July 16th, 2009

Bob LutzCars & Trucks
It Seemed Like a Good Idea at the Time…
By Bob Lutz
GM Vice Chairman

OK, I have some late-breaking news for you from the world of GM, where things are indeed moving quickly, and what I’m about to say is proof.

In fact, we’re moving so fast, we’re going back in time to, oh, about four or five days ago, when the Pontiac G8 was going away and was not going to become a new Chevrolet Caprice.

And therein lies the news: The G8 will not be a Caprice after all. I’d mentioned it, and said we were studying it, giving it a serious look, because a car like the G8 was just too good to waste.

That’s all still true. But I have to say that, with my new “marketing” hat on, upon further review and careful study, we simply cannot make a business case for such a program. Not in today’s market, in this economy, and with fuel regulations what they are and will be.

I know that we’ll get a lot of complaints from G8 lovers, because I’m one of them. And the product guy in me is complaining as loudly as anyone. But the marketing guy says there’s no case. With budgets being what they are for the time being, the resources must be allocated elsewhere.

In no way, and this is very important, in no way does this mean we are backing away from performance, or backing away from rear-wheel drive. Look no further for proof than the Corvette, the Camaro, the CTS or many other present and future Cadillacs. We have a strong lineup of RWD vehicles already and we will continue to have it.

And we have a tremendous RWD team in Australia that gave us the beloved G8, a team that we will tap into at some point again in the future for its expertise and sheet metal. Just not right now.

Pontiac G8: The World's Best Car Nobody Was Buying

Date posted: 07-20-2009
STORY TOOLS
Digg this storyDigg this!
del.icio.usdel.icio.us

DETROIT — On General Motors' FastLane blog last week, newly unretired Vice Chairman Bob Lutz conceded that the company can't make a business case for rebadging the suddenly lamented Pontiac G8 sport sedan, the car that caused a first-week-on-the-job train wreck between Lutz's vision of GM's product-strategy future and that of the automaker's CEO, Fritz Henderson.

Days before and barely hours into his return to GM's salaried-exec payroll, Lutz said GM was going to rebadge the underappreciated, Australia-sourced Pontiac G8 as a Chevrolet Caprice, calling it a car "too good to waste."

The pronouncement flew directly against an earlier thumbs-down verdict about the G8 from Henderson, who said he does not favor rebadging.

Lutz previously had praised the G8's cult status among enthusiasts and said the car's sales were gaining momentum. True enough. But a little perspective from data analysts at Edmunds.com shows what appears to have really generated that momentum: outsized incentives.

It wasn't until the big-time money was on the G8's faux ram-induction hood that its sales numbers began to ratchet up — and even those numbers, fueled by thousands of dollars in high-test incentives — hardly were the stuff that saves distressed divisions.

If Lutz finally saw the numbers, this simple snapshot of the G8's true "demand" — and more important, its ultimate profitability — that quickly led Lutz, on the FastLane blog, to admit, "upon further review and careful study, we simply cannot make a business case for (rebadging the G8 or using it as a law-enforcement fleet vehicle). Not in today's market, in this economy, and with fuel regulations what they are and will be.

"I know that we'll get a lot of complaints from G8 lovers, because I'm one of them," Lutz continued. "And the product guy in me is complaining as loudly as anyone. But the marketing guy says there's no case."

Long before GM confirmed Pontiac would be discontinued and before GM started slathering on incentives, G8 sales were running at a tepid average of about 1,500 per month and for the full year sold a total of 15,002. Its best month last year was April, its first full month on sale, when G8s went to 2,126 buyers. Not the numbers of a car sparking a sensation in the market — at least not a profitable sensation.

Yes, the G8's 2008 sales total assuredly was impacted by the industry sales crash that began in the second half of the year. But assuming the G8's numbers were affected in proportion to the total industry decline, its actual 2008 sales might project to a year of perhaps 22,000 sales.

As for the widely distributed theory that the G8 is just now "catching on" with consumers and gaining momentum, move on its 2009 year-to-date performance. A quick look at Edmunds.com's Total Cost of Incentive demonstrates what's likely responsible for the G8's ballooning sales: as soon as GM radically hiked G8 incentives (by 50 percent or more), sales increased in direct proportion.

In fact, just two months ago in May, Edmunds.com data indicates G8 incentives hit their highest-ever amount ($5,415) for this purportedly "hot" model — almost five times the G8 incentive GM was offering at the same time last year.

Inside Line says: Nobody wants to shut down emotion, but the G8's perceived popularity was profitless — and at least the "new" GM now appears grudgingly willing to admit it. — Bill Visnic, Senior Editor, AutoObserver.com