RIP Pontiac..., GM kills Pontiac effective Monday Options

[Rob Hood]

It's all over the 'net, CNN, Fox, WSJ (subscription)...

[rmackintosh]

Yeah....all knew it was coming....still don't understand why they don't kill BUICK instead of Pontiac!?!?!?!!?

It SHOULD be:

Chevrolet = family/everyday/work vehicles (Corvette an exception)
Pontiac = sporty cars
Cadillac = Luxury cars

DONE....end of story

What the hell do they need Buick for? Grandpa can step up to a Cadillac base model.....

[trackbird]

Turns out, Buick is a HUGE prestiege brand in China. You know, the country with the seriously growing thirst for cars? Buick is apparently revered over there as a status brand. Nope, it's probably not going anywhere. Buick in China seems to be thought of like Caddy is in the US.

[cccbock]

Turns out, Buick is a HUGE prestiege brand in China. You know, the country with the seriously growing thirst for cars? Buick is apparently revered over there as a status brand. Nope, it's probably not going anywhere. Buick in China seems to be though of like Caddy is in the US.

I hate to see things going the way they are, BUT bizness is bizness.

As with all things, brands come and go. heck, Olds is dead, and Cadillac was nearly dead 10 years ago, now they have performance and style...who woulda thought?

Hopefully Buick and Chevy will take up some of the performance stuff. As much as we might like Pontiac, their stuff isnt selling. The Ricers are kicking their butt.

bock

[rmackintosh]

Turns out, Buick is a HUGE prestiege brand in China. You know, the country with the seriously growing thirst for cars? Buick is apparently revered over there as a status brand. Nope, it's probably not going anywhere. Buick in China seems to be though of like Caddy is in the US.

....turns out....the Chinese aren't too smart after all...... (IMG:http://www.frrax.com/rrforum/style_emoticons/default/ph34r.gif)

[Rob Hood]

What I hope happens is the G8 becomes the Impala. I doubt it though, since GM needs the fuel mileage that the current Impala provides.

[trackbird]

As with all things, brands come and go. heck, Olds is dead, and Cadillac was nearly dead 10 years ago, now they have performance and style...who woulda thought?

Plymouth died many years ago as well. Does anyone even remember to miss it? I suspect we'll eventually get over many of these brands too. And, this is likely going to squash all the rumors of a 5th gen Firebird, once and for all...

[sgarnett]

I kinda miss my 64 Plymouth (IMG:http://www.frrax.com/rrforum/style_emoticons/default/smile.gif)

[2000Z-71]

Who knows, GM put out a statement on Friday saying that they had not made any decisions regaud=rding the discontinuation of brands.

http://media.gm.com/servlet/GatewayServlet...amp;docid=53902

[trackbird]

I just can't take these on again, off again relationships...

(Cue "Should I stay or should I go now" in the background)

[rhit_rs]

I'm really hoping they don't pull the plug on Pontiac...I'm a big fan of the solstice (my mother is an even bigger one), and the G8 is just flat out hot. I need them to make enough G8's that when I finally get done with school and get a real job I can buy a used one reasonably...come on GM...keep the poncho's in the lineup...

[00 Trans Ram]

Here's the part I don't understand about the "Buicks sell in China" arguement. Why not just sell them in China? According to the AP story I read a few minutes ago, Pontiac is the 3rd best selling GM brand. Buick is 5th. Keep Pontiac here and Buick there.

I think that companies do this all the time. Sell one brand in one place but not another. Right?

[CMC #37]

You wonder what they will do with the Solstice. That car is a winner! I see tons of them where I live.

[2000Z-71]

Well now it's official, no more Pontiac after 2010. With their latest plan the government and the UAW will own 89% of GM. If this goes through, I don't think it will be long before the rest of GM follws Pontiac...

I would hope that the Solstice and G8 could be re-badged and sold in the Chevy lineup, but I doubt they will. I could see a Monza Spyder (ok maybe not, too much bad press with that one form the crappy 70's) and a Chevelle, an El Camino II from the Ute would also seem to make sense. What's the logic of keeping GMC and having a second truck line?

http://money.cnn.com/2009/04/27/news/compa...sion=2009042712

GM goes for broke
As part of new plan, taxpayers and unions would own majority of automaker. Company unveils more cuts in jobs and dealers in bid to avoid bankruptcy.

NEW YORK (CNNMoney.com) -- General Motors announced plans Monday to cut 23,000 U.S. jobs by 2011, drop its storied Pontiac brand and slash 40% of its dealer network in its latest bid to stay out of bankruptcy.

The new restructuring proposal will leave the Treasury Department, and thus U.S. taxpayers, owning a significant stake in GM. Treasury would accept GM stock, rather than cash, for repayment of about $10 billion that the government has already lent to GM.

Trust funds controlled by the United Auto Workers union would also hold a significant stake in the company. Between them, Treasury and the unions would own 89% of GM.

GM also announced an offer to its bondholders to swap $24 billion of the company's $27 billion in unsecured debt for stock. GM is offering bondholders 225 shares of its stock for every $1,000 it owes the bondholders in principal.

GM CEO Fritz Henderson warned in a press conference Monday that a bankruptcy is still very likely unless bondholders agree to the swap.

"It's not impossible but it's a tough task," Henderson said about the company's ability to get enough bondholders to accept the company's stock. "That's why I think [bankruptcy] is more probable."

The moves are GM's latest efforts to cut costs and stem losses that have dogged its North American auto operations since 2005. But Monday's restructuring announcement goes much further than the viability plan GM unveiled to President Obama's auto industry task force in February.

0:00 /00:49GM CEO: Bankruptcy is an option
The company had announced many of the job cuts in February, but Monday's news that GM would have about 38,000 hourly U.S. employees by 2011 represents an additional reduction of 7,000 to 8,000 jobs beyond what GM disclosed in its previous viability plan.

The job cuts come as GM is set to announce the closing of more plants in the next few weeks. Henderson would not comment on which plants could be on the chopping block.

The company said its goal is to cut costs to the level where GM can break even even with industrywide U.S. sales of only 10 million vehicles, rather than the 11.5 million to 12 million sales range that had been its previous break-even target. Henderson added he's hoping that the company could be profitable as soon as 2010 under the new restructuring plan.

While the cuts will leave GM a much smaller company, Henderson said this does not concern him. He admitted that results at GM have not been acceptable for quite some time.

"I'm much more focused on getting results than being big," he said.

GM also confirmed reports that surfaced Friday and officially announced plans to drop its Pontiac brand altogether. In its earlier restructuring plan, GM had signaled that Pontiac would survive, albeit as a niche offering.

The company also said it would make more cuts to its dealership network than it announced in February, and at a much faster pace. GM said Monday it will cut the number of its dealers by 42% to 3,605 by 2010, up from its original plan to reduce its network to 4,100 dealers by 2014.

Bankruptcy still possible
The Obama administration's task force, which found that GM's February turnaround plan was not viable, said Monday that the new plan "reflects the work GM has done since March 30 to chart a new path to financial viability." But the task force added that it "has made no final decision regarding the treatment of its current loan to GM or with respect to any future investments in the company."

The administration has given GM only until the end of May to reach deals with creditors and unions to cut costs or be forced into bankruptcy. But the Treasury Department did extended GM an additional $2 billion in loans last week, bringing its total federal assistance to $15.4 billion.

Even before it reaches the government's May 31 deadline to reach an agreement with bondholders and unions, GM will need additional loans from the Treasury in order to continue to pay its bills, Henderson said Monday.

Details of those loans have not yet been worked out. The company has said it could need as much as $30 billion in federal help to weather its current financial crisis, and Henderson said Monday that request should still be sufficient.

The United Auto Workers union and the ad hoc committee of bondholders were not available for immediate comment on Monday's announcements.

GM will still need to convince bondholders to take the deal and win further labor concessions from the union if it is to stay out of bankruptcy. The union announced a tentative deal with Chrysler LLC late Sunday in an effort to help that company meet an April 30 deadline to avoid its own bankruptcy filing.

If the GM bondholders take the offer, they will end up owning about 10% of GM. But they will be accepting stock worth only $380, based on Friday's closing price, for every $1,000 they are now owed on the bonds.

By accepting the offer, bondholders would be betting that the company's stock would rise in the future, and that the alternative of bankruptcy could result in them getting even a smaller percentage of what they are owed.

But taking the deal will still be risky. Even unsecured bondholders can hope to be paid something back on their bonds if the company is forced into bankruptcy at some point in the future, while stockholders are likely to be wiped out altogether.

If all parties agree to the new restructuring plan and bankruptcy is avoided, current shareholders will be left owning as little as 1% of GM's outstanding shares.

Still, shares of GM (GM, Fortune 500), a component of the Dow Jones industrial average, gained more than 30% in late morning trading due to hopes that the company may now be able to stay out of bankruptcy.

First Published: April 27, 2009: 8:41 AM ET

This post has been edited by 2000Z-71: Apr 27 2009, 05:47 PM

[00 Trans Ram]

The term "hell in a handbasket" comes to mind.

[CMC#5]

Does anyone know why GM would sell Saturn but discontinue Pontiac? Why not sell Pontiac is my question. I also don't understand why Buick being a big deal in China means it has to exist anywhere else. I also don't understand why GMC stays at all. Considering this is an exercise in overlap reduction...what exactly does GMC do? Slightly more luxurious than Chevy but not as much as Caddy? Make the top end Chevy model equivalent to the GMC and you're done, no?

[rmackintosh]

Does anyone know why GM would sell Saturn but discontinue Pontiac? Why not sell Pontiac is my question. I also don't understand why Buick being a big deal in China means it has to exist anywhere else. I also don't understand why GMC stays at all. Considering this is an exercise in overlap reduction...what exactly does GMC do? Slightly more luxurious than Chevy but not as much as Caddy? Make the top end Chevy model equivalent to the GMC and you're done, no?

Yeah....axing GMC seem like the biggest "no brainer" in the book....

But we ARE talking about GM here aren't we..... (IMG:http://www.frrax.com/rrforum/style_emoticons/default/banghead.gif)

[bubba353z]

I also don't understand why GMC stays at all. Considering this is an exercise in overlap reduction...what exactly does GMC do?

The original reason for GMC was so that the B-O-P dealerships would have trucks to sell too. Back in the "good ol' days", there weren't many multi-line dealers. The Chevy guys weren't with the Buick guys, who weren't with the Olds guys - and so on....

Now the single line dealership is getting to be an endangered species - and with the downsizing and consolidation of dealerships that is forthcoming, they may just go extinct. We've still got a few single line B-P dealers in Columbus, so it will be interesting to see their fates.

[cccbock]

Does anyone know why GM would sell Saturn but discontinue Pontiac? Why not sell Pontiac is my question. I also don't understand why Buick being a big deal in China means it has to exist anywhere else. I also don't understand why GMC stays at all. Considering this is an exercise in overlap reduction...what exactly does GMC do? Slightly more luxurious than Chevy but not as much as Caddy? Make the top end Chevy model equivalent to the GMC and you're done, no?

I heard a story on the radio today where they stated that they (GM) did not have ANY current scenario whereby Pontiac could be made profitable. This leads me to believe there are a lot of underlying problems which we (consumers and car buffs) do not see. And this tells me that Pontiac was not making much money when times were good, much less now. When Pontiac is selling cars, it is scavenging a lot of sales from other GM brands. GM is killing one of Chevy and Buicks competitors, while saving big bunches of money. What we don't see are the underlying dealership costs, and other baggage that comes with Pontiac that may not reside with Chevy, Buick and Saturn

An example: Pontiac currently relies heavily on R&D from other GM divisions (Chevy, Holden). Nobody would buy Pontiac, unless it came with the R&D connections to GM,OR unless they had their own (for example Dodge Viper is trying to do this while splitting from Dodge and SRT). Which means the new owner would need have their own R&D, because GM is not going to give away their international R&D to the new owner.

On the other hand, Saturn could be easily run without GM, has their own R&D, their own factory, their own models, their own union agreements, their own stand alone dealerships....blah blah blah. A new owner could just write a check, and immediately be in the American car business....

bock

[2000Z-71]

One of the reasons that I heard behind GM's restructuring with the killing of Pontiac and selling off of Saturn is the UAW's involvement. Saturn has a lot of their operations in Spring Hill, TN, a right to work state with non-union plants. Pontiac has models made in plants without union involvement as well; G8 from Australia, Matrix from their joint plant with Toyota in California. With the news today or the proposed bailout making the Treasury and the UAW as the prime owners of GM, it wouldn't surprise me.