Pontiac Headed for Junk Yard
Fabled Muscle-Car Brand Is Being Eliminated Amid GM's Cutbacks
APRIL 25, 2009
General Motors Corp. is readying plans to ditch its fabled Pontiac, an 82-year-old division that last flourished selling sporty, muscle cars, people familiar with the matter said Friday.
During its heyday three decades ago, Pontiac was the launching ground for young auto designers and executives including John DeLorean. But its sales have tumbled 70% since their peak in 1978, and the unit in recent years has been a steady money loser.
GM has more than three months' supply of Pontiacs on dealer lots, according to Edmunds.com. Last month, the average Pontiac sold for 22% off the sticker price, compared with ... the industry average of 16%, Edmunds said.
GM spokesman Jim Hopson said no final decision on Pontiac's future has been made. But he said nothing is guaranteed. "Everything has been put under review," Mr. Hopson said.
The auto maker, facing a June 1 federal deadline to dramatically restructure or go bankrupt, is expected to disclose next week it will eliminate or sell Pontiac, according to several people who have been briefed on the plan. The decision comes as GM must show it can make painful cuts to win continued government financing.
GM had said it intended to keep one or two Pontiac models. But the Obama administration is pressuring GM to accelerate its downsizing. The auto maker is working on plans to sell or liquidate its Saturn, Hummer and Saab divisions. Each has received some interest from outside buyers, but it remains unclear whether any will survive.
GM's last automotive division to be eliminated was Oldsmobile in 2000. That decision cost GM billions of dollars in dealer-buyout costs, led to messy litigation and frayed many relationships with dealers and buyers.
"Disappointment is an understatement," Russ Shelton, owner of Shelton Pontiac Buick GMC in Rochester Hills, Mich., said of word of GM's decision.
Pontiac's first model was a 1926 six-cylinder roadster called the Chief of the Sixes. In following years, the brand became known for offering sporty V8 models that were cheaper than Buicks and used components from low-cost Chevrolets.
In the 1960s, the Pontiac GTO became the founding member of Detroit's horsepower wars. That car was created by Mr. DeLorean and introduced in the fall of 1963. Shortly thereafter, Ford introduced its Mustang and Chrysler its Plymouth Barracuda as responses to GM's hit coupe.
One of Mr. DeLorean's legacies -- the so-called widetrack vehicle design -- still remains a feature of some Pontiac automobiles, and has played a role in its advertising messages.
In the 1970s, Pontiac went into decline as the Arab oil embargo drove up gasoline prices and consumers turned away from gas guzzlers. Pontiac enjoyed a brief resurgence in the 1980s when gas prices fell and GM accompanied its "Pontiac Excitement" marketing campaigns with smaller cars that had bigger engines, such as the Trans Am and Firebird.
In recent years, Pontiac has struggled to carve out an identity of its own. Attempts to revive its nameplates, including the GTO, have fallen flat due to a lack of design flair. Those efforts were also stymied by the bland minivans and sedans that Pontiac produced.
The GMC brand of trucks and sport-utility vehicles could also be in danger. The Obama auto task force, noting that GMC sells models similar to Chevrolet, has pressed GM to make a convincing case the brand should survive.
To avoid bankruptcy, GM is scrambling to complete an offer for a public debt swap that would eliminate $27 billion in unsecured debt. The auto maker has been unable to strike a deal with an ad hoc committee representing bondholders. But federal regulations require that GM must make the offering by Monday to have the swap complete by June 1.
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