GM may kill off Buick or Pontiac

[Flatrater]

http://moneycentral.msn.com/content/...ra/P112987.asp


GM may kill off Buick or Pontiac

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.''

[tman]

It figures, GM just postponed the Zeta platform, which could stir some new life in the division, but noooooo, we must send funds the the almighty chevrolet so they can get some new trucks that just got a facelift in 03. THE PARK AVENUE HASNT BEEN UPDATED SINCE 97!!! ARRRGHHH!!!

This news sucks, it's like promising a truckload of jellybeans to a little homeless ethiopian, letting him sit there and see them, and telling him, no, not yet, we've got to feed the fat American kid first.

I say we put me in charge of GM.

[Flatrater]

I have been fixing cars at the dealer for almost 14 years and Buick has always been my pick to work on. I have alot of fond memories of Buick repairs and I hope Buick isn't the one chosen to die. But on the other hand I also do the Pontiac brand which I also have learned to enjoy.

The BUick Lesabre and Park as well as the Bonny have been fun to work on, they are the easiest to fix and allow the most room on them.

GM can have the GMC division which to me is the most troublesome. Eveyr day I see at least 10 Envoys coming in for warranty work out of the 25 cars we have been getting lately a day.

['97ventureowner]

I say we get rid of the management in there now and bring in a fresh, new team. There are so many problems with GM now and they seem to be getting worse. They (GM) needs to start stemming the flow of former GM owners who have left the brand due to problems with poor quality and the lack of customer service to even acknowledge the problems exist, let alone fix them. They need to get "out in the trenches" and find out what John Q public is looking for in a vehicle, something that isn't being done efficiently now. They need to build better quality engines that won't leak antifreeze and have the gaskets "dissolve" after the warranty expires.GM should start with the dealers as this is the first experience many customers have with them. Too many dealers do not treat their customers as well as they should, as evidenced by many posts on this site. Followup needs to be done to make sure everytrhing is all right with the vehicle and that problems are corrected the first time. When I bought my '90 Lesabre new, I received surveys and received a call to see how everything was going during the first year of ownership. I have recently spoken to friends who have purchased a new GM vehicle in the last 4 years and none of them have received a call, and only 2 ever got a survey. This is how GM can find out what areas need improvement. They also should be looking ahead with the ever rising cost of fuel, and continue to develop hybrid and crossover vehicles to meet customers' needs, since the sale of large trucks and SUV's "might" decline in the next few years, and they are a big part of sales.
[/rant]

[MagicRat]

Books have been written on GM (mis)management over the years. The way the company has lost 21% market share in 25 years is appaling.

As I have a business degree (with a major in marketing) I understand the value of brand image and brand support. However, there is great value in a recognisable brand name, even if its image has suffered a bit. A recognisable brand is not something to throw away....its much tougher to start a new brand (Lexus, Infiniti, Scion) than it is to promote an existing one.

Also....its about the product, in this industry. In the late 80's/early 90's, Hyundais were crap and everyone knew it. These days they are really good and the Hyundai brand has nothing to be ashamed of....because their cars are very good.

If GM wants to attract buyers, of course they must build competitive cars....the Cobalt should have come out 10 years ago, and NOT the Cavalier re-treads that they sold.
GM does enormous harm, bit by bit, by continuing to sell non-competitive products. Even today, the updated mini-vans are dismissed as also-rans in the market place, because the basic platform is 7 years old....when competitrs have dramatically re engineered their offerings.

GM can only sell these minivans based on lower prices and discounts....like they have done for years. And this discounting is what harms the GM brand!!

[BIG-L]

New Release

Kill a brand? GM's LaNeve says no

By Jason Stein
Automotive News / March 24, 2005

DETROIT -- One day after General Motors Vice Chairman Robert Lutz mused about the automaker possibly killing a brand, another GM executive asserted that the automaker has no intention of eliminating any of its brands.

Mark LaNeve, vice president of sales and marketing for GM, told Automotive News the automaker is investing heavily in all eight brands. Phasing out a particular division is not under consideration.

"We have no plans, or even discussions, of killing any brands," LaNeve said, "We're investing more heavily than ever in product and marketing programs."

On Wednesday, Lutz told a Morgan Stanley Automotive conference in New York if one of GM's "troubled brands" fails to turn around, "then we'd have to take a look at a phase-out."

Published reports linked Pontiac and Buick to Lutz's comments.

LaNeve reemphasized in a message to dealers Thursday that both brands are safe.

LaNeve also said GM is managing Buick, Pontiac and GMC as one channel and providing those divisions with a product portfolio "to service that channel and to focus " the lineup.

That represents a key difference from Oldsmobile, which GM killed last year, he said.

"These portfolios we're going to deliver we don't have to deliver an A to Z portfolio for those three brands," he said. "We can tighten and focus them. I'd rather have four or five great Pontiacs or Buicks than eight undistinguishable products. That business model makes a lot of sense."

[Flatrater]

BIG-L


I read the memo that LaNeve wrote but I am not convinced, it's the same thing they did with Olds. First GM announced Olds shutting down then they chaged their tune and later Olds died.

[MagicRat]

Originally Posted by Flatrater

BIG-L


I read the memo that LaNeve wrote but I am not convinced, it's the same thing they did with Olds. First GM announced Olds shutting down then they chaged their tune and later Olds died.

I agree. Lutz has the reputation for being a straightforward person, and he IS on top of the management heap, so I believe Lutz.

If GM really wants to refute or spin Lutz's comment, then Lutz would be the person to say so.

IMHO this comment would give Pontiac- Buick dealers fits, so GM has a vested interst in hiding any negative intentions anyways

[57JagXKSS]

Even though the 2006 Pontiac Solstice won't sell in big numbers, it will still help Pontiac. The styling is sensational, imo.

Sales of the new Pontiac GTO have improved since it went on sale.

Cadillac had their best sales last year since 1990 or so.

Why can't Holden work on the Zeta chassis for the next generation Pontiac GTO and big Buick sedan?

[kronkonn]

IMO what is killing pontiac is vehicles like the aztec i mean it is one ugly pile of scrap metal. they (gm) need to get a decent stylist that isn't on crack and put some pimping into it like the caddy. buick need to stop being marketed to old fogeys and marketed to smooth style luxury and performance like they used to with the grand national and regals. now they all look like they belong next to a double wide trailer. pontiac need to make the firebird compete more with the vette and the grandprix as a camaro counter part make more synonomous with performance than just psuedo-performance like most people think of it and seriously the pontiac really shound't have release the aztec under the pontiac umbrella it should have been realeased with the ugly avalancheunder geo or something when i used to think pontiac i thought of firebird formulas now i think ugly aztec and i think that most people think the same. GM needs to bring back the typhoon and cyclone under the pontiac name to help the pontiac name out and with the buick they need to bring back a grand national style car and maybe a typhoon knock off. they also need to remake the lesabre and the regal badly tyat is why sales dropped off because the new cars coming out under the buick name are the same since 1997. i know i'd rather buy an older buick than a new one because there is no real difference except price. also they need to phase in the norstar engines into buick wouldn't that be sweet. but that is all in my opinion thank you for taking the time to read this rant

[Flatrater]

kronkonn

If you haven't heard the Lesabre is dead as the bonny and the Park will be removed soon.

As for the GTO I think it needs to be built in the US and called an American muscle car.

The Aztec has a small market and it is well liked in that market but the Aztec is being redesigned right now Look for the new Aztec to look more like its sister in the Buicks.


GM has lost the high performance cars and I don't see them coming back. The Firebird had lackluster sales less than the Aztec.

GM is putting the most money into SUV's and CUV's.

[BNaylor]

Originally Posted by Flatrater

kronkonn

If you haven't heard the Lesabre is dead as the bonny and the Park will be removed soon.

As for the GTO I think it needs to be built in the US and called an American muscle car.

The Aztec has a small market and it is well liked in that market but the Aztec is being redesigned right now Look for the new Aztec to look more like its sister in the Buicks.


GM has lost the high performance cars and I don't see them coming back. The Firebird had lackluster sales less than the Aztec.

GM is putting the most money into SUV's and CUV's.

The Regal is dead too being replaced by the LaCrosse. But this change will probably backfire on GM. I grew rather fond of the Series II 3800 with SC since owning two of them. The Japanese are capitalizing on the horsepower game and will no doubt gain more market share than they already have. What will GM do next, especially with fuel prices constantly going up. SUV and truck sales are down.

[Flatrater]

Read this link from Forbes.

http://www.forbes.com/2005/03/25/cz_...s&boxes=custom

[tman]

Flatrater, check your PM's!

If GM kills Buick, I will boycott GM, and find another car company to drive with. I love GM, they offer the most complete line of cars, from 16 year olds to old fogeys, but if they kill Buick and/or Pontiac, Lutz will be biting the hand which feeds him.

[BNaylor]

Originally Posted by tman2093

Flatrater, check your PM's!

If GM kills Buick, I will boycott GM, and find another car company to drive with. I love GM, they offer the most complete line of cars, from 16 year olds to old fogeys, but if they kill Buick and/or Pontiac, Lutz will be biting the hand which feeds him.

tman2093 just take your place in line...lol. If GM kills Pontiac or Buick, I will never buy GM again, either.

According to NBC, US car makers only have about 56% market share now domestically. The Japanese, Koreans, and all others have the rest. GM is in the spotlight and they are in big trouble. The analysts aren't helping either because they want GM to downsize, cut models and continue to get rid of complete divisions in order to compete and remain profitable.