Good-Bye Pontiac, Saturn, Saab, HummerBy Michelle Krebs April 27, 2009
By Michelle Krebs
DETROIT -- General Motors will eliminate or dispose of the Saturn, Saab and Hummer brands by the end of 2009 and Pontiac by no later than the end of 2010, under the automaker's most recent viability plan unveiled on Monday.
Eliminating the Pontiac division was a tough decision and "an intensely personal one" for many at the auto company because of its heritage, GM CEO Fritz Henderson said in a press conference Monday. "But it is one that needed to be taken."
Under the original plan, GM was to make Pontiac a niche brand as the marque is generally sold alongside Buick and GMC vehicles. "We concluded that we didn't have a strategy that would allow us to win with the Pontiac brand," said Henderson. "We didn't have the resources in the form of product or marketing muscle behind the brand."
He said GM will discontinue production of Pontiac vehicles "no later than 2010."
GM has struggled in recent times to keep Pontiac relevant. But Edmunds.com's data supports GM's decision to abandon the brand.
For the past few months, the percentage of people who traded their Pontiac for another Pontiac dropped to 16 percent. By comparison looking at GM as a whole, 50 percent of the people who traded in a vehicle from any GM brand bought another GM model, according to Edmunds.com's data.
Further, Pontiac has been attracting a low-end buyer. The average down payment on a Pontiac is a very low $1,600, on average. Only Kia buyers apply a lower down payment to their purchase.
And Pontiac's inventory of unsold vehicles has climbed even higher than the rest of GM's brands. Even if GM stopped production of all Pontiac models, the automaker would have well over a three-month supply, according to Edmunds.com's calculations.
Henderson also noted to financial analysts on Monday afternoon that Pontiac was heavy in fleet sales -- sales that can be shifted to another GM brand.
Saturn: End Advanced
Henderson confirmed the last Saturn vehicle will be built this year unless a buyer for the brand emerges with a good offer. GM will phase out Saturn by the end of this year instead of 2011 as previously planned.
An investor group that a private equity firm and some Saturn dealers said it has approached GM to acquire and operate the principal assets of Saturn. Last week, Henderson said it wasn't the only party interested in Saturn. However, his remarks Monday sounded less optimistic about a buyer for the marque.
"If there's a successful offer on table that we think might justify doing contract assembly [for Saturn] beyond then, we would consider that," said Henderson Monday, adding so far not one that "we find acceptable" is on the table.
Hummer: Could Be Sold
Henderson said "several parties have made bids" for Hummer. GM was supposed to announce a decision on the sale or elimination of Hummer on March 31 but Henderson postponed that announcement, saying it would come in days or weeks, not months.
"There's a reasonable likelihood there would be a sale [of Hummer]," Henderson said. That sale could involve GM contract building vehicles for Hummer. "Otherwise, we wouldn't expect to build Hummers beyond 2009."
Saab: In Negotiations
GM will cut ties with Saab by year-end. Saab is in the equivalent of Chapter 11 reorganization in Sweden's courts now. Reportedly a number of buyers are interested in the brand.
"Any buyer would want to have Saab's U.S. distribution system and we'll want to negotiate that," said Henderson. It's possible GM's overseas operations would contract build Saab models. However, the Saab 9-7 will no longer be built in the U.S. after this year.