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GM may kill off Buick or Pontiac
MSN Report:

One of automaker's storied brands may follow Oldsmobile to the grave if sales fail to meet targets, execs say. It's a move analysts have urged for years.

By Reuters

General Motors, 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 (GM, news, msgs) 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.

Stemming the losses
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%, posted a 6% drop in U.S. sales for the first two months of the year. GM's U.S. market share fell to about 25%, far below its share of 27.5% for all of 2004.

Analysts said last week that GM's March sales could fall as much as 10% in March, while foreign automakers such as Toyota (TM, news, msgs), Hyundai (HYMLF, news, msgs) and Nissan (NSANF, news, msgs) 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 midsize 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.'
 

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Not according to their backpedal. See below, they may kill off some underperforming nameplates now but not whole brands.
GM says it won't phase out a brand

Exec calms dealers after comments by Lutz, but says slow sellers may be axed.

By Ed Garsten / The Detroit News




General Motors Corp.'s top sales executive assured alarmed dealers Thursday that the automaker has no plans to kill one of its U.S. brands a day after Vice Chairman Bob Lutz said GM could "phase out" some struggling nameplates if sales continue to fall.

"We are not discussing or planning the elimination of any of our brands," Mark LaNeve, GM's sales and marketing chief for North America, told dealers in an e-mail Thursday. "On the contrary, we're investing more heavily than ever on new products and marketing programs."

GM's U.S. sales and market share have dropped sharply this year, prompting a new round of cost reductions and speculation among analysts that one of its eight North American brands -- Oldsmobile is already being phased out -- will be dropped. Though they remain profitable, Buick and Pontiac, which have seen sales steadily drop for 20 years, have been mentioned as candidates.

Lutz said Wednesday that if "damaged brands" such as Buick and Pontiac failed to achieve sales targets, "then we would have to take a look at a phase-out."

Lutz added: "I hope we don't have to do that. What we've got to do is keep the brands we've got."

Along with Buick and Pontiac, GM's U.S. brands include Chevrolet, Cadillac, GMC, Hummer, Saab and Saturn.

LaNeve told The Detroit News Thursday that Lutz's comments were "absolutely misinterpreted" by the press.

"It's important to set the record straight," LaNeve said. "GM is investing in all of its brands."

While LaNeve said there are no plans to drop a division, he said GM will slim down a brand's offerings if necessary to focus marketing efforts and other costs on promising products.

"If there has to be four or five (models) ... as opposed to nine or 10, I'll make that trade-off," he said.

LaNeve promised the company would "reignite Pontiac's muscular design and street credibility" and build Buick as a brand with vehicles that are the "quietest and highest-quality."

Dealers welcomed LaNeve's memo, but it may not be enough to stem the shock of Lutz's remarks.

"They got dealers scared to death," said Phil Shostack, sales manager at Jim Fresard Pontiac-Buick in Royal Oak. "It sent shockwaves. We're spending gobs of money (to expand), and to lose a franchise? Are you kidding?"

Rochester Hills Buick-Pontiac dealer Russ Shelton called Lutz's remarks "extremely upsetting" since he's also contemplating an expansion.

"Why did (Lutz's comments) happen in the first place?" he asked.

GM's U.S. market share has dropped from 45 percent in 1980 to 27.3 percent last year, and it has been forced to close several North American assembly plants. Despite a major overhaul in the 1990s, it was forced to drop Oldsmobile.

Pontiac sales dropped to 474,179 last year, well below the nearly 800,000 units it sold 20 years ago, and sales of Buick vehicles have fallen from a high of 941,000 in 1984 to 309,639 units last year.

Several new GM models have struggled, and the automaker has been forced to cut production to reduce inventories.

"Most alarming for Pontiac -- although their new models created hype, they still require a lot of incentives to keep them moving," Edmunds.com sales analyst Jesse Toprak said. "The G6 (sedan) has been out only 6 months and already has over $3,600 per unit in incentives on it. That's a lot."

J.D. Power and Associates sales analyst Jeff Brodoski said a recent analysis by the market research firm doesn't support a move by GM to excise any brands.

"We have all the GM brands going strong in our forecasts," said Brodoski. "A lot of them are adding vehicles, and we still see a lot of product activity."

The slow sales start by some of GM's newly launched vehicles reflects an oversaturated marketplace, Brodoski said. By the end of the year there will be about 300 different vehicles available in the United States, compared with about 220 five years ago, he said.

Brodoski said coupe and convertible versions of the Pontiac G6, and the new two-seat convertible Solstice, will help Pontiac in the near term.

But analyst Erich Merkle at IRN Inc. in Grand Rapids said GM "has far too many divisions to support right now with their current resources."

GM warned last week it will report a first-quarter loss and that 2005 profits will fall as much as 80 percent.

Jim McTevia, chairman of Eastpointe corporate turnaround specialists McTevia and Associates, believes Pontiac and Buick have about run their course despite new models, and that given GM's sinking financial fortunes, the automaker needs to adjust its vehicle portfolio to match the needs of a changing marketplace.

http://www.detnews.com/2005/autosin.../A01-128984.htm
 

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I think that GM should lose about 18+ car models altogether.

1. Asstek
2. Montana
3. Vibe
4. Monte Carlo
5. Colorado/Canyon
6. SSR
7. Limp-ala
8. Avalanche
9. Blazer/Jimmy
10. Equinox
11. Uplander
12. HHR
13. La Crosse
14. Tarraza
15. Rendezvous
16. Rainier
17. H3
18. 97X

These are just my personal opinions.....feel free to bag on my choices, but I'm standing by them. I wouldn't blink an eye if all these got the axe. :rolleyes:
 

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Rainier said:
I think that GM should lose about 18+ car models altogether.

1. Asstek
2. Montana
3. Vibe
4. Monte Carlo
5. Colorado/Canyon
6. SSR
7. Limp-ala
8. Avalanche
9. Blazer/Jimmy
10. Equinox
11. Uplander
12. HHR
13. La Crosse
14. Tarraza
15. Rendezvous
16. Rainier
17. H3
18. 97X

These are just my personal opinions.....feel free to bag on my choices, but I'm standing by them. I wouldn't blink an eye if all these got the axe. :rolleyes:
My Brother just bought an Avalanche and it was the ONLY thing out there that would scratch his itch. He was coming off a '95 F150 and I'm not so sure he would have gone with Chevy if it were not for the utility and style of the Avalance.

All of this is ju'st my way of saying it must be terribly hard to pick what stays and what goes. A bread and butter seller is a no brainer to keep. But cars are getting more "niche" oriented all the time. And now you seem to have to produce a huge myriad of specialized cars and trucks rather than just a few great ones.

I'm not really sure when this started, but it wasn't this way in the 70s and 80s.
 

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I don't see a problem with having fewer models to choose from...I mean, the market is there, and if people don't like it, then they can shop elsewhere.

GM shouldn't have to bend over backwards to satisfy every little niche market, especially if they can't figure out how to do so without interupting the general scheme of things.

Keep the suburban, keep all the fullsize trucks/vans, and axe the rest of the crossover vehicles....Leave those to the companies that do them better anyway. IE Toyota, Nissan, Honda...
 

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Discussion Starter #7
Rainier said:
I think that GM should lose about 18+ car models altogether.

1. Asstek - YES
2. Montana - GONE
3. Vibe - NO *twin sister of the Toyota Matrix
4. Monte Carlo - Maybe
5. Colorado/Canyon - NO *only midsize pickup GM makes
6. SSR - A Planned Short life cycle (I LOVE MINE :O))
7. Limp-ala ?
8. Avalanche - NO *Great product!
9. Blazer/Jimmy - ? GONE - they are redesigned *Trail Blazer & Envoy A must!
10. Equinox *BEST in it's CLASS (WIFE LOVES HERS)
11. Uplander- Have to have a mini van in the Chevy line up
12. HHR - Time will be the judge (I like)
13. La Crosse - Maybe - had great reviews
14. Tarraza - Maybe - another mini van
15. Rendezvous - Maybe (good product)
16. Rainier - A Very Good Product
17. H3 - A MUST HAVE *My Vote for Best new choice
18. 97X - ?

These are just my personal opinions.....feel free to bag on my choices, but I'm standing by them. I wouldn't blink an eye if all these got the axe. :rolleyes:
HI Rainier,

I am sorry but I had to ROFLMAO when I saw you said to eliminate yourself!
I am sorry but on most of those I disagree with you... you might not miss any of those vehicles at a blink of an eye... but to eliminate most of them would kill off a lot of GM's profitable models.
 

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As I was reading over my list, I see your point. I let my personal feelings get in the way of sound judgement.

I am thoroughly convinced though, that they should AXE the Monte Carlo, the Impala, and the Vibe. The reason behind this is IMO, the Monte is a dead formula, and only mullet wearing, Marlboro Red smoking, NASCAR fans will ever actually buy them. The Impala is the retarded cousin of the Malibu, and they're desecrating the good Impala name by reviving it as a FWD 6 cylinder midsize sedan.

Lastly, the Pontiac Vibe should go, just because I don't like seeing practically the same car under different badging go for such a different price tag. Not to mention, when it comes time to unload your Vibe, you're not going to get back as much as you would unloading a 'Toyota'. The same will be the case over the Kappa twins. :rolleyes: In my head it just doesn't compute well. :willy:
 

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Marangis

I sure hope they keep Pontiacs around! I had a 1972 Grand Prix (my Batmobile) that was broken into in 1989 (or I'd still have it), and a 1989 Grand Prix that is still chugging along. The 2004 GTO was too plain, and when I looked at the 2004 Grand Prix GTP my hair touched the ceiling. They had one last 2003 Bonneville SSEi on the lot - I paid $11K under sticker and it's the best car I ever owned. Great acceleration, smooth ride, excellent sound system. The 303hp V8 Grand Prix GXP looks interesting - but who knows when that'll be out.

I liked the Solstice until I saw the SKY at the NY Car Show - I'm 50, so I guess it's time for my mid-life crisis! Also, my daughter is getting her license and is psyched about having a SKY in our garage.

Other vehicles at the car show that I wouldn't mind owning (excluding, of course, the Viper, Maybach, Ferrari, and other items out of my price range) were the black Chevy Trailblazer SS (390 hp) and the red Dodge Charger SRT-8 (425 hp). I guess they would go for around $40K?
 

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Rainier said:
As I was reading over my list, I see your point. I let my personal feelings get in the way of sound judgement.

I am thoroughly convinced though, that they should AXE the Monte Carlo, the Impala, and the Vibe. The reason behind this is IMO, the Monte is a dead formula, and only mullet wearing, Marlboro Red smoking, NASCAR fans will ever actually buy them. The Impala is the retarded cousin of the Malibu, and they're desecrating the good Impala name by reviving it as a FWD 6 cylinder midsize sedan.

Lastly, the Pontiac Vibe should go, just because I don't like seeing practically the same car under different badging go for such a different price tag. Not to mention, when it comes time to unload your Vibe, you're not going to get back as much as you would unloading a 'Toyota'. The same will be the case over the Kappa twins. :rolleyes: In my head it just doesn't compute well. :willy:
So you don't care for (in the past) Ranger/B2000 or Accord/Legend; Avalon/Q??;Altima/G??;Crossfire/CLK;Sable/Taurus or is it just GM you are ragging on. BTW the Camry is this country's number one selling car but I can't tell you the last time I saw, OR RECOGNIZED one on the streets around here, and yes there are large Toyota dealers around. Personally I like the Vibe's looks better than the Matrix which looks too much like a Ford something. Only complaint is you can't get the same drivetrains in the Pontiac, i.e. GT engine and 6 speed with AWD. :banghead: Vibes sell well and hold their value here in the rustbelt over the import (I know, I know, both are imported from California) Maybe between the loosely related Audi/VW/Porsche one of those brands should go. :D And as far as unloading roadsters check the latest R&T and read up on the Z3's that are only 8 years old going for a whopping 10k. Reading about the problems inherent in those cars and just waiting to happen on each and every one I'm glad I'm getting an American designed (yes, yes, by a German individual) and American built sportscar, just not American built only (Z3).
 

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Buick is for the senior buyers wanting a little luxury. The COULD go to chevy or cadillac.

Pontiac has a lot of money invested in it.

Not sure which one has lower sales numbers. My guess is Buick as there are a lot of grand prix rental cars vs. buick lacross.

I recommend selling off (not just ending) Saab or Isuzu depending on if they have low profit margins. Find out which division can fill in their gaps in their particular market.
 

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Rainier said:
I think that GM should lose about 18+ car models altogether.

1. AsstekQUOTE]

The aztek is gone! I have a 2002 red one and 2005 was it's last model year!
 
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