GM Says It May Kill Off One of Its Brands
03-23-2005, 03:35 PM
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GM Says It May Kill Off One of Its Brands 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."
© Copyright Reuters Ltd. All rights reserved. The information contained In this news report may not be published, broadcast or otherwise distributed without the prior written authority of Reuters Ltd.
03/23/2005 15:44
Here's the link
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."
© Copyright Reuters Ltd. All rights reserved. The information contained In this news report may not be published, broadcast or otherwise distributed without the prior written authority of Reuters Ltd.
03/23/2005 15:44
Here's the link
03-23-2005, 05:54 PM
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GM's product line is just not fun. The could bring back the Olds 442 using the Monaro platform. The Bonneville could be really nice based on the CTS platform. Buick could be really neat if you could get them with some of the LS series engines and also use the CTS platform. They just need to bring in some new blood, and rid themselves of the Lutz regime. They also need to reinvent themselves. People aren't end-all loyalists the way they were in the past. The customer will move on. They also need to promote the Pontiac GTO. Something seems fishy on that end. I haven't seen anything about that new car, and hardly any of them driving around. The stupid attitudes of the Pontiac dealers in regards to handling themselves with the GTO doesn't help either. Go to a foreign dealership, there's a theme. They're usually friendly; the place is nice and put together well. Go to a Pontiac dealer; it's a joke. It's even worse for service or parts.
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03-23-2005, 10:08 PM
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what is the purpose of buick? boring grandma cars to take over from cadillac? have they made anything decent in the last 10 years? i don't know anybody with a buick. saturn is actually doing good for GM. pontiac is really not dong very good, but thats cause ALL THE CARS LOOK THE SAME. they don't have anything worth buying overall. i like the slightly redone GTO, but thats not enough. the solstice looks really cool, but still a small market car. the G6 looks good, but not enough to save it.
03-24-2005, 01:30 AM
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For GM's sake, I hope they wake up and can both Buick and Pontiac as well as more brands.
The big news this past week and their steadily eroding market share over the past few years is a very clear warning they cannot continue to prop up their sorely antiquated division structure.
They have too many names, too many models, and not enough money and room in the US market to support them all. It's time for more to fade like Oldsmobile.
The big news this past week and their steadily eroding market share over the past few years is a very clear warning they cannot continue to prop up their sorely antiquated division structure.
They have too many names, too many models, and not enough money and room in the US market to support them all. It's time for more to fade like Oldsmobile.
03-24-2005, 01:36 AM
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There isn't enough brand exclusivity to make one stand out from the other. From a buyer's prospective, the difference between brands is the sheetmetal and maybe the size of the car. Most GM cars, brand to brand, can be optioned the same, and they have the same engines.
03-24-2005, 09:38 AM
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Axe Buick, there's nothing substancial there. I have never seen a big Buick dealer, no plants would close because every buick is manufactured next to a Pontiac. The only thing I could think of is the Buick Rendezvous, Pontiac Azzkick
03-24-2005, 09:42 AM
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I Say go Cadillac and Chevrolet and thats it. While your at it buy out all the existing dealer owners and get a good dealer program going with customer service and start selling cars close to sticker. I feel bad for everybody else that doesn't walk into a GM dealership and ask for invoice.