Goodbye Pontiac!

[David #19063]

http://news.yahoo.com/s/ap/20090427/ap_on_bi_ge/us_gm_plan

GM to cut 21,000 US factory jobs, shed Pontiac

By TOM KRISHER and KIMBERLY S. JOHNSON, AP Auto Writers Tom Krisher And Kimberly S. Johnson, Ap Auto Writers

DETROIT â€" General Motors Corp. said it will cut 21,000 U.S. factory jobs by next year, phase out its storied Pontiac brand and ask the government to take stock in exchange for half GM's government debt as part of a major restructuring effort that would leave current shareholders holding just 1 percent of the company.

The struggling automaker said it will offer 225 shares of common stock for every $1,000 in notes held by bondholders as part of a debt-for-equity swap that aims to retire most of GM's $27 billion in unsecured debt.

The announcements came in a filing Monday with the Securities and Exchange Commission.

GM is living on $15.4 billion in government loans and faces a June 1 deadline to restructure and get more government money. If the restructuring doesn't satisfy the government, the company could go into bankruptcy protection.

GM said in a news release that it will ask the government to take 50 percent of its common stock in exchange for canceling half the government loans to the company as of June 1.

In addition, GM is offering the United Auto Workers stock for at least 50 percent of the $20 billion the company must pay into a union run trust that will take over retiree health care expenses starting next year.

CEO Fritz Henderson said the objective of the bond exchange is to reduce GM's $27 billion of outstanding debt by about $24 billion dollars. The company estimates that after the exchange, bondholders would own 10 percent of the company.

All the stock offerings mean that current common stockholders would own only 1 percent of the company under the deals, GM said.

In premarket trading, GM shares rose 16 cents, or 9.5 percent, to $1.85.

GM said it would speed up six additional factory closings that were announced in February, although it did not identify them in its news release. Additional salaried jobs cuts also are coming, beyond the 3,400 in the U.S. completed last week.

Including previously announced plant closures, the restructuring will leave GM with 34 factories at the end of next year, down from 47 at the end of 2008.

The company also said it plans to thin its dealership ranks by 42 percent from 2008 to 2010, cutting them from 6,246 to 3,605.

"The Viability Plan reflects the direction of President Obama and the U.S. Treasury that GM should go further and faster on our restructuring," Henderson said in a statement. "This stronger, leaner business model will enable GM to keep doing what it does best â€" provide great new cars, trucks and crossovers to our customers, and continue to develop new advanced propulsion technologies that are vital for our country's economy and environment."

The new plan lowers GM's break-even point in North America to an annual U.S. sales volume of 10 million vehicles, the company said. That's slightly more than the current sales rate, and most economists expect an uptick in the second half of the year.

"This lower break-even point better positions GM to generate positive cash flow and earn an adequate return on capital over the course of a normal business cycle, a requirement set forth by the U.S. Treasury," the statement said.

The company said it would phase out its storied Pontiac brand no later than next year, and the futures of its Hummer, Saturn and Saab brands will be resolved by the end of this year by either selling them or phasing them out.

For Pontiac, the decision means the death of a brand known for its muscle cars including the Trans Am made famous in movies and the GTO, the subject of a nostalgic song by the Beach Boys.

Henderson said in a news conference that the company was spread too thin to make Pontiac work.

"We didn't think we had the resources to get this done from a product perspective," or marketing, he said Monday at a news conference.

He said the decision was very tough for many at GM because of the brand's heritage.

Henderson said GM wants to develop a plan that doesn't have to be repeated.

"We only want to do this once," he told reporters.

[76eldo]

Should have kept Pontiac and bagged Buick.

Chevy, entry level

Pontiac, mid level with some sportiness

Cadillac, no explanation needed.

Buick would have been a better choice to cut, in my opinion.

Brian

[82CDV]

Should have kept Pontiac and bagged Buick.

Chevy, entry level

Pontiac, mid level with some sportiness

Cadillac, no explanation needed.

Buick would have been a better choice to cut, in my opinion.

Brian

Might have more to do with the dealer network than the brand positioning?

[Wynn Moore]

Should have kept Pontiac and bagged Buick.

Chevy, entry level

Pontiac, mid level with some sportiness

Cadillac, no explanation needed.

Buick would have been a better choice to cut, in my opinion.

Brian

That seemed to be the logical move to me also, as it would be mid level.  Buick is more toward the luxury end of the line.  Again is appears that GM is going to for bigger profits.

[Wynn Moore]

Might have more to do with the dealer network than the brand positioning?

Seems to met that many dealerships are Pontiac-GMC-Buick.  Why get rid of Pontiac.  I think this has been sort of decided some time ago, ever since GM stopped making Bonneville's, and screwing up the Gran Prixs and GTOs.

[JI Garner]

Pontiac outsold Buick nearly two to one, but Buick is more profitable. They probably went for the higher profit with much less union labor and related fringe benefit cost. That means a lot in the long run.
Jim

[Don Boshara #594]

My dad was a Pontiac dealer from 1935 to 1957 and thought that General Motors and its Pontiac Division was God’s gift to America. It’s well that he’s gone and not witnessing these events.

[Jim Salmi #21340]

Maybe they figure that it will be easier to cheapen down the Buick name to a mid-level product, than it would be to raise the Pontiac name from lower mid-level.  The middle-middle was what Oldsmobile occupied.  I agree that Pontiac has a more youthful, sexy image.  Little GTO, sang the Beachboys.  Or was that Jan and Dean?  Can't remember.  It's for sure there aren't any songs about Little Lesabre that I can recall.  Buick has a good product, but stodgy image.  It's a shame it had to come to this.  

Why are they keeping GMC trucks?  Seems like they have always been redundant when you have the Chevy truck division.

[Mike Josephic CLC #3877]

Little GTO was Ronnie and the Daytona's.

Anyway, I hate to see Pontiac go -- lots of memories.  The first car I ever drove was
a '53 Pontiac.  I also had a '64 LeMans and a '67 Bonneville.

Makes me wonder what some of these dealers are going to do.  A very large dealer
near me sells Pontiac, Volvo, GMC and Hummer.  Guess he's a bit nervous now.

However, I agree with the forgoing comments, that the only way to "shrink" GM
quickly enough was to cut out some major brands.  In that way, you shed UAW, white
collar workers and generate some cash from the write off.  The least profitable is the only
correct way to do it -- not base it on sales volume.  That's why they kept Buick.

Mike

[Bob-S]

Hi All,
It is my understanding that Buick sells very well in China and Pontiac is not known there.

[Rich S]

It's really unfortunate to witness this elimination of a brand well entrenched in American culture! Surely, their thinking is geared towards eliminating the least profitable divisions.

However, it seems fundamental that in business, it is easier to keep customers happy, rather than attract new ones all the time. I can't help but think that when GM eliminated longstanding product names, this contributed to loss of customers. Was a G6 slotted to fill the gap left by the Grand Am, or the Grand Prix, etc.? Consumers just went elsewhere, even many who were loyal to Pontiac. With the new brand order, many people will still avoid Chevy, since it has always been considered the entry-level model, and they may not go for Buick, since it generally attracted older and more conservative buyers. I sure wish GM the best--and I hope they build a fantastic replacement for the DTS--and bring back the DeVille name! My Cadillac dealer's sales manager said that at a recent meeting, the dealers were told there will be one to one and one-half years without a DTS model in the line-up, until the replacement vehicle is ready. He expressed concern about customers on a cycle for replacement, who traditionally bought a DTS, because they may go to other brands, outside the GM line-up.   

[Otto Skorzeny]

As previous posters have noted, Buick is very profitable for GM. It would be stupid to pull the plug on that brand. It also constistantly ranks very high in the JD Power surveys. It tied with Lexus 2 years ago.

Also, as has been said, Buick is GM's biggest seller in China. It also sells lots of them in Israel. I don't go for SUVs but the Buick Enclave is world-class by all accounts. You've got to keep making what people want to buy and Pontiacs aint it.

My brother looked at a Pontiac Solstice in '07. I went with him. It is a cheap POS. Flimsy interior, plastic junk everywhere. He bought a top of the line Buick Lucerne and loves it.

[Chris Conklin]

It is my understanding that Buick sells very well in China and Pontiac is not known there.

I think you hit the nail squarely on the head - the world's foremost emerging market and Buick is big there.

[Wynn Moore]

Maybe they figure that it will be easier to cheapen down the Buick name to a mid-level product, than it would be to raise the Pontiac name from lower mid-level.  The middle-middle was what Oldsmobile occupied.  I agree that Pontiac has a more youthful, sexy image.  Little GTO, sang the Beachboys.  Or was that Jan and Dean?  Can't remember.  It's for sure there aren't any songs about Little Lesabre that I can recall.  Buick has a good product, but stodgy image.  It's a shame it had to come to this.  

Why are they keeping GMC trucks?  Seems like they have always been redundant when you have the Chevy truck division.

Most likely to offer trucks to dealerships other then Chevrolet, that didn't offer trucks.

[Davidinhartford]

Indeed it is sad to see Pontiac go away.   But everything that was great about them disappeared long ago.   

The Bonneville..... gone

The Catalina.......gone

The Grand Prix..... turned into ricer...   ugh.

But it is the general public that is responcible for the demise of Pontiac, Oldsmobile, Plymouth etc.

The boomers, their kids and grand kids all bought foreign and never thought of the consequenses of what would happen when the party was over.    They all wanted UAW wages and then bought an Avalon or Lexus.    Time for all of us to pay the piper folks.   

We should all be rallying around to encourage eachother to trade in the foreign cars for American ones.     Chevys Malibu is world class.   Cadillacs CTS is too.    The Ford Fusion and Millan are damn impressive too.

Trade in those Tundras for Silverados!

The job you save may not be your own, but it could be your neighbors.

[EdDougher]

Maybe, just maybe, all those years of shoddy products and indifference toward customers has something to do with it too.

My brother's '78 Grand LeMans with what turned out to be a modified Chevette transmission (there was a class action suit against GM) comes to mind.

The chickens do eventually come home to roost.

[The Tassie Devil(le)]

The start of the downfall of GM was when each "Brand" started using the same engines.

It started in Australia in 1958 when Pontiacs used the Chevrolet Chassis and drivetrain.

Then, Pontiac became a Chevrolet with slightly different shape and badging.   The rest of the car was exactly the same when sitting behind the wheel.

Bruce.

[Wynn Moore]

The start of the downfall of GM was when each "Brand" started using the same engines.

It started in Australia in 1958 when Pontiacs used the Chevrolet Chassis and drivetrain.

Then, Pontiac became a Chevrolet with slightly different shape and badging.   The rest of the car was exactly the same when sitting behind the wheel.

Bruce.

1958???  Same drivetrain? Surely you jest!  Maybe that's how it was in Australia, but in the good Old USA, this was the golden age of GM.

[The Tassie Devil(le)]

1958???  Same drivetrain? Surely you jest!  Maybe that's how it was in Australia, but in the good Old USA, this was the golden age of GM.

No, the cars came from Canada as CKD's, and even Canada had the Chevrolet components in the Laurentians and Parisiennes.

At least we got full Leather Interiors up till 1964 in both Pontiacs and Chevrolets.   That was part of the Local Content requirement.

But, you have to remember that Chevrolet was treated as a Luxury Brand here, and Pontiac was just that bit higher. (and only a 4 door sedan to boot).    No Buicks imported by GM since 1953, and no Cadillacs since 1940 or maybe 1941 as we were in war mode starting 1939.

Bruce.

[David #19063]

The Ford Fusion and Millan are damn impressive too.

A couple years ago I worked for a Tier 1 supplier for the Ford Stamping plant in Chicago Heights, IL. 

All the workers there hated the Fusions / Milans as they considered them foreign cars since they are all made in Mexico.  You didn't see any of them in the huge parking lots there. 

I had to park way way way out on left field in the non-Ford parking area because I drove my Cadillac Concours.  There were also a few more Cadillac's and a couple Hemi powered Chrysler's and Dodge's parked with me.