduced this year in the U.S., said John Wolkonowicz, an analyst with IHS Global Insight in Lexington, Massachusetts. He said Pontiac may drop the G5, G6, Solstice and Vibe cars and the soon-to-be- released G3 compact.

The cutbacks would mark the near-demise of a once iconic brand, he said.

“In its heyday, Pontiac was a brand everyone wanted to own and no one would be embarrassed to drive,” Wolkonowicz said. “Pontiac simply lost that excitement; it totally lost its way.”

First sold in 1926, Pontiac became known as a higher- quality alternative to Chevrolet. The unit developed a reputation for high-performance autos such as the now-defunct Bonneville sedan, eventually rising to third in U.S. sales behind Chevrolet and Ford’s namesake brand.

Muscle-Car Era

Pontiac’s 1964 GTO sports car ushered in an era of so- called muscle cars such as the Dodge Challenger and Chevrolet Camaro. “Pontiac at that time was the golden boy of the auto industry,” Wolkonowicz said.

The division’s most popular model was the Grand Prix, with sales of 288,000 in 1977, GM said. Pontiac sales peaked in the U.S. at 896,980 in 1978, GM’s best year, according to trade publication Automotive News. By last year, they had fallen 60 percent from that record. Today, GM is trying to incorporate the brand alongside Buick and GMC models in dealer showrooms.

GM also is rethinking the future of its Saturn unit and has put Saab and Hummer on the sales block. Ford said on Dec. 1 it will sell Volvo, while Chrysler is closing a Newark, Delaware, plant this year where it makes the Dodge Durango and Chrysler Aspen sport-utility vehicles.

GM Vice Chairman Bob Lutz, who in 2005 described Pontiac as a “damaged brand,” has said the division hit a low point with its Aztek crossover SUV that debuted in 2001. Time magazine listed the Aztek among the worst 50 cars of all time in 2007, citing a “deformed and scary” appearance.

Dealers Go Too

LaNeve said GM will try to eliminate 1,700 of its 6,400 U.S. dealerships in five years, in part by normal turnover and combining showrooms for Buick, Pontiac and GMC, known internally as BPG. GM expects to lose about 400 dealerships after selling the Saab and Hummer franchises, he said.

Reducing dealers helps cut competition, boosting sales at remaining outlets. The changes may add more desirable customers, said Charles Martin, who owns Classic Buick-Pontiac-GMC in Carrollton, Texas.

“This could be a good thing for the BPG channel, by inviting younger buyers,” he said.

Raven99

If Pontiac is down to just the G8 they may as well just kill it IMO What's the point? Is the G8 that much of a "halo vehicle" ? I don't think so. I think the Solstice fits that role moreso than the G8.

Bah! whatever. It's just a sad situation all the way around.

Looks like a 370Z is the next car for me

guionM

Think for a moment.

Pontiac is GM's 2nd biggest car division. Excluding Cadillac, Pontiac sells more cars than the rest of GM's North American operations combined except Chevrolet.

The entire Buick division (including trucks) barely outsells Pontiac's G6 alone.

Yet, Pontiac is the one shrinking and becoming a niche brand.... from 327,800 vehicles as of December 1st to, what? About 15-18K G8 GTs and GXPs annually?

And people wonder why GM is about to collapse?

z28 justin

Everyone forgets Buick = China sales. I agree with the above post about the Solstice being Pontiac's model. I love the G8 but comparing something to the Vette but cheaper, what else is there?

HuJass

These statements just reinforce what I believe would be the best path for Pontiac. Embrace those years when it WAS the "golden boy".
GM NEEDS to figure out what made Pontiac SO popular back then, and then recreate it. I still think they can tap some of the players back then for guidance.

And it also shows that Pontiac stopped being Pontiac in 1978-79 time period. That just happens to coinside with the end of the Pontiac 400 and the installation of GM "corporate" engines into Pontiac.

And notice when the GP had it's best year. When it was a personal luxury coupe, not a 4 door sedan.

R377

Yeah, it never made sense to me to keep Buick instead of Pontiac. Pontiac is much more relevant in today's marketplace, with its somewhat youthful, somewhat sporty target market. Given the right cars and right marketing, I think Pontiac would have a much better chance at growing its sales than Buick would. Very few people aspire to own a Buick, as is clearly evidenced by their sales. Keep Buick going in China of course, but that doesn't mean it needs to be sold here.

The downside of this turn of events is that I may not get the opportunity to purchase a Solstice Coupe in a couple years' time.

Z284ever

I think part of the allure of Buick in China is, that it is considered a psuedo-premium American brand. If they closed Buick down here, there goes that.

GM has very few cash cows left. Buick/China is one of them. GM wants to protect it.

R377

Given the 'perception lag' inherent in the auto business, it's more likely the seeds of Pontiacs decline were sown well before sales hit their peak in '78-79. I don't know exactly what that was, but I also doubt it had much to do with corporate engines. Sure a few enthusiasts would care, but the majority of the market wouldn't know the difference between a 400 and SBC.
Are you suggesting that the GP should have always remained a coupe? In 1978 luxury coupes were the hot market, kinda like SUVs a few years ago. So it's natural that a division calling itself the excitement division would sell a lot of luxury coupes. But in the 1990s and 2000s, large coupes were very much out of fashion and had Pontiac stuck to making only two-door Grand Prixs, their sales undoubtedly would have been much worse.

Z284ever

The 1970's GPs were considered pretty fancy cars. Sort of what an Infiniti or Acura would be today, if they sold large coupes. I guess you could also say the same thing about the Cutlasses of the era. A HS classmate, one of those guys who worked fulltime and went to school, bought himself a brand new, 1977 Grand Prix SJ, with a 400 4 bbl. I think it cost something like 8-9K. A pretty penny back then.

formula79

I have always thought it made sense to make Buicks in China rebadged Opels. Then you scrap Buick here and keep Saturn as is (rebadged Opel). I never was a fan of Saturn, but it is stupid after all the money GM has spent to shut it down.

Z28x

But it would cost more money to shut down Pontiac, Buick, or GMC, and all those brands sell more units. One thing is for sure though, some one has to go.

Good Ph.D

That's a bit drastic even for me. I would like to see Pontiac have three solid, class leading cars, small, mid and large, each available in a lot of configurations, convertible, coupe, sedan, etc.

I support the thought process, but even if they intend to expand the lineup slightly at a later date when more appropriate products are available, it may be too late.

Clearly they haven't learned the Saturn lesson yet. Turning a niche brand into a volume brand didn't work, so why would the inverse?

rlchv70

I don't think GM will lose that many sales. Remember that Pontiac is in the same show room as Buick and GMC. The Pontiac Torrent becomes the GMC Terrain. No sales lost. The G6 is replaced by the Buick Regal. No sales lost. The G3 and G5? Probably will stick around for a while. Solstice will also be around for a while.

Good Ph.D

They lost sales when LaCrosse replaced Century and Regal, lost sales when Lucerne replaced LeSabre and Park Avenue...

It may not make sense, but even among GM people are very brand loyal.

91_z28_4me

2 models -> 1 isn't the same as a name and brand change. Although I do think that if you move a model to another division you will lose sales.