US: Pontiac for the chop in 'faster, deeper' GM reorganisation
General Motors is expected to announce the death of Pontiac later today. The closure of the brand once renowned for sports cars follows the axing of Oldsmobile in 2004, which reportedly cost GM US$1bn in costs, including compensation for early termination of dealer contracts.
Reports began circulating on Friday night and sources in Canada, where GM has a large plant in Ontario, told just-auto this morning that rumours were circulating all weekend of a major announcement.
"Just as the G8 reawakened our interest in 83-year-old Pontiac, the brand falls victim to bad times and old mistakes," said Daniel Pund, senior editor of Edmunds.com's Inside Line.
He said the announcement would be part of GM's new "faster, deeper" reorganisation plan.
Pontiac's inventory is much higher than that of the rest of the GM brands, according to Edmunds' data.
"They still have a lot of inventory to get rid of before they can disband the brand," said analyst Jessica Caldwell. "Even if they stopped production of all Pontiacs, they have well over three months supply in stock at this time - over 80,000 cars."
Pontiac sells seven 2009 model lines in the US with the entry-level G3 coming from GM-Daewoo in South Korea, the G8 sports sedan from Holden in Australia and the Vibe from the NUMMI joint venture with Toyota in California. The rest are made in GM's North American plants. Eight model lines are currently sold in Canada, which gets an additional SUV model dropped from the US range for 2009.
Edmunds is predicting that most of those vehicles will be sold to fleets, but suggests there will be new car bargains for consumers while us used car shoppers "will also be able to pick up great deals as Pontiac resale values will only continue to fall".
"Pontiac market share has fallen to 1.9% so far this year, the lowest year on record. Sales in March 2009 represent about 11.3% of General Motors' total.
"March 2009 data indicates that on average, Pontiac vehicles currently sell for 21.9% off sticker price compared with the industry average discount of 16.4%."
The Pontiac brand originated as the Oakland Car Company of Pontiac, Michigan, in 1907. In the 1950s, its Bonneville model was a huge hit, offering equal measures of performance and luxury.
The became famous in the 1960s after it introduced the first 'muscle car', the GTO option for the compact Tempest.
Pontiac also enjoyed tremendous success during the latter part of this decade with the launch of its Firebird and Firebird Trans Am.