GM Said to Keep GMC, Say Buh-Bye Pontiac

Detroit April 24, 2009; Jeff Green and Katie Merx writing for Bloomberg reported that General Motors Corp., facing the threat of a bankruptcy filing if it can’t meet a June 1 U.S. deadline, will preserve the GMC truck line and drop its 83-year- old Pontiac brand as part of a government-led recalibration of its business plan, people familiar with the decision said.

The Detroit automaker, which received an additional $2 billion in federal assistance on April 22, will keep the GMC, Chevrolet, Cadillac and Buick brands, after a review that included profitability with the Obama administration’s automotive task force, said the people, who asked not to be named because the decisions have not been announced.

GM may reveal next week the end of the make that produced the Grand Prix, Bonneville and Firebirds, they said.

“I hate to see these brands go, they are a part of the American experience,” said John Wolkonowicz, a forecaster and auto historian at IHS Global Insight Inc. in Lexington, Massachusetts. “If you were growing up in the 1960s, Pontiac was the hottest thing going.”

Pontiac spawned the “muscle car” era in 1964 when it stuffed a 389-cubic-inch V8 engine into a Tempest and called it the GTO. Killing the brand highlights the changes GM is being forced to make to survive in its second century of carmaking.

GM had already decided late last year to cut Pontiac to a niche brand, possibly with just one model, to sell alongside Buick and GMC in combined showrooms. To trim from its roster of eight U.S. brands, GM has said it will sell or shut Hummer, Saab and Saturn.

Steve Harris, a GM spokesman, declined to comment on the brands.

Savings Needed

“I should have seen the signs: You can’t even order a 2010 Pontiac G6,” said Russ Shelton, a Pontiac-Buick-GMC dealer in Rochester Hills, Michigan. “Once they make this announcement, those are basically sales-proof.”

Chief Executive Officer Fritz Henderson is in a race against the June deadline set by President Barack Obama to find more savings from unions, creditors and operations.

A Pontiac announcement next week may be part of an outline of a plan to close plants and scrap models as much as four years sooner than planned to lower its break-even point, the people said.

Lower Break-Even

The cuts may mean GM can be profitable in a U.S. market with sales of as few as 10 million autos, said the people. The annual sales rate was 9.9 million in March, after GM said Feb. 17 its break-even target was 11.5 million to 12 million.

The number of brands is part of a discussion on how to speed up the winnowing of GM’s 6,200 dealer locations to 4,100 sites as quickly as possible, said one person.

The U.S. Treasury said today that it provided an additional $2 billion to keep GM operating. The new money is part of $5 billion disclosed this week in a report by the special inspector general for the Troubled Asset Relief Program. GM has received $15.4 billion from the Treasury.

GMC’s truck-building history dates to 1902, when brothers Max and Morris Grabowsky sold their first commercial model to a Detroit dry cleaner, according to GM’s Web site. Their Rapid Motor Vehicle Co. was absorbed by GM in 1912, along with two other Detroit-based commercial-vehicle makers, GM said.

By 1915, GMC produced the first light-duty vehicle with the basic configuration of a modern pickup, according to the automaker. GMC’s U.S. sales fell 26 percent last year to 376,996, making it GM’s second-largest brand after Chevrolet.

The Pontiac brand was first sold by GM in 1926, and U.S. sales peaked at 896,980 in 1978, according to trade publication Automotive News. Pontiac’s domestic deliveries fell 25 percent to 267,348 in 2008.

Muscle-Car Brand

Pontiac originated as part of the Oakland Car Co. of Pontiac, Michigan, in 1907. GM acquired Oakland in 1909 and introduced the first Pontiac vehicle in 1926 at the New York auto show. The Pontiac models were so popular they replaced the division’s namesake Oakland models.

By the 1950s, Pontiac sales were flagging as the brand was seen as an “old ladies” car with its signature “silver streaks” of chrome on the hood and trunk, Wolkoniwicz said.

In 1956, Semon “Bunkie” Knudsen took over the division, stripped off the streaks for the 1957 models and started making the changes that led to the GTO in 1964 --including the trademark split grill, Wolkoniwicz said.

‘Smokey and the Bandit’

Pontiac was the third best-selling brand in the early 1960s, passing Plymouth, which DaimlerChrysler AG killed in 2001, and trailing only Ford and Chevy.

Pontiac also had success in the 1960s and 1970s with its Firebird and Firebird Trans Am -- featured in the 1977 movie “Smokey and the Bandit,” staring Burt Reynolds and Sally Field.

“I’d rather keep it,” said David Cole, co-owner of the Cole Valley Pontiac Cadillac dealership located near the Lordstown, Ohio, assembly plant that builds the Pontiac G5. “The sooner they make clear what they’re going to do with the brand, the better it will be for us. I will survive. I just have to be able to plan.”

GM rose 6 cents, or 3.7 percent, to $1.68 at 10:21 a.m. in New York Stock Exchange composite trading. The shares have tumbled 90 percent in the past year on concern that the company may collapse after $82 billion in losses since 2004.

‘Truly Iconic’

GM has stepped up planning for both a new business model and a potential bankruptcy since late March, when the Obama administration asked CEO Rick Wagoner to resign and said it would back a “quick-rinse” bankruptcy to cut debt and other costs if GM couldn’t do so in 60 days.

Chevrolet and Cadillac are GM’s strongest brands and Buick is popular in China. GMC and Buick are both profitable, Henderson said April 17. Pontiac was scheduled for as few as one model, so killing it wasn’t as significant a step as deleting one of the other brands, one person said.

“Pontiac was the first real muscle car and the government doesn’t want muscle cars,” favoring fuel-efficient models, Wolkonowicz said. “I’m sad to see this brand go, it’s truly iconic.”