Official: Pontiac is DEAD!

Johnnyboy · #1 (**permalink**) 04-27-2009, 01:23 PM

General Motors has just announced that Pontiac will be phased out by the end of 2010!

Quote:

PRESS RELEASE:

FOR RELEASE: 2009-04-27

GM Accelerates its Reinvention as a Leaner, More Viable Company

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

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. GM Media Online. 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."

Very very sad news

Johnnyboy · #2 (**permalink**) 04-27-2009, 01:30 PM

You can watch the press conference here

Jeeper · #3 (**permalink**) 04-27-2009, 01:45 PM

I know a guy that works for Pontiac and he says they have to keep it running for 4-5 years for parts and service and stuff like that.

Johnnyboy · #4 (**permalink**) 04-27-2009, 02:03 PM

It shouldn't affect any service or warranty work for current Pontiac owners. It would likely be handled by other GM dealers.

cyberwaste · #5 (**permalink**) 04-27-2009, 03:09 PM

apolloGT · #6 (**permalink**) 04-27-2009, 04:07 PM

This is what happens when big government tries to fix things.. it doesn't work. RIP Pontiac.. 21,000 people out of jobs just like that. GM wanted to keep it as a niche brand with one or two models, but because of government pressure, Pontiac is dead.

kendallcschm · #7 (**permalink**) 04-27-2009, 09:11 PM

O_O the only GM brand i liked... they should close hummer

MY69GOAT · #8 (**permalink**) 04-27-2009, 11:33 PM

Those SOB's!!!!!!! That's it, I'm done! The choice to move out of country just got a whole lot easier! Since our government can't seem to remove their heads from their rearends, I believe I'll have to look elsewhere. Damn Communist Bastards!!

Jeeper · #9 (**permalink**) 04-28-2009, 01:14 AM

Quote:

Originally Posted by MY69GOAT

Those SOB's!!!!!!! That's it, I'm done! The choice to move out of country just got a whole lot easier! Since our government can't seem to remove their heads from their rearends, I believe I'll have to look elsewhere. Damn Communist Bastards!!

A-FREAKING-MEN

Jeeper · #10 (**permalink**) 04-28-2009, 01:15 AM

Quote:

Originally Posted by kendallcschm

O_O the only GM brand i liked... they should close hummer

The word on the street is that Obama is asking that they sell or close Hummer as well in the next 5 years.

sccavette · #11 (**permalink**) 04-28-2009, 01:30 AM

Quote:

Originally Posted by Jeeper

The word on the street is that Obama is asking that they sell or close Hummer as well in the next 5 years.

GM has been trying to unload Hummer for a few years however nobody would buy it. They do not want to just close it because of all the military vehicles they build, they just want to sell it off to somebody else.

Saturn will be done at the end of 2010 also.

Jeeper · #12 (**permalink**) 04-28-2009, 01:39 AM

Quote:

Originally Posted by sccavette

GM has been trying to unload Hummer for a few years however nobody would buy it. They do not want to just close it because of all the military vehicles they build, they just want to sell it off to somebody else.

Saturn will be done at the end of 2010 also.

Holy crap. Everything will go except Chevy in the next 10 years. sad.

mesarius · #13 (**permalink**) 04-28-2009, 02:09 AM

Right when overall quality is improving and GM has some good affordable sports cars in the G8 and Solstice/Sky they have to go and axe the whole kabosh just like that. Why didn't they axe Buick or Cadillac? You don't need two luxury marques.

kendallcschm · #14 (**permalink**) 04-28-2009, 06:25 AM

Quote:

Originally Posted by mesarius

Right when overall quality is improving and GM has some good affordable sports cars in the G8 and Solstice/Sky they have to go and axe the whole kabosh just like that. Why didn't they axe Buick or Cadillac? You don't need two luxury marques.

i agree with that.... and Cadillacs aren't even good vehicles... and neither are Buicks ... pontiac is much better.... saturn isn't much of a loss but hey what are they doing with Saab? .... they discontinued the GTO... pontiac was going down as it was... i think in the next 20 years GM will be a memory.. it will be the big american 2 .... Mopar and Ford... if Mopar lasts that long...

sccavette · #15 (**permalink**) 04-28-2009, 10:44 AM

Quote:

Originally Posted by kendallcschm

i agree with that.... and Cadillacs aren't even good vehicles... and neither are Buicks ... pontiac is much better.... saturn isn't much of a loss but hey what are they doing with Saab? .... they discontinued the GTO... pontiac was going down as it was... i think in the next 20 years GM will be a memory.. it will be the big american 2 .... Mopar and Ford... if Mopar lasts that long...

They will end up with 3 or 4 divisions after it is all over.

Chevy
Buick
Cadillac
GMC (maybe)

Chevy will be the general platform and will have all the performence cars like the vette and maybe the camaro if it does not get axed.

Buick is a BIG seller over seas and with older people in the US. Buick division will probably end up with a little larger span of cars and maybe a perf model again.

Cadillac will be the luxery division and you will not see anymore performance vehicles from the Cadillac team.

It is still up in the air IF the truck/SUV market will be under the Chevy platform or if it will go under its own devision GMC.

The SAAB devision has not really been brought into this restructure yet because it sells very good over seas. They have tried to sell it a few times however like hummer nobody wanted it. I do not see them closing down SAAB however they would love to sell it off.

The pontiac devision has been on the chopping block for a while.