April 28, 2009 - Pontiac Motors, Detroit MI

Fabled Pontiac can't muscle its way out of the GM mess

One of the best-known car brands may soon be history as struggling GM announces plans to dramatically downsize its lineup.

Fabled Pontiac can't muscle its way out of the GM mess

One of the best-known car brands may soon be history as struggling GM announces plans to dramatically downsize its lineup.

For generations of drivers, a car brand was more than a collection of statistics describing performance, safety and design. It was an affair of the imagination.

Monday, General Motors traded imagination for reality, saying it will dump the Pontiac line along with Hummer, Saturn and Saab — and placed its future in the hands of Chevrolet, Cadillac, Buick and GMC.

It's part of a desperate bid by GM, once the colossus of American capitalism, to avoid bankruptcy and become a leaner, government-owned company if the Obama administration goes along with its plan to slash jobs and close plants.

"It's a pretty sad day," said Jack Nerad, executive editorial director at Kelley Blue Book, a leading provider of information on cars and who owned a 1968 Pontiac Firebird, one of the most beloved muscle cars.

"It was something, it appealed to your emotions. That's what they were selling. At one point the slogan was 'We build excitement.' "

The excitement faded in recent years.

Bill Caudill, 44, has owned more than 40 Pontiacs. A salesman at an auto-parts company in Evansville, Ind., he's a "hard-core Pontiac guy" who is a member of several fan clubs and whose garage "looks like a shrine" to the brand, he said.

But when looking for new cars a few years ago, he and his wife bought a Mini Cooper and a Chevrolet truck. The newer Pontiac models were a letdown, he said, "uninspired, bland and dated" compared with more exciting vehicles from the brand's glory days.

"The Pontiac of the past had a distinct identity of being 'fast with class,' and you could tell it was a Pontiac from half a mile away," he said. "It broke my heart this time to have to go buy a new car somewhere else, but there was nothing else that was attractive."

The restructuring plan announced Monday by GM would eliminate 2,600 dealers, 21,000 workers, $44 billion in debt and four brands, while leaving the U.S. government owning at least half of the troubled automaker. GM would cease production of the Hummer, Saturn and Saab brands by year's end and Pontiac will be terminated after 2010.

The Pontiac brand has steadily lost its appeal to younger consumers, despite its colorful history since introducing its first car in 1926.

John DeLorean joined Pontiac in 1957 to head up advanced engineering and helped design the cars that soon would reshape the division.

Pontiac built a reputation for performance in the 1960s and 1970s with such offerings as the GTO, one of America's first muscle cars and the inspiration for Ronny and the Daytonas' hit Beach Boys-sounding song "Little GTO."

The high-performance Pontiac GTOs, Grand Prix and Firebirds were at the forefront of the muscle-car era in the 1960s and 1970s. But the brand stumbled in recent years: The Aztek crossover SUV was criticized for its looks, and the 2004 relaunch of the GTO met with lukewarm reviews.

At its peak in 1986, Pontiac sold 841,441 cars — three times as many as last year. The brand had begun to spin its wheels in a marketplace asking for cleaner, greener vehicles.

Likewise, Hummer had become a drag on GM.

Introduced in 2000, the massive sport-utility vehicle couldn't weather the sudden spike in gas prices in recent years.

Saturn was supposed to be a "different kind of car, a different kind of car company" when it launched in 1990. The brand would make small, fuel-efficient cars — built by workers unburdened by the United Auto Workers' contract — to compete with the rising popularity of small Japanese cars.

But Saturn eventually adopted the union contract, and GM failed to add new vehicles to the brand for five years.

"A lot of people didn't understand what Saturn was and meant anymore. GM was too big to handle all the brands that they had. They weren't able to manage all brands properly," said Carl Galeana of Michigan and owner of one of the first Saturn dealerships.

As GM laid out the proposal Monday, new agreements fell into place between Chrysler and its unions in the U.S. and Canada, making it apparent that the future of both companies now rests with their creditors.

General Motors Chief Executive Fritz Henderson said the company would offer the U.S. Treasury Department more than 50 percent of its stock to absolve GM of $10 billion in government loans. The automaker also proposed that the United Auto Workers take GM stock for at least half the $20 billion the company owes to a union-run trust that will assume retiree health-care expenses starting next year.

Combined, the union and government would own 89 percent of the century-old automaker, which has been bleeding red ink and is saddled with more than $62 billion in debt. Current GM shareholders would own only about 1 percent.

"It is unprecedented, but it signifies the importance of the automobile industry," said David Lewis, a retired professor at the University of Michigan who taught business history for 43 years.

Although the government has loaned money to corporations in the past, including to Chrysler in the 1970s, Lewis could not recall a time when it had taken a majority stake in a company.

White House press secretary Robert Gibbs said the administration does not want to own GM or any other auto company. "This administration has no desire to run an auto company on a day-to-day basis," Gibbs said. "We strongly back an auto industry we believe can, and should, be self-reliant."

Original Story - Seattle Times