GM Said to Study Dropping Pontiac, GMC as Savings Push Deepens
April 15 (Bloomberg) -- General Motors Corp., facing a June 1
U.S.-backed bankruptcy, may drop its Pontiac and GMC brands as part of
broader cost-cutting moves, people familiar with the discussions said.
GM’s Chevrolet, Cadillac and Buick brands are likely safe, said the
people, who asked not to be named because decisions aren’t final. GMC
and Pontiac are being studied as part of talks with an Obama
administration task force assessing whether GM can be restructured
without bankruptcy, the people said.
Shedding Pontiac or GMC would mean a deeper cut into GM’s portfolio of
eight U.S. brands than in its Feb. 17 blueprint for keeping $13.4
billion in federal loans. GM said then it would keep Chevrolet,
Cadillac, Buick and GMC and retain Pontiac as a niche line while selling
or closing Hummer, Saab and Saturn.
GMC has a better chance of surviving than Pontiac, one of the people
said. GMC’s lineup consists only of light trucks such as the Sierra
pickup, while Pontiac’s offerings include the descendants of the brand’s
high-performance 1970s models.
Among the decisions yet to be reached is what would happen to Pontiac or
GMC should Detroit-based GM opt not to keep them, the people said.
President Barack Obama ordered GM to revamp its survival plan and wrest
larger cost reductions from unions, debtors and within their own
organizations. Chrysler LLC, which borrowed $4 billion, was given a May
1 deadline to finish reorganizing and merge with Italian automaker Fiat SpA.
“We are continuing to assess our global operations, brand portfolio and
nameplates, and will take further actions to more aggressively
restructure our business,” said Renee Rashid- Merem, a GM spokeswoman.
“It’s premature to comment on what those actions could entail.”
A Treasury spokeswoman, Jenni Engebretsen, had no comment.
The reassessment of GM’s earlier decision to keep Pontiac and the future
of all of the brands are among topics in meetings this week between
executives of the biggest U.S. automaker and a Treasury team led by
adviser Harry J. Wilson, the people said.
The number of brands is also part of a discussion on how to speed up the
elimination of GM’s 6,200 dealer locations to 4,100 sites, said one person.
GM gained 11 cents, or 6.2 percent, to $1.89 at 6:40 p.m. in New York
Stock Exchange composite trading. The shares have tumbled 90 percent in
the past year amid fears of a collapse by the company, which has posted
$82 billion in losses since 2004.
GM has stepped up planning for both a new business model and a potential
bankruptcy since March 29, when Obama asked Rick Wagoner to step down as
chief executive officer and said the government would support a
“quick-rinse” bankruptcy to cut debt and other costs.
New CEO Fritz Henderson has said that while GM would prefer
restructuring without a bankruptcy, Obama’s new demand makes a filing
for court protection more probable. A GM bankruptcy will likely result
in the creation of a new company that keeps only the best brands and
other assets, people familiar with those plans have said.
GM, which turned 100 in September, established the Pontiac division in
1926. Sales peaked at 896,980 in 1978, according to trade publication
Automotive News. GM sold a record 9.55 million vehicles worldwide that
year, which came at the end of an era when Pontiac won notice for sports
coupes such as the Firebird.
Pontiac sales fell 25 percent to 267,348 in 2008. Chevrolet and Cadillac
are GM’s strongest brands and Buick is popular in China, said the people
familiar with the automaker’s discussions.
GM said today it has “multiple bidders” for its Saturn dealer network,
including a group let by Oklahoma City private- equity firm Black Oak
Partners LLC. Potential buyers for Hummer also have signaled their
interest, Henderson said last month.
Saab, based in Trollhaettan, Sweden, filed for protection from creditors
on Feb. 20 after GM said it will cut ties by the end of the year.