Posted by: David Kiley on April 24, 2009
General Motors is expected to announce Monday that it plans to kill its Pontiac brand, rather than maintain it as a niche brand with one or two models into the future as had been previously announced by company officials.
The company will also announce further plant closing and job cuts as it tries to meet a May 31 deadline to show the Obama Administration that it has a solid plan for financial viability. If it succeeds, the White House will grant GM additional government loans to operate. If GM faces bankruptcy, the government will provide financing for the automaker to re-emerge from Chapter 11 smaller and leaner.
The move to shutter Pontiac comes as GM is being forced to make a lot of hard decisions to restructure itself. The automaker has until May 31 to demonstrate to the White House that it has a viable comeback plan that will justify further taxpayer loans.
Most Pontiac showrooms have been combined with GM’s GMC and Buick brands. But there are about 40 stand-alone Pontiac stores.
The company killed the Oldsmobile brand in 2000. It currently is in process of closing off its Saab brand, waiting to see if investors want to buy it and keep it going. It is also trying to sell its Hummer and Saturn brands. In Europe, it is in negotiations to possibly sell its Opel and Vauxhall brands.
Pontiac has been almost a lost brand at GM. It once was positioned as the company’s performance brand. “We Build Excitement” was a long-standing ad slogan. It’s twin-kidney grille design was taken from BMW’s. The high-water mark for Pontiac’s brand clarity, most agree, was the 1964 Pontiac GTO, which many point to as the start of the muscle car era.
In the 1970s and 80s Pontiac offered the Firebird as a legitimate street rod. But GM got lazy, and began dumping “badge engineered” cars into the showrooms. That meant, for example, Pontiac Grand Ams, Grand Prixes, and Sunfires were nothing more than Pontiac-badged versions of the cars that could also be bought at Chevy, Buick and Olds dealerships.
I bought a 1993 Pontiac Grand Prix for myself. It had a flabby ride, and I particularly recall the piece of foam hanging out of the slot in the door where the door opener was situated. Even with the foam stuffed into the hole, the wind whipped through it at me when I was driving at highway speeds.
The drifting identity of Pontiac may have hit its nadir when the automaker gave dealers a minivan, called the Montana, as well as a gawky SUV called the Aztek in 2000. The Aztek has become the poster-car for awful design at GM in the last 20 years.
Hope for Pontiac sprung when Bob Lutz arrived on the scene to take over product development at GM in 2001. He immediately got to work adapting an Australian car GM already built as a new GTO. But it failed to catch on. The first car designed from the ground up under his direction was the Solstice roadster convertible. It has been reviewed well by the auto press, but sold in small numbers due, in part, to the weakness of the Pontiac brand.
A few years ago, GM executives heard advertising pitches on how to reposition Pontiac. One seemingly good idea was to embrace the gritty Detroit roots of Pontiac, and pitch it as a urban Motown muscle and performance brand. GM officials liked the idea, pitched by ad agency Deutsch, which now handles the Saturn account. But those officials realized they didn’t have the product lineup to back up the compelling ad idea. It never got off the ground.
Pontiac sold about 42,000 vehicles through the first three months of the year, down 44% from the year before, a bit deeper decline than the industry as a whole. That low sales volume is spread across seven active Pontiac models: G3, G5, G6, G8, Vibe, Solstice and Torrent. Lots of Pontiacs show up at car rental lots, though, which means a big chunk of sales aren’t profitable.
There is finally widespread agreement, albeit forced on GM management by the recession and the White House auto industry task force, that it is madness to maintain so many brands that have so little market share.
GM, through March, had an 18.8% share of the U.S. auto market. But 11.2% of that is Chevy. Saab, Pontiac, Hummer, Saturn—the brands on the auction block or headed for the graveyard--add up to 3% of the market. And a good bit of that has been rental fleet.
GM's pressurized restructuring is not only about manufacturing costs and headcount reduction. It is about opportunity cost. If the company is worried about supplying all these weak brands with new models and ad budgets, it is shorting the real brands that make money and have futures, like Chevy and Cadillac, of the focus and resources they need.
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So long Pontiac. Say hello to Olds when you get where you are going.