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Worst Day in Pontiac History

It's Official, Pontiac is Phased Out
Posted April 27 2009 09:08 AM by HPP_EDITOR 
Filed under: Pontiac News, Tom DeMauro

This past week, media speculation had risen to such a fever pitch regarding the rumored demise of Pontiac, that a Division spokesperson released a statement on the afternoon of April 24th, in an effort to quell it.


Then this morning, Monday, April 27, 2009, GM officially announced that Pontiac would be phased out by the end of 2010. Not a good day for us Pontiac fans. Those press releases are posted here.

FOR RELEASE:  2009-04-24

CONTACTS

Pontiac Statement Re: Media Speculation


Contrary to media speculation, General Motors has not announced any changes to its long-term viability plan or to the future status of any of its brands. GM is continuing to review its restructuring plan to go further and faster and best ensure its future success. Additional information will be released as any decisions are finalized.

CONTACT(S):
Jim Hopson
jim.hopson@gm.com
o: 313-667-4124
m: 313-268-2164

 

 

 

2009-04-27

CONTACTS

Updated Viability Plan Speeds, Deepens Restructuring of U.S. Operations

GM Accelerates its Reinvention as a Leaner, More Viable Company

 

DETROIT -- General Motors (NYSE: GM) today presented an updated Viability Plan that will speed the reinvention of GM's U.S. operations into a leaner, more customer-focused, and more cost-competitive automaker.

The Viability Plan is included in an exchange offer whereby GM is offering certain bondholders shares of GM common stock and accrued interest in exchange for certain outstanding notes.

Revised Viability Plan goes further and faster

The Viability Plan announced today builds on the February 17 Viability Plan submitted to the U.S. Treasury. LINK. The revised Plan accelerates the timeline for a number of important actions and makes deeper cuts in several key areas of GM's operations, with the objective to make us a leaner, faster, and more customer-focused organization going forward.

Significant changes include:

A focus on four core brands in the U.S. - Chevrolet, Cadillac, Buick and GMC - with fewer nameplates and a more competitive level of marketing support per brand.
A more aggressive restructuring of GM's U.S. dealer organization to better focus dealer resources for improved sales and customer service.
Improved U.S. capacity utilization through accelerated idling and closures of powertrain, stamping, and assembly plants.
Lower structural costs, which GM North America (GMNA) projects will enable it to breakeven (on an adjusted EBIT basis) at a U.S. total industry volume of approximately 10 million vehicles, based on the pricing and share assumptions in the plan. This rate is substantially below the 15 to 17 million annual vehicle sales rates recorded from 1995 through 2007.
"We are taking tough but necessary actions that are critical to GM's long-term viability," said Fritz Henderson, GM president and CEO. "Our responsibility is clear - to secure GM's future - and we intend to succeed. At the same time, we also understand the impact these actions will have on our employees, dealers, unions, suppliers, shareholders, bondholders, and communities, and we will do whatever we can to mitigate the effects on the extended GM team."

Fewer U.S. brands, nameplates, and dealers

As part of the revised Viability Plan and the need to move faster and further, GM in the U.S. will focus its resources on four core brands, Chevrolet, Cadillac, Buick and GMC. The Pontiac brand will be phased out by the end of 2010. GM will offer a total of 34 nameplates in 2010, a reduction of 29 percent from 48 nameplates in 2008, reflecting both the reduction in brands and continued emphasis on fewer and stronger entries. This four-brand strategy will enable GM to better focus its new product development programs and provide more competitive levels of market support.

The revised plan moves up the resolution of Saab, Saturn, and Hummer to the end of 2009, at the latest. Updates on these brands will be provided as these initiatives progress.

Working with its dealers, GM anticipates reducing its U.S. dealer count from 6,246 in 2008 to 3,605 by the end of 2010, a reduction of 42 percent. This is a further reduction of 500 dealers, and four years sooner, than in the February 17 Plan. The goal is to accomplish this reduction in an orderly, cost-effective, and customer-focused way. This reduction in U.S. dealers will allow for a more competitive dealer network and higher sales effectiveness in all markets. More details on these initiatives will be provided in May.

Sales volume and market share projections

The Viability Plan anticipates improved financial results despite more conservative U.S. sales volume expectations going forward. The lower volume expectations are the result of managing the business with fewer nameplates and dealers, leaner inventories, and reduced market share. To address the inventory issue, GM on April 23 announced U.S. production schedule reductions of approximately 190,000 vehicles during the second and early third quarters of 2009.

The Viability Plan also reduces GM's market share projections to adjust for the impact of the brand and dealer consolidation, as well as for the short-term impact of speculation regarding a GM bankruptcy. The plan assumes a 19.5 percent share in 2009, with share stabilizing in the 18.4 to 18.9 percent range in subsequent years.

"We have strong new product coming for our four core brands: the Chevrolet Camaro, Equinox, Cruze and Volt; Buick LaCrosse; GMC Terrain; and Cadillac SRX and CTS Sport Wagon and Coupe," said Henderson. "A tighter focus by GM and its dealers will help give these products the capital investment, marketing and advertising support they need to be truly successful."

Lower structural costs, lower breakeven point

The Viability Plan also lowers GMNA's breakeven volume to a U.S. annual industry volume of 10 million total vehicles, based on the pricing and share assumptions in the plan. This lower breakeven point (at an adjusted EBIT level) better positions GM to generate positive cash flow and earn an adequate return on capital over the course of a normal business cycle, a requirement set forth by the U.S. Treasury in its March 30 viability plan assessment.

GM will lower its breakeven point by cutting its structural costs faster and deeper than had previously been planned:

Manufacturing: Consistent with the mandate to accelerate restructuring, we plan to reduce the total number of assembly, powertrain, and stamping plants in the U.S. from 47 in 2008 to 34 by the end of 2010, a reduction of 28 percent, and to 31 by 2012. This would reflect the acceleration of six plant idling/closures from the February 17 plan, and one additional plant idling. Throughout this transition, GM will continue to implement its flexible global manufacturing strategy (GMS), which allows multiple body styles and architectures to be built in one plant. This enables GM to use its capital more efficiently, increase capacity utilization, and respond more quickly to market shifts.
Employment: U.S. hourly employment levels are projected to be reduced from about 61,000 in 2008 to 40,000 in 2010, a 34 percent reduction, and level off at about 38,000 starting in 2011. This further planned reduction of an additional 7,000 to 8,000 employees from the February 17 Plan is primarily the result of the previously discussed operational efficiencies, nameplate reductions, and plant closings. GM also anticipates a further decline in salaried and executive employment as it continues to assess its structure and execute the Viability Plan. More details will be announced as soon as they are finalized with the various stakeholders.
Labor costs: The Viability Plan assumes a reduction of U.S. hourly labor costs from $7.6 billion in 2008 to $5 billion in 2010, a 34 percent reduction. GM will continue to work with its UAW partners to accomplish this through a reduction in total U.S. hourly employment as well as through modifications in the collective bargaining agreement.
As a result of these and other actions, GMNA's structural costs are projected to decline 25 percent, from $30.8 billion in 2008 to $23.2 billion in 2010, a further decline of $1.8 billion by 2010 versus the February 17 Plan.

Strengthening GM's balance sheet

Another key element of GM's restructuring will be taking the necessary actions to strengthen its balance sheet. GM today took an important step in improving its balance sheet by launching a bond exchange offer for approximately $27 billion of its unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity.

"A stronger balance sheet would free the company to invest in the products and technologies of the future," Henderson said. "It will also help provide stability and security to our customers, our dealers, our employees, and our suppliers."

Another important part of improving the balance sheet will be the ongoing discussions with the UAW to modify the terms of the Voluntary Employee Benefit Association (VEBA), and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50 percent of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50 percent of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions.

In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction.

Throughout the Plan, GM will continue to make significant investment in future products and new technologies, with an investment of $5.4 billion in 2009, and investments ranging from $5.3 to $6.7 billion from 2010 to 2014. Very importantly, development and testing of the Chevy Volt extended-range electric car remains on track for start of production by the end of 2010 and arrival in Chevrolet dealer showrooms soon thereafter.

"The Viability Plan reflects the direction of President Obama and the U.S. Treasury that GM should go further and faster on our restructuring," Henderson said. "We appreciate their support and direction. This stronger, leaner business model will enable GM to keep doing what it does best - provide great new cars, trucks and crossovers to our customers, and continue to develop new advanced propulsion technologies that are vital for our country's economy and environment."

# # #

About GM - General Motors Corp. (NYSE: GM), one of the world's largest automakers, was founded in 1908, and today manufactures cars and trucks in 34 countries. With its global headquarters in Detroit, GM employs 243,000 people in every major region of the world, and sells and services vehicles in some 140 countries. In 2008, GM sold 8.35 million cars and trucks globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com.

Forward-Looking Statements - In this press release and in related comments by our management, our use of the words "plan," "expect," "anticipate," "ensure," "promote," "believe," "improve," "intend," "enable," "continue," "will," "may," "would," "could," "should," "project," "positioned" or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors. Among other items, such factors might include: our ability to comply with the requirements of our credit agreement with the U.S. Treasury; our ability to execute the restructuring plans that we have disclosed, our ability to maintain adequate liquidity and financing sources and an appropriate level of debt; the ability of our foreign subsidiaries to restructure and receive financial support from their local governments or other sources; our ability to restore consumers' confidence in our viability and to continue to attract customers, particularly for our new products; our ability to sell, spin-off or phase out some of our brands, to manage the distribution channels for our products, and to complete other planned asset sales; and the overall strength and stability of general economic conditions and of the automotive industry, both in the U.S. and globally.

Our most recent reports on SEC Forms 10-K, 10-Q and 8-K provide information about these and other factors, which may be revised or supplemented in future reports to the SEC on those forms.


CONTACT(S):
Tom Wilkinson
GM Communications
313-667-0366 (o)
313-378-6233 (c)
tom.wilkinson@gm.com

Reneé Rashid-Merem
GM Communications
313-665-3128 (o)
313-701-8560 (c)


 



13 comments
Moanalua
Moanalua

Well, Henderson left but then returned in another capacity. As a Pontiac fanatic, I'd like to commend all of you who submitted comments. This hopefully shows GM how passionate Pontiac loyalists can be. As many of you are probably aware, there's an organization called "Save Pontiac" that is still trying to bring Pontiac back. I'm just one person, but I've e-mailed them several times to thank them for their efforts. Pontiac fans, keep the faith! Let's not let our love affair with Pontiac (particularly Pontiac musclecars) die!

arian455
arian455

I totaly agree with 3,5,6,7 and #9!!! When you look at it there are really only 2 core brands when you eliminate the "clone cars & trucks"! What we should realy do is get all pontiac owners with there opinions on saving Pontiacs and mention it to all magazines,clubs,resto companies, GM and the President. Lets all preserve our heratige! Im shure that all of us together will hit more than 250,000 loyatis minimum & if GM does not put Pontiac back, that would be 250,000 minimum that would not buy GM any more!

78transam428
78transam428

i have been upset with GM for awhile now for the g named crap.as for them cancelling pontiac, i will not sell my 70 goat convertible,i will not sell my 78 trans am, i will not sell my 79 anniversary (4spd, no olds eng. here) trans am,and i will not stop lovin my old pontiacs. what i will do is bid GM a not so found farewell and cant wait to piss on the grave after they finish going belly up, which i feel will be sooner rather than later. maybe the unemployeed workers could try to resurect pontiac, but i dont think the banks would loan them the money. maybe we could get the oil companies to loan the money.

chadnick73
chadnick73

I dunno, perhaps GM could resurect a limited edition GTO Judge in the (near?) future? Maybe, just maybe they could make a limited edition TA similiar to what Year One produced? If enough people complain...and does Buick have a high performance magazine catering to it's fans/followers like HPP? I don't believe they do.

firebird76400
firebird76400

J. Christopher Preuss, GM Vice President Communications, your wrong! "I do not think the removal of Pontiac will hurt things." You just don't understand the customer that would buy a Pontiac is looking for. Its style, performance and quality. The new Camaro is nice, but doesn't have that aggressive look of the Firebirds. I can not buy a Camaro cause it doesn't set my heart on fire. The 2004-2006 GTO's missed the styling also. Didn't set many hearts on fire either. You, J. Christopher Preuss just don't get it. Your not a car enthusiast. You have no idea of what driving a Pontiac means. You drive a G6. Big deal. Like you said "its a decent car." That car has never won a comparision test and doesn't hold up to the foreign makes and the Malibu. Why didn't you put more effort into the quality and style of the G6 like you did the Malibu? Build what the Pontiac enthusiast is looking for (try asking us, have you been the the POCI events or Trans Am & GTO clubs) and call it a Grand Am or Le Mans, not G6. To let Pontiac die and have two luxury divisions and two truck divisions makes absolutely no sense. It would not have been hard to bring the nameplate back to life. Just bad decisions after bad decisions! You cancelled the Firebird. Screwed up the styling of the GTO. Alphanumeric names and comparing Pontiac to BMW in commercials. Who walks into either dealership and compares the two. We want Trans Ams, Bonnevilles, Grand Prixs, GTO's, Grand Ams, etc. You just pissed off thousands of devoted Pontiac enthusiasts. We've been waiting patiently for you to turn this division around. But someone in GM has always tried to squash this division. Fritz Henderson, CEO, you just made the worst mistake in GM history in your short tenure. You are not a car enthusiast. Buick and Caddy sales combined are less than Pontiac. I dont want to hear about sales in China either. Your going to kill an American icon for sales in China! You were also quoted as saying the government wants us to build more fuel efficient vehicles and the Pontiac image is muscle, not economy. Yeah, big Buicks and GMC trucks are all about economy.One more thing. What's next? I know, Obama is going to tell you what to build. Embarrassing to see Wagoneer just sit there and take that crap from our corrupt, hypocritical politicians. GM has no balls! What happened to the car enthusiasts that use to run GM. You have lost a customer for good. See ya GM! Long live Pontiac!

creepyracing
creepyracing

I told you guys Pontiac died in 2002 When the last Trans am Rolled off the line. Whats the surprise? Say thank you to Bob Putz and his team of g whiz machine makers. The G whiz cars Took pontiac from the number 3 spot and killed the company. The End was so predictable trying to compete with BMW. Snobs that buy beamers DON"T buy poncho's.And this surprises you?

my455TA
my455TA

This doesnt suprise me. GM took the power from Pontiac back in the 70's. They have always put Pontiac second to the junk Camaro and Chevelle. So now they have completely shut them down. i have a 1980 TA that i have had since 1988 and grew up in the back seat of GTO's, Grand Prix's, and a SD Bonniville. i quit buying GM products in 1990 and bought FORD. FORD is the only manufacturer the demied bail out money. GM took Pontiac from me years ago, now they shut it down, and they want bail out money! Screw you! i was looking at the G8 too. It's BS! I would not miss them if they just went away completely.

PONTIAC_MUSCLE
PONTIAC_MUSCLE

GM can go *** themselves!!! Pontiac is their #3 selling brand and they drop it for less popular and less selling brands!!! I will always and "only" buy Pontiac!!!

Robroyoldboy
Robroyoldboy

I am deeply saddened by this development. I begin to wonder what GM officials are thinking. Buick may not be all that, but I can almost see their business case, and it almost seems valid. GMC!?!?!? There's nothing there that you can't get for the same price in a Chevy truck. I am of a similar mindset as comment #1 on here. However, I am a little more inhibited than he is: I plan to keep my new car money going to Detroit. I'm going to do as Chadnick73 has suggested and send e-mails to every GM address I can find. I'm going to tell them that until they can get their heads out of their collective behinds, I'm going to go sit in the Ford camp. Why? 2 reasons 1. I've always thought of Ford as a respectable adversary 2. I'd rather spend my money on something out of Detroit, rather than Tokyo, Seoul, Stutgart, or any other foreign city/country. That, to me, is all about what flag I fly, and THAT will always be Red, White, and Blue.

chadnick73
chadnick73

As per my comment #3, I emailed GM in protest for them phasing out their storied Pontiac brand. I hope everyone tosses them an email....!!!

chadnick73
chadnick73

I couldn't help but to agree with comment #2 posted by user werewolf486. Why did GM decide to keep Bu-ick, and shed Pontiac? I, and so many people out there associate Buick with being like 80 years old! Buick has no slogan like "you got it Pontiac, we build excitement", or "ignite the feeling". Buick is blah. In 1977, Smokey and the Bandit was only second to Star Wars in top movie sales. So GM made a new Camaro, why couldn't they make a new Firebird? It would be built on the same platform with some changed out parts, and the screaming chicken decal on the hood - easy. Ford hasn't discontinued making the Mustang. It's one of their top sellers. Perhaps Ford may pick up the Pontiac name plate like Chrysler picked up Jeep from AMC? Ford Firebird - it does have a decent ring to it huh?!! Better someone to pick up the name plate than to let it go into history. GMC & Chevy trucks are basically the same. GM could cut some lines from each. Is there anything one can do to persuade GM to have a change of heart? What the hell?!! I'll try emailing a copy and pasted copy of what I wrote here. Perhaps HPP can lobby GM on everyone's behalf?

Werewolf486
Werewolf486

GM kills Pontiac and keeps Buick? Buick who's last 3 letters spell ick!! Screw GM! This is the last straw for me and my family! No new Pontiac's means no new GM purchases for me or my family..EVER!! I won't go FORD, but I WILL NOT BUY A NEW GM till Pontiac is back!! So if it never happens, I never buy another NEW GM! I will happily buy used low mileage Pontiac's till the well dries up, then I guess I will be buying foreign autos and wearing an ascot or installing fart mufflers!Why not get rid of the redundant GMC line, shed Buick, and cut the D*mn union who pushed car costs through the roof!! Oh and slash management and fat out of GM. This is BS!!! Can't we do anything???

NoSmog
NoSmog

Ignore anything and it will wilt and go away. Just like the few years prior to GM killing Camaro, the demise of Pontiac is a lesson in repeating history. So when realization set in that the Camaro, an ignored model in the lineup had an important role with the GM enthusiast base, "Gee... maybe that was a mistake".. it came back ONLY after stabbing loyal fans and moving some to Ford Mustang loyalty camps. Now HPP fans can rejoice in knowing only THEY will be the Keepers of Chief Pontiac history, and maybe see an increased value of every classic Pontiac in existence today. Should Pontiac Michigan should change its name in protest? http://www.pontiac.mi.us/history/chiefpontiac.htm

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High Performance Pontiac
High Performance Pontiac