GM may kill Buick or Pontiac

[01silverado2500]

Reuters

GM Says It May Kill Off One of Its Brands

Wednesday March 23, 3:20 pm ET

 

DETROIT (Reuters) - General Motors Corp. (NYSE:GM - News), which issued a shock profit warning last week and has been losing market share, may phase out one of its weaker car brands if sales fail to meet projections, company Vice Chairman Bob Lutz said on Wednesday.

GM's Buick and Pontiac are both "damaged brands" due to lack of investment over the years, and GM is working to correct that with an array of new vehicles coming to market, Lutz told a Morgan Stanley automotive conference in New York.

 

But if some of its brands fail to meet sales projections, "then we would have to take a look at a phase-out. I hope we don't have to do that. What we've got to do is keep the brands we've got."

 

Financial analysts have said for years that the world's largest automaker has too many brands to support, even with the gradual phase-out of the Oldsmobile brand a few years ago, particularly with its weaker U.S. sales.

 

Sales for both Pontiac and Buick have lagged in recent years. But GM is in the midst of a $3 billion investment in new vehicles for Buick, and Pontiac showrooms and they will have four new vehicles this year, including the Solstice roadster, Torrent SUV and the G6 mid-size coupe.

 

GM, which last week cut its earnings outlook for 2005 by as much as 80 percent, posted a 6 percent drop in U.S. sales for the first two months of the year. GM's U.S. market share fell to about 25 percent, far below its share of 27.5 percent for all of 2004.

 

Analysts said last week that GM's March sales could fall as much as 10 percent in March, while foreign automakers such as Toyota Motor Corp. (Tokyo:7203.T - News), Hyundai Motor Co. Ltd. (KSE:005380.KS - News) and Nissan Motor Co. Ltd. (Tokyo:7201.T - News) would continue to gain U.S. market share.

 

Lutz said GM will post relatively flat U.S. sales for March, however, performing much better than expected.

 

"I think we're going to be just about even, our best guess at this point. Either a percent over or a percent under," he said. "It is a substantially better month than January or February, and it looks like the whole industry is up."

 

"A HUGE ALBATROSS"

 

No details about an expected restructuring at GM, the largest private U.S. provider of health care, have emerged since it roiled markets with its warning last week.

 

But the company, which has about $300 billion in outstanding debt, said on Wednesday it was in talks to sell a stake in its GMAC Commercial Mortgage unit after potential investors expressed interest in the unit.

 

And Lutz and Gary Cowger, GM's president for North America, spoke of possible demands for a cut in mounting health care benefits for the company's hourly union employees in remarks on the sidelines of the New York auto show on Wednesday.

 

An elimination of any one of GM's brands would likely mean plant closings and a shrinking of GM's hourly work force.

 

"An across-the-board competitive health care plan for salaried and hourly employees could literally save us billions," Cowger said. Health care costs, added Lutz, are "a huge albatross hanging over American industry today."

 

Lutz particularly acknowledged that the automaker, which will struggle to make a profit this year, faces challenges. But he said GM was "taking the necessary step to right this ship."

 

"Sure, we face short-term challenges, and this is not going to be a banner year," he said. "It's a difficult period of adjustment. But we will get through it."

 

He said some of GM's new cars, such as its Chevrolet Cobalt small car and the Pontiac G6 mid-size car, will post their best sales to date in March, and told the Morgan Stanley conference "I don't know where all the gloom and doom is coming from."

 

He quoted one car reviewer who said, referring to GM's troubles, that the quality of the Cobalt convinced him that "the Titanic may yet turn fast enough to miss the iceberg."

[RyanbabZ71]

I see buick leaving before pontiac.

 

At least pontiac has the grand prix and gto

[BellevueSilvy]

I have to differ on that I think Pontiac would go before Buick due to the fact Buick has been a bench mark GM vehicle for the middle age american who wants luxury and quality but can't afford the next step up which would be Cadillac. Unlike Pontiac which essentially has the same line up in vehicles as Chevrolet and in my opinion lower quality. But Pontiacs do appeal alot more to the young american than Buick so it could be a toss up. With the demise of Oldsmobile it could be easy to judge that Buick would be the next to go but I don't think so.

[watz]

I have to differ on that I think Pontiac would go before Buick due to the fact Buick has been a bench mark GM vehicle for the middle age american who wants luxury and quality but can't afford the next step up which would be Cadillac.  Unlike Pontiac which essentially has the same line up in vehicles as Chevrolet and in my opinion lower quality.  But Pontiacs do appeal alot more to the young american than Buick so it could be a toss up.  With the demise of Oldsmobile it could be easy to judge that Buick would be the next to go but I don't think so.

 

<{POST_SNAPBACK}>

 

 

 

 

Agreed. Chevrolet has always been, will always be GM flag ship performance brand. Vette, Camaro, Chevelle, so on.... If either go, say bah bye to pontiac....

 

Besides old people drive them buicks, they never run out of money....

[Chevy Tough]

I always wondered why GM bought or owned so many brands including the import ones you know like Vauxhall and etc..plus i hate to see one of them go cause they both had history in the muscle car era.

[USA1Fan]

Saab.. Sales haven't looked especially strong for them. And I didn't see anything to the news article that mentioned which brand(s) might be on the chopping block. I'd seriously think the new kid on the block with extremely bad sales would be first before even considering getting rid of the long-timers with an established following (even if they have weak sales lately).

 

However if one of the two listed was to go I see it as being Pontiac. Look at the lineup right now (including upcoming cars). The only truly unique vehicle they have is the GTO (love it, btw) and that is a purely 'halo' car. Worse, it isn't even selling in the originally hoped for limited numbers they expected (which is why the '05's got a lower production and shorter run). It's also due to be discontinued soon with no replacement in site for a while if ever (thanks to the cancellation of NA zeta platform cars, which rumor had placed the replacement GTO on). Of the rest of their current lineup the closest to being a truly original vehicle is the G6. It's Epsilon based (same as Chevy Malibu) and rides on the same version of stretched Epsilon as the Malibu Maxx. I won't call it a rebadge since they did put a lot of effort into a very unique exterior styling (the interior is a lot easier to see the resemblance in though, despite different color, different lighting, and pods for things like vents). It still shares engines and drivetrains with the Chevy's though (except possibly a manual tranny availability, which Chevy doesn't get). All the rest of the Pontiac stable are much closer to being true rebadges than even the G6- even the upcoming Solstice, which shares with the Saturn Sky.

 

Not that I want to see Pontiac go, but I'd agree for it to go before Buick. Chevy is more than capable of handling the performance role with some of its cars. Chevy's gonna have more SS cars at one time than ever before very soon now, btw. Just think, the SS line could really be about performance with no sister division requiring Chevy's versions to be detuned to save face as they currently do to keep from trampling hi-po Pontiacs with their Chevy brethren.

[Truckman031]

I think Saab should go. I never see them on the road. I think GM should also get rid of its European companies.

[Tucson_02Silverado]

It's probably time GM restructered worldwide.

 

All worldwide nameplate should go except Cadillac (no I'm not biased towards Cadillac).

 

The corporate name should be changed slightly as well.

 

General Motors changes to just GM.

 

Passenger Cars GMA (GM Automotive) then the local added as designs that sell are different between all of the worldwide locations.

GMA, NA

GMA, SA

GMA, Euro

GMA, Asia

GMA, AUS

GMA, ME

GMA, AFR

This division handles all passenger (non-high performance) cars from subcompact to fullsize

 

 

 

Cadillac, only premiere luxury/performance vehicles (platforms, engines are not shared with any of the other divisions)

 

 

All Trucks, GMT (GM Truck)

SUV, minivan, van, crossover, LD/HD/OTR trucks/chassis

There would probably be local designations here as well, as different type trucks are used in the various locals

I suppose the TAXI and Transit market would be here as well

 

 

Performance and racing GMHPR (GM High-Performance and Racing)

Move the Vette to this division (when is the last time you heard someone call it a Chevrolet Corvette as to just Corvette or Vette?)

GTO, Camaro, Solstice/Sky (new name please) goes here as well, seems to cover all the performance levels (ultra performance, muscle, pony, roadster)

Special performance editions of (like Mercedes has AMG) of GMA, GMT

Existing GMPP (General Motors Performance Parts) would move here

NASCAR/Indy/F1/etc racing engines/chassis would move here

 

 

Law Enforcement/Military, GMLEM

Special purpose designed

GMA/GMT modified

i.e. 1996 Caprice design updated with 2005 technology (hydroform frame, "plastic" panels, engine/drivetrain) interior purposed designed (dash has provisions for communications, computers, weapons), integrated roll cage, minimalistic rear seating containment cage