Pontiac G8: The World's Best Car Nobody Was BuyingBy Michelle Krebs July 20, 2009
By Bill Visnic
On the FastLane blog at General Motors Co.'s Web site, vice chairman Bob Lutz now concedes the company can't make a business case for rebadging the suddenly lamented Pontiac G8 sport sedan, the car that caused a first-week-on-the-job train wreck between Lutz's vision of GM's product-strategy future and that of CEO Fritz Henderson.
Days before and barely hours into his return to GM's salaried-exec payroll, Lutz said GM was going to rebadge the underappreciated, Australia-sourced Pontiac G8 as a Chevrolet, calling it a car "too good to waste."
The pronouncement flew directly against an earlier thumbs-down verdict about the G8 from Henderson, who said he does not favor rebadging and insists every model in GM's line "pay its own rent."
Lutz previously had praised the G8's cult status among enthusiasts and said the car's sales were gaining momentum. True enough. But a little perspective from data analysts at Edmunds.com shows what appears to have really generated that momentum: outsized incentives.
It wasn't until the big-time money was on the G8's faux ram-induction hood that it sales numbers began to ratchet up -- and even those numbers, fueled by thousands of dollars in high-test incentives -- hardly were the stuff that saves distressed divisions.
Did Someone Finally Show Lutz the Numbers?
Was it this simple snapshot of the G8's true "demand" -- and more important, its ultimate profitability -- that quickly led Lutz, on the FastLane blog, to admit, "upon further review and careful study, we simply cannot make a business case for (rebadging the G8 or using it as a law-enforcement fleet vehicle). Not in today's market, in this economy, and with fuel regulations what they are and will be.
"I know that we'll get a lot of complaints from G8 lovers, because I'm one of them," Lutz continued. "And the product guy in me is complaining as loudly as anyone. But the marketing guy says there's no case."
Lutz isn't the only one to insist the G8 was a winner. The car has rock-star popularity in chat rooms, blogs and message boards, all of which blazed when Lutz proffered hope the G8 would return.
Problem was, all the love from this horde of enthusiasts, supporters, cult appreciators and basement bloggers never extended to hitting the showroom and actually buying one.
G8 "Enthusiasts": Show Me the Money
Long before GM confirmed Pontiac would be discontinued and before GM started slathering on incentives, G8 sales were running at a tepid average of about 1,500 per month and for the full year sold a total of 15,002. Its best month last year was April, its first full month on sale, when G8s went to 2,126 buyers. Not the numbers of a car sparking a sensation in the market -- at least not a profitable sensation.
Yes, the G8's 2008 sales total assuredly was impacted by the industry sales crash that began in the second half of the year. But assuming the G8's numbers were affected in proportion to the total industry decline, its actual 2008 sales might project to a year of perhaps 22,000 sales.
As for the widely distributed theory that the G8 is just now "catching on" with consumers and gaining momentum, move on its 2009 year-to-date performance. A quick look at Edmunds.com's Total Cost of Incentive demonstrates what's likely responsible for the G8's ballooning sales: as soon as GM radically hiked G8 incentives (by 50 percent or more), sales increased in direct proportion.
In fact, just two months ago in May, Edmunds.com data indicates G8 incentives hit their highest-ever amount ($5,415) for this purportedly "hot" model -- almost five times the G8 incentive GM was offering at the same time last year.
But even during months earlier this year when G8 incentives amounted to as much as a 20 percent discount on the car, sales still struggled to hit the 3,000-unit mark.
Blue indicate sales volume; gold shows Total Cost of Incentives
Still not numbers that were going to save Pontiac. And the kind of incentive-driven sales performance, it now seems evident, that did not make a business case to a company that, according to Henderson, now demands every model justify its existence -- by making a profit.
Is the G8 fun? Yes -- at least with V8 power. Is it a bargain sport sedan? Yes, particularly when factoring in the high-horsepower incentives GM offered to seal the deal with 15,691 G8 fanatics so far this year.
But is the G8 all that special? Not really. It's a reasonably good-looking chunk with a stealthily cheap and haphazard interior and performance that's only genuinely entertaining when its ploddy chassis is overpowered by an outsized engine.
In essence, the G8 followed the formula that for too long has led GM astray. A car with virtues, but not enough of them. A car that needed big incentives to sell in even relatively modest numbers. A car that wasn't good business.
Nobody wants to shut down emotion, but the G8's popularity was profitless -- and at least the "new" GM now appears grudgingly willing to admit it.
Analysis by Edmunds.com's Ivan Drury
Photos by GM
1 - Rapper 50 Cent helped introduced the Pontiac G8 at the New York auto show.
2 - GM's Bob Lutz talks with reporters after the Pontiac G8 introduction.