How will killing Pontiac save GM?

[01Malibu]

I am no expert and don't claim to be. But how do you shrink a company into greatness? How did killing Oldsmobile help GM gain market share, sales and reduce costs? When you shrink a company, you no longer offer variety. Can someone here tell me why shrinking or killing Pontiac is a good thing and how it will save GM? Show me a company that shrunk itself to prosperity?

GM's problems is the high cost per vehicle compared to the low profit per vehicle. How will cutting dealers accomplish this? Shouldn't a company be expanding? GM has lost its swagger.

Pontiac a niche brand? Did Pontiac or Buick increase sales after Oldsmobile died? Maybe the Impala and CTS gained a few points in market share. But I am just not a fan of shrinking the company.

[turbo200]

generally speaking, we are past this point. GM's daily operations are in doubt now, let alone keeping Pontiac around. they've gone to the point of cancelling one divion's planned model releases [GM will not spend the money to launch Saab's new cars] and cancelling one division altogether [saturn]. GM has gone back to the government now asking for more money, but auditors within the company are now coming up with a report to show IF the business itself is sustainable. Pontiac is GM's third biggest brand in terms of volume, but that volume is evaporating on all fronts, not strictly Pontiac. GM is looking for ways for GM to stay around, let alone Pontiac. whatever happens, if GM survives, it's safe to say this will change the corporation forever, including Pontiac. whether that means the brand closes completely or if they are revived in a much more limited capacity under a new Chevy/Cadillac GM, or other potential scenarios, we will have to wait and see.

[Satty]

Haven't Pontiac sales been declining for like a decade straight? Eliminating Pontiac gives GM one less thing to worry about, it would allow them to focus on core brands. Plus, if they want to bring Pontiac's traditional buyers back, in a few years they can just add cladding to Chevys.

[Camino LS6]

The short answer is it can't and won't.

It is a false, failed, premise.

[buyacargetacheck]

General Electric in the early 1980s "shrunk itself to prosperity" by shedding businesses that were losers or that were not #1,2, or 3 in their markets. Once they were realistically retrenched they were able to grow again.

GM's business plan is broken and has been for a very long time. Their internal politics and culture would not allow them to change. Victims of their own success. None of this is news: John Z DeLorean, Ross Perot and Elmer Johnson all warned about this decades ago.

I am no expert and don't claim to be. But how do you shrink a company into greatness? How did killing Oldsmobile help GM gain market share, sales and reduce costs? When you shrink a company, you no longer offer variety. Can someone here tell me why shrinking or killing Pontiac is a good thing and how it will save GM? Show me a company that shrunk itself to prosperity?

GM's problems is the high cost per vehicle compared to the low profit per vehicle. How will cutting dealers accomplish this? Shouldn't a company be expanding? GM has lost its swagger.

Pontiac a niche brand? Did Pontiac or Buick increase sales after Oldsmobile died? Maybe the Impala and CTS gained a few points in market share. But I am just not a fan of shrinking the company.

[frogger]

Just something they could put on paper to suggest they have a long term survival plan in place, in order to get more tax money and slightly delay the inevitable.

[Drew Dowdell]

Killing brands = market share gone.

It's that simple.

If Ford kills Mercury, Mercury buyers aren't going to buy Fords or Lincolns. They bought a Mercury because they didn't like what the Ford looked like or offered and they didn't buy the Lincoln because they probably couldn't afford it.

If Toyota killed Scion, do you think Corolla/Matrix sales would shoot up? Unlikely

If BMW killed Mini. The 1 series wouldn't even feel the tickle of increased sales.

Face it, even as we like to mock some of the current Pontiac products. They still sell. There is some reason that someone picks a G6 over a Malibu or a Torrent over an Equinox or a Vibe over an Aveo or Matrix. The Torrent can move easily to GMC, but where are you going to put the G6? The Vibe? The G8?

Saturn's base fans are a rather weird set. Kill Saturn completely and most will likely end up at Scion or Honda.

[Z-06]

General Electric in the early 1980s "shrunk itself to prosperity" by shedding businesses that were losers or that were not #1,2, or 3 in their markets. Once they were realistically retrenched they were able to grow again.

GM's business plan is broken and has been for a very long time. Their internal politics and culture would not allow them to change. Victims of their own success. None of this is news: John Z DeLorean, Ross Perot and Elmer Johnson all warned about this decades ago.

Those GE businesses were in different industries, different markets and different products. Small market loss for the loser business thus did not alter the big picture of GE as a whole. If you kill one or two brands of GM, it losses market share, money, and business. Therefore, you cannot compare GM and GE. If GM had locomotive division, motorcycle division, ATV division, scooters division, aircraft division and few of brands in some of its divisions were not doing good, then your theory of comparing GE with GM makes sense.

What GM needed was a thorough restructuring and FOCUS when it had money. Difficult questions have simple answers but solutions can be difficult.

[FUTURE_OF_GM]

Haven't Pontiac sales been declining for like a decade straight? Eliminating Pontiac gives GM one less thing to worry about, it would allow them to focus on core brands. Plus, if they want to bring Pontiac's traditional buyers back, in a few years they can just add cladding to Chevys.

Last time I checked, the number 3 best seling brand out of 8 DID qualify as core.

[buyacargetacheck]

True. It's also true that market share ≠ profits.

Killing brands = market share gone.

It's that simple.

[buyacargetacheck]

You are right that GE was more of a conglomerate in the early 80s than GM is today. But the concept is still the same with "brands" as it is business units. GE showed us that sometimes you have to sacrifice revenue for profits and long-term growth. In GM's case it does not make sense to keep Pontiac's 2% market share if it costs the company money to keep it.

Those GE businesses were in different industries, different markets and different products. Small market loss for the loser business thus did not alter the big picture of GE as a whole. If you kill one or two brands of GM, it losses market share, money, and business. Therefore, you cannot compare GM and GE. If GM had locomotive division, motorcycle division, ATV division, scooters division, aircraft division and few of brands in some of its divisions were not doing good, then your theory of comparing GE with GM makes sense.

What GM needed was a thorough restructuring and FOCUS when it had money. Difficult questions have simple answers but solutions can be difficult.

[ShadowDog]

True. It's also true that market share ≠ profits.

As well, knowing that killing brands = market share gone... it's the lack of market share that results in killing the brand.

GM is not in image-mode, they're in survival-mode. The don't have enough money to sustain their entire operation. Think about household income and where most of it is spent. One has a non-existent income and must sustain themselves on credit until they start to receive income again. If housing and food are the necessities for survival, while everything else is an expenditure, one doesn't try to sustain their lifestyle or image by eating out for dinner, paying for their worst gas-guzzler, full-cable, big cell phone package, etc., they make cuts or eliminate some of these expenditures altogether in order to avoid losing it all.

[smk4565]

Killing Pontiac saves GM because every dollar they would have spent on Pontiac can be spent on the Cruze, Malibu, and Impala, basically doubling the budget behind each car, then the Cruze, Malibu and Impala will have actual retail sales that turn profit, not fleet dumps.

[gm4life]

Getting rid of Pontiac is simply stupid, and I will agree with Oldsmobli's post. The Torrent can go to GMC but what happens with the cars? Pontiac has a place in GM's stable especially that Saturn will be gone. Just like Olds you can kiss Pontiac's market share good-bye and the loyal buyers like me could go away. We understand Pontiac can't have a full line-up but believe they deserve fun, functional and practical products.

Edited March 2, 2009 by gm4life

[regfootball]

Killing Pontiac saves GM because every dollar they would have spent on Pontiac can be spent on the Cruze, Malibu, and Impala, basically doubling the budget behind each car, then the Cruze, Malibu and Impala will have actual retail sales that turn profit, not fleet dumps.

last i saw at the local hertz lined up was an accord, a camry, a mazda 6, some hyundais and some kias.

[regfootball]

oh the solstice is the number one selling roadster in the US over the last 3 years. nothing like leading your segment.

[SAmadei]

Killing Pontiac saves GM because every dollar they would have spent on Pontiac can be spent on the Cruze, Malibu, and Impala, basically doubling the budget behind each car, then the Cruze, Malibu and Impala will have actual retail sales that turn profit, not fleet dumps.

Doubling the budget to do what? A complete redesign and more advertising of wannabe Camcord clones on TV? Great. The UAW will still be taking its pound of flesh and few Americans will be buying without available credit.

Oh, and meanwhile a couple hundred thousand sales will evaporate, just like the Olds fans did.

And as others have noted, fleet sales still make profit. Probably more so than a mountain of incentives and the dealer's cut.

[Oracle of Delphi]

If GM were really smart, they would get rid of all the brands and just badge their vehicles as GM, with only the little silver GM Chiclet on their vehicles. That way they could have a GM Delta II, a GM EP II, GM Zeta etc. Just one platform to sell in each segment, think of the savings without all that overlap ...

[smk4565]

The Torrent can go to GMC but what happens with the cars?

G3 is a Chevy

Vibe it a Toyota

G5 is a Chevy

G6 is an 04 Chevy Malibu

Those can be bought elsewhere. G8 sells 1,000 units a month, and they could sell it as a Chevy if they wanted. Solstice/Sky are niche products that GM can't really afford to do anymore.

[buyacargetacheck]

You're being facetious, but I happen to agree. Except, ditch the GM name and use Chevrolet instead.

If GM were really smart, they would get rid of all the brands and just badge their vehicles as GM, with only the little silver GM Chiclet on their vehicles. That way they could have a GM Delta II, a GM EP II, GM Zeta etc. Just one platform to sell in each segment, think of the savings without all that overlap ...

[CaddyXLR-V]

It's just the start of the end for GM. It will not save GM. It will reduce revenue, and therefore reduce money GM has to spend on other brands. It will increase the cost per vehicle, because GM has large fixed costs, and less vehicles sold means the same costs spread out over a lower number of vehicles. It will also turn loyal GM buyers into buyers of other brands. I'm not the first, and I wont be the last to leave GM over this decision.