By K.O. Jackson
Pontiac promised.
“We build excitement,” its commercials said.
Too many people must have become bored waiting for so much excitement.
Now, Pontiac and several other General Motors Corp. brands will bid America goodbye.
In a new restructuring plan, GM announced Monday it is phasing out its least profitable brands: Hummer, Saturn and Pontiac.
GM will focus on its core brands: Buick, Cadillac, Chevrolet and GMC.
“I think this makes us a stronger GM. That’s what GM’s research shows,” said Steve Parrott, Kokomo’s McGonigal general sales manager, said.
His dealership sells Buick, Cadillac and GMC. It started selling Pontiacs this February.
“We’ve had customers come in asking questions about the [eliminated] brands. But they have gone through this with Oldsmoblie. They know we will get through it. We have customers taking advantage of great initiatives to purchase a vehicle.”
GM is under a June 1 federal guideline to make cost-saving concessions with its bondholders and the UAW. It needs to reduce its $70 billion debt to avoid bankruptcy.
Last week, to save money, GM said it would temporarily idle 13 plants in the U.S. and Mexico for up to nine weeks this summer.
Once the world’s largest automaker — until it was passed by Toyota last year — GM now is spending up to $1 billion a month while existing on a $13.4 billion government loan.
Eliminating the three brands will cut 7,000 jobs and 2,600 dealerships.
Hummer and Saturn will no longer be built by the end of this year. The last Pontiac is scheduled to be built by the end of 2010.
According to the National Automotive Dealers Association, GM wants to reduce its dealer body by 2,641 by 2010. A move like that could cost the automaker 124,200 jobs.
There are 2,627 Pontiac franchises in the U.S, but only 27 sell only Pontiac.
Tipton’s Dan Young LLC sells GM’s top brands, as well as Pontiac. Young’s new sales manager said they will continue selling Pontiacs as long as GM makes them.
“Eliminating the brands is part of the survival plans. It’s nothing we can control in Tipton,” said Joe Cottingham, who has worked at the dealership for 20 years.
He currently has 31 Pontiacs in his inventory.
“We’ll keep selling Pontiacs. There is a market for them. We want them to make more of them. It is still a GM car and there are people loyal to the Pontiac brand and we are a proud GM dealership.”
Starting at about $20,000, Pontiac has started some excitement with its G6 model, said Mark Scott, of Autotrader.com.
He expects that excitement to continue for that model. He’s not certain about the other GM brands.
“So far, the interest in the G6 hasn’t translated into sales. But it is still a fairly new car,” said Scott. “We have seen similar interest with the Hummer since gas prices spiked. Even when they went down, people were still looking for SUVs, but not the Hummer. I think the Hummer says a lot about you besides you are driving a big car. There is some baggage to that brand.”
In 2004, GM eliminated its Oldsmoblie brand. People then wondered if they should keep the old Olds or buy a new brand.
However, as long as it’s a GM brand, consumers should be safe with the car, said an automotive analyst.
Yet, he speculates about car-part suppliers.
“The GM brand is going to be around. That’s security for the consumer,” said Jesse Toprak, senior analyst for Edmonds.com, an online automotive Web site.
“The warranty is backed by the government if they were to go into bankruptcy. You are buying a GM warranty; not a Pontiac warranty. The downturn in all of this is parts. If they no longer make the car, and the suppliers are not making parts, what is going to happen to the supplier? They may have to go out of business.
“If a consumer is in the market to keep a car a long, long time and they are not concerned about resale value, I suspect those [eliminated] brands will be a bargain and a great buy.”
However a “great buy” doesn’t mean one of the eliminate brands will become a collector’s item.
Robyn Eckard, director of public relations of Kelly Blue Book, said with GM eliminating brands, consumers don’t have to “head for the hills and get rid of their car. But they need to know it’s not going to become a collector’s item.”
The California-based Kelly Blue Book is the U.S. largest automotive vehicle valuation company.
“We don’t set the [monetary] value we reflect what is on the market,” continued Eckard. “We don’t expect a huge depreciation drop in any of those brands. It remains to be seen what will happen at the wholesale auctions. We will see if there is any panic among car dealers buying or not buying Pontiacs and such. Then we’ll know the value within four weeks.”
K.O. Jackson can be reached at (765) 854-6739 or via e-mail kirven.jackson@kokomotribune.com
