DETROIT (Reuters) - General Motors Corp., 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 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. 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 percent, posted a 6 percent drop in U.S. sales for the first two months of the year. GM's U.S. market share fell to about 25 percent, far below its share of 27.5 percent for all of 2004. Analysts said last week that GM's March sales could fall as much as 10 percent in March, while foreign automakers such as Toyota Motor Corp., Hyundai Motor Co. Ltd. and Nissan Motor Co. Ltd. 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 mid-size 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."
If they cut......it'll be the "old man's" brand. :af: Too many people buying grand am junk for them to cut Pontiac. ou:
I bought my '00 WS6 several years ago because there was no new muscle out there. Didn't want a Corvette, no Buicks that peaked my interest, won't go foreign, so what was I to pick? o No: It's really sad! :ball:
I think it's pretty obvious which brand is next. Buick will not be selling new cars in 5 years or less. It has a reputation as an old persons car, the average age of the purchaser is way too high when compared to Pontiac. It would take huge dollars to change the brand image and they won't spend it. In their eyes Buick and Cadillac are redundant and Cadillac is getting the investment. They want Chevy for entry level, move up to Pontiac when you reach your 30's and finally up to Cadillac in your 40's or 50's. That's the brand portfolio that makes sense.
In my honest opinion, with the recent move by GM to stop the Buick Velite concept car, Buick will be the next division to be ended. They have concidered the Buicks to be luxury cars, and are going to push Cadillacs as the luxury cars. I think in the end, Pontiac will have the performance division, Cadillac will have the luxury cars and Chevy will fill in the gaps. But what do I know. Dan :3gears:
I agree -- someday GM will consist of Chevy, Cadillac, GMC, and maybe Pontiac. They really oughta just cut to the chase and do it already. The shame is that GM turned the divisions into brands. If they had remained semi-independent divisions, they would have had much higher chance of surviving, and if they faltered, they could be sold off instead of killed. You can't tell me that there aren't business men out there who would have salivated at the possibility of buying the Oldsmobile division and turning it around. If I could sell tens of thousands of widgets at an average price of over $25k, well, I've gotta believe there's room for profit in there somewhere. But without independent divisions, there was nothing for GM to spin off -- no plants, no capital, no engineers -- just a "brand", whatever that is. It's easy to kill a brand. Poof, it's gone.
Everyone is forgetting about Saturn. That division has yet to have a year in the black, or so I've been told. As far as the average age, Olds had made a huge jump towards the younger, more afluent types that had grown up on FWD from across the pond. My gut tells me that they are going to get rid of GMC and Buick at the same time. A GMC is just a rebadged Chevy truck.
We need Harley Earl, or even Bill Mitchel. It was Harley Earl that once said: "We don't follow, we lead" when one of his JR designerrs got a look at what the competition was doing, I wish I could find the article I read that quote in. Seems these days GM is just chasing it's tail.
GM lost me as a new vehicle purchaser when they killed Olds. They may as well just kill everything but Chevy and Caddy. Then they'll have an everybody brand and a luxury brand. When it comestime for me to by a new vehicle, it'll probably be ford
Yes but look at Ford. They have entry, middle, and top and they struggle to keep Mercury alive. Oh, and remember Plymouth? I could see that Pontiac and Buick could both be on the block. The GTO or G6 sure won't save Pontiac...
Rob, My latest issue of Popular Hotrodding was showing the new 6-speed THM that was going to be used for everything. Modular design was going to let it be the same tranny from Caddy to Chevy Trucks. Super steep 1st gear and closer ration low gears was supposed to reduce 0-60 times by 7%. The big 3 are getting ready to go through some very difficult times ahead. Currently, it looks like Chrysler (Oops, sorry DCX) is setting fairly good compared to Ford and GM. Someone mentioned it just a couple of post earlier, they are not in the business to make cars, they are in the business to make money. Took me almost 6 years in the auto business to come up with that gem of wisdom! ou:
I didn't forget Saturn -- I left it off the "keeper" list on purpose. It'll be killed, too. But probably later rather than sooner; it's too early to admit their mistake. I've been a GM man all my life (almost exclusively Olds), but I've got to admit the few new Mustangs I've seen cruising the streets look mighty nice ........ mmmmmm, V8, rear-wheel drive, sporty coupe, ........ A Ford? Somebody slap me!! ou:
I would slap you, but instead I think I will just get in line behind you at the local Ford dealer................
Since I doubt many of us have a new Buick in the driveway, it really shouldn't affect us. Losing Oldsmobile didn't hurt the value of a 70 442.. GM really needs to come out with something exciting. Have you seen pics of the new Shelby GT500 or The Dodge Charger SRT8? Todd
"Pontiac or Buick to join Olds?" Geez, Casey, this topic is about the reported failing of a motor division! Here I was thinking that, in your own charming way, you were simply challenging someone with a small displacement Pontiac or Buick to join you in the 12-second bracket. :3gears: :laugh:
I'm with you, never owned anything but GM. It would pain me to see Buick go, but nothing really has peaked my interest/desire since the Reatta or SC Riviera, even though I did buy a 2000 Regal GS. But it didn't look or feel particularly like a Buick-and it wasn't my loyalty, it was simply that my wife liked it better that the Grand Prix... Ford-500, Mustang, trucks, Focus - all reasonably priced....they look pretty solid financially to me... DCX-The Charger 4 door (I predict) will be a flop. The Magnum will be a solid seller. PT sales are going down. Vans and trucks will keep them afloat. Saturn....I think they'll roll it under Chevy and drop the no haggle dealer cr&p. Pontiac-desperately needs a quick, sporty, competitively priced 2 door (not the GTO) that competes with the Mustang. Buick-Rendezvous(flop), Rainier(nice but overshadowed by Caddy), Regal-dropped, Park Ave-dropped, Terraza-what?, LaCrosse-nah, Lucerne-maybe, lawhatsnext?
