Skip to comments.Auto Bailout: GM May Axe Pontiac, Hummer, Saturn and Saab
Posted on 12/04/2008 5:06:22 AM PST by Cronos
General Motors manufactures eight brands of automobiles. When executives of America's biggest automakers return to Capitol Hill carrying business plans explaining how they would spend the federal bailout they've asked for, the automaker may propose trimming itself to just four
Bloomberg reports that the company "is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer, people familiar with the matter said. Selling or dropping brands would save money and reduce overlap as the biggest U.S. automaker struggles to avoid running out of operating cash by year's end, said the people, who didn't want to be identified because no decision has been made."
The move would leave GM selling just Buick, Cadillac, Chevrolet and GMC vehicles.
Left out of the discussion so far is exactly what process GM would use to eliminate the overlapping brands. Autoblog comments, "The word shedding' is used to describe what GM would do with Saturn, Pontiac, and Saab. But we don't know where and how they would shed them." Selling the brands to other automakers isn't likely. "With the state of lending and credit markets, it would probably be easier to buy a pterodactyl than get a loan to buy one of GM's brands. HUMMER's already been on the block so long it's about to get arrested for loitering." Instead, GM is probably looking at simply shutting them down
Analysts have believed for years that GM needs to shed some brands in order to survive, but the automaker can't simply shut down a brand without a massive infusion of cash. Bloomberg points out, "GM agreed to eliminate the 103-year-old Oldsmobile brand in 2000 because of declining sales."
But eliminating Oldsmobile is believed to have cost the company over $2 billion -- money used to buy out dealer contracts and settle lawsuits filed by Oldsmobile dealers whose businesses were ended by the move. As markets open today, GM's total net worth is just slightly over $3 billion, and the company is believed to have less than a one-month supply of cash on hand.
Policymakers considering the bailout must also note that shutting down brands would mean, as Autoblog points out, "some serious upheaval and tens of thousands of job losses," which is what the bailout plan is supposedly designed to prevent.
Eliminating overlapping brands, however, looks like a great idea to investors. MarketWatch reports that GM shares " rallied during Friday's holiday-shortened trading session ahead of [this] weeks crucial meetings in Washington that could lay the groundwork for a federal bailout of the ailing auto industry." The value of GM shares surged almost ten percent after they "caught buyers' interest on reports that the company is considering shedding its Saturn, Saab and Pontiac brands as part of its effort to cut costs and secure the government loans." The company was already widely reported to be looking for a way to get rid of its stake in Hummer.
Colorado's Grand Junction Free-Press says that dealers who sell the cars "haven't received direction or assurance from the companies that make the cars on their lots."
While the bailout debate goes on, automakers are trying to sell cars as fast as possible with deep discounts. Research the best car deals with U.S. News' Car Reviews.
Isn’t it like past midnight in Japan now?
And why not the GMC's they are just a Chevrolet with a different sticker, and cost additional advertising to sell.
Isn’t Saturn built in Franklyn, Tenn, and is a non union shop?
When the autoworkers are getting great pay and great benefits, I’m delighted for them. But when they need taxpayer money to keep the scheme going, I’m hoping for their demise. The big three need to fix their own damn mess, or go out of business. If they get one nickel, I’ll never buy another vehicle from them, and will work hard to influence others to do the same.
Exactly. They should dump Buick as well. Frankly, they should just dump it all and rename all their cars General Motors or GMC. Have GMC trucks, GMC Camaro, GMC Corvette, GMC Malibu, GMC Cadillac (the upscale model), etc. Ford-Lincoln-Mercury-Jaguar-Mazda-Volvo should do the same. You just have a bunch of the same cars with different grills and nameplates on them. Cut the fat.
It’s in Spring Hill, TN which is close to Franklin.
Jag is owned by Tata Motors of India now...............
They should dump Buick as well.
From WIKI: The Buick Lucerne is a full-size car sold by the Buick division of General Motors that replaced the Park Avenue and the LeSabre in 2006. Although the rear-wheel drive GM Zeta platform was considered, the production Lucerne introduced at the Chicago Auto Show on February 9, 2005 rides on the revised G-body platform of the late Pontiac Bonneville. Initial sales of the Lucerne have been strong, with the car claiming 24% of the full-size sedan market in the United States.
“And why not the GMC’s they are just a Chevrolet with a different sticker, and cost additional advertising to sell.”
GMC brand makes it possible for non-Chevy dealers to sell trucks. I don’t know about other parts of the country, but in the south trucks (pick ups particularly) are the bread and butter of most dealer’s sales. Most of the Buick and even Cadillac dealers would probably go out of business if they couldn’t also sell GMC trucks.
The Chevrolet brand probably has more customer loyalty and name recognition, but you're right, they need dump car lines that don't sell, and consolidate and rebrand the ones that do. Declaring bankruptcy under chapter 11 and getting out of their union contracts would help a lot as well.
For YEARS I have been saying that GM should re-organize as follows:
GMC - Trucks, SUVs and Suburbans ONLY.
Chevrolet - “Mini-Vans”, “Cross-overs” (whatever they are), Base and Mid-Level sedans/hatchbacks ONLY (with exception of the iconic Corvette)
Pontiac - ALL Small and Sporty cars (except the iconic Corvette)
Cadillac - Top end sport sedans and luxury cars.
Sell Saab back to the Swedes.
That’s IT. No overlap among “brands” and NO OTHER lines of cars.
Dealers would be GM dealers, with an optiojn to “specialize” in one or more of the “brands”, but a requirement to make any/all of them available to the customer.
It’s 10:24 p.m. New York 8:24 a.m .
bodacious Tata Motors, every garage should have a pair.....
I like my 2006 Saturn Vue. It has a Honda motor.
Someone has to go out of business!!!
GM needs to go chapter 11
True, that is why some advocate bankruptcy. But the trucks are still the same just different names.
“Most of the Buick and even Cadillac dealers would probably go out of business if they couldnt also sell GMC trucks.
Someone has to go out of business!!!”
The light duty trucks are one of the few bright spots in GM’s line. That’s the one area they don’t need to cut back.
GM has too many dealers, but that’s the dealers problem, not GM’s. IMHO, GM should combine the brands they would like to dump (pontiac, saturn, saab, etc...) into a single brand (let’s call it Combo for grins) and turn all their existing dealers of those brands into “Combo” dealers. There would eventually be a shakeout of dealers on their own, and it would reduce the number of brands.
I was given a 2003 saturn vue, and hated it. Worst piece of junk I’ve ever driven, and I’ve driven a LOT of junk. I hated just about everything about it.
I now have an Exploder (ford explorer) and love it. I like almost everything about it.
They need to keep Saturn and ditch Buick.
Good point. Back inthe day, people would buy cars on loyalty, from the dealer in their town. People really wouldnt' travel to buy a car. A deal in nearly every town, or at least county used to make sense. Not now.
I’m pretty sure when GM set up Saturn that it was to be a union shop from the start (the UAW wouldn’t tolerate a non-union GM brand). Although the concept was a big success at first, Saturn became much more “GM-like” over time and quality went in the toilet.
I have a 2008 Vue and I’m lovin’ it.
Axe the AUW contract if you want to survive.
GMC brand makes it possible for non-Chevy dealers to sell trucks. I dont know about other parts of the country, but in the south trucks (pick ups particularly) are the bread and butter of most dealers sales. Most of the Buick and even Cadillac dealers would probably go out of business if they couldnt also sell GMC trucks.
OK then ,, cancel Chevy trucks ,, just sell them as GMC and let all dealers participate..
Congrats, I’m happy for you. I grew up on pickups, dump trucks and OTR trucks, and have racing experience. The vue never ever drove properly, it was unlike anything I have ever driven, was lousy around town and was scary on the highway. The suspension/handling in mine was scarier than driving a scooter at 70 MPH.
My explorer is substantially larger, and is easier to drive and park, even in crowded parking lots. The all around view is far superior, too.
In any case, enjoy the vue!
The solution: Every dealer becomes a "GM" dealer. GM builds a model and gives it a brand, and that's the only version of that model they build.
Example: Instead of a Pontiac Solstace and a Saturn Sky, make one model, call it a Pontiac or a Saturn, and let every dealership in the country sell it.
Instead of a Chevy Silverado and a GMC Sierra pickup truck, make just the Chevy or the GMC and let all dealers sell them. (If this were done, the GM pickup would outsell the Ford F-150.)
Caddilac would get their unique CTS and STS, Chevy would keep the HHR, etc., but there wouldn't be an Esclade and a Tahoe and an Envoy, but just one.
So you go to your local GM dealer, and you will find a Chevy Tahoe next to a Cadilac CTS next to a Pontiac Solstace next to a Saturn Astra.
Part two is to reduce the myriad of options available. Instead of literally hundreds of permutations of options and trim levels, make three trim levels, and the options are predetermined for each level. (With maybe a couple of exceptions like a sunroof.) This would lower GM's manufacturing costs, parts inventory costs, and it would be easier for dealers to swap inventory between them.
Yes, your list makes more sense.
I have owned more GM vehicles than any other make. They included a 70 Buick (first car), two pickups (98 and 00), an 2000 Cavalier and a 2004 Impala. The Buick was a good car, the 98 truck got totalled in 2000, the 2000 pickup had various problems, the Cavalier was a POS, but I didn’t have any problems with the Impala.
Today I own three vehicles. 2007 Nissan Titan, 2008 VW New Beetle Convertible, and a 1969 VW Beetle Convertible. the 2008 VW is just months old, so I have no opinion yet, but I really like the Titan, and I LOVE my little bug.
GM really needs to do something. You can go to different GM brands and get the same car at greatly different prices. When I bought the Impala I also looked at the LeSabre. Same size car, same options, etc. but the Impala was priced same as the mid-sized Buick Century. My Dad bought the LeSabre in 2004 and I couldn’t tell the difference in the ride, handling etc. between his Buick and my Chevy. Why make three or more different versions of the same car? Same with the other two automakers. A Ford is a Mercury is a Lincoln just different prices. And Chrysler/Dodge.
Plus Plymouth, if they still market that.
If the Lucerne is so popular, it could be sold as a Pontiac Bonneville, or under the latest Pontiac model naming convention, G10.
Pontiac is a much more identifiable brand name than Buick, IMO. And the G8, which comes from GM’s Holden division in Australia, is a great car. Holden also supplied the most recent GTO. Although it wasn’t a “real” GTO in the tradition of the original, it was a good performance car. It was simpoly too plain-vanilla styled and too expensive. GMC still needs an “excitement” division, and Pontiac is the natural.
Saab needs to go. It’s a low-volume Swedish manufacturer, and GM needs to find a buyer for it. Volkswagen might be interested.
GMC should either go, or all trucks made by GM should be branded as GMC. There’s extra cost involved in having GMC and Chevy versions of the same truck models.
The rationale for GMC was always that non-chevy dealers needed a truck brand to sell. But if GM is serious about cutting down on the number of its’ dealerships, they should be consolodated so that every GM dealership sells every GM brand.
Ssturn should go. It was intended to be a different kind of brand whose dealers did business differently. Now it has become a brand that is nothing but re-badged Opels, Saabs, GMCs and Chevys. No need for that.
Hummer could probably be sold to BMW or VW as a specialty brand. BMW already owns Lamborghini, for example, and VW has Bentley.
Chevy, Pontiac, Cadillac - those are the only three brands that GM needs. Or four, if they decide that all GM trucks should be branded as GMCs.
Ford needs to do some housecleaning also. Sell Volvo. BMW was interested in it at one time, but Ford wasn’t serious about selling at the time. Perhaps BMW’s interest vcan be rekindled with a good offer. Ford should retain enough stock in Volvo to keep the cross-pollination going that has heldped Ford recently. Using Volvo’s structural ideas, for example, Fords aced the latest crash tests. Ford also learned from Volvo’s engineers how to build a proper seat.
Mercury needs to go. Mercs are just re-badged Fords with different front clips and tail lights. Drop the brand or do something creative with it, Ford.
Keep Mazda, or at least keep enough stock in it for cross-pollination purposes, as with Volvo.
Chrysler - abandon hope, all ye who enter here. The Dodge Challenger is really hot, but it won’t save the company. Someone needs to buy Jeep to rescue the brand. Perhaps Ford can buy it with the money it gets from selling Volvo.
Dumping Hummer may be a little hasty, considering what fuel prices are doing.
Ironic, since Jeep was the only brand to survive the AMC failure.
15 or 16 hours ahead of us.
fuel prices will go back up to $70 a barrel by 2010.
Thats astounding. GM is only worth three billion. Let them go down the new world order drainhole. America has entered a new age where manufacturing is done by robots or slave labor. The free traders have all the problems solved.
The reps and dems both agreed on this and you know they must be right when they both agree. Unless its true that we have a evil party and a stupid party. Once in a blue moon they agree and do something stupid and evil. Thats called bi-partnership.
I can see keeping Caddilac around as an upscale brand, like Lexus, Acura or Infiniti. I really don’t see the point of keeping the Buick brand around. How many distinct models does Buick even have, these days?
I’d be sorry to see Saab disappear, although GM has pretty much watered that brand down by slapping the Saab name on several lightly reworked GMs (and a Subaru, too, I believe).
GM Key Statistics:
Data provided by Capital IQ, except where noted.
Market Cap (intraday): 2.86B
Enterprise Value (4-Dec-08): 32.25B
Trailing P/E (ttm, intraday): N/A
Forward P/E (fye 31-Dec-09) : N/A
PEG Ratio (5 yr expected): N/A
Price/Sales (ttm): 0.02
Price/Book (mrq): N/A
Enterprise Value/Revenue (ttm): 0.19
Enterprise Value/EBITDA (ttm): -22.839
Fiscal Year Ends: 31-Dec
Most Recent Quarter (mrq): 30-Sep-08
Profit Margin (ttm): -13.24%
Operating Margin (ttm): -6.05%
Return on Assets (ttm): -4.83%
Return on Equity (ttm): N/A
Revenue (ttm): 166.10B
Revenue Per Share (ttm): 292.691
Qtrly Revenue Growth (yoy): -13.20%
Gross Profit (ttm): 12.12B
EBITDA (ttm): -1.41B
Net Income Avl to Common (ttm): -22.79B
Diluted EPS (ttm): -38.742
Qtrly Earnings Growth (yoy): N/A
Total Cash (mrq): 15.90B
Total Cash Per Share (mrq): 26.043
Total Debt (mrq): 45.16B
Total Debt/Equity (mrq): N/A
Current Ratio (mrq): 0.729
Book Value Per Share (mrq): -98.185997
Cash Flow Statement
Operating Cash Flow (ttm): -5.79B
Levered Free Cash Flow (ttm): -10.76B
This is what GM should have been doing all along... trim its rediculous number of pointless brands, and file for Chap 11, not going to DC begging for handouts.
They can’t. It is selling well in China and they make a profit there is the Buick line.
You are right. I have a saturn outlook and I love it. I don’t know anyone who drives a buick.
Whatever they do, they should cut way down on the models of cars they produce. Take a lesson from Honda: Fit, Civic, Accord, Pilot, Ridgeliner, Odyssey - maybe I missed one or two. Then build QUALITY into the cars. I have owned Hondas for 20 years - nary a problem. Family members with GMs? Many expensive problems. GM is just stretched too far, so quality suffers.
Yeah ... lose the Hummer and Saab brands. And quit duplicating cars across brands. The same vehicle does NOT need to be sold as Chevy, Pontiac and Saturn ... or Chevy, GM, Cadillac ... or Chevy, Buick, Pontiac ... etc.
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