Monday, April 27, 2009

Pontiac's Problems Were More Complicated Than Sales

The problems that killed off the Pontiac brand were far more complicated than mere sales. Pontiac was actually the third best selling brand for GM behind the Chevrolet and GMC brands. In 2008, for example sales were 1,801,131 for Chevrolet, 376,996 for GMC, 267,348 for Pontiac, 188,004 for Saturn, 161,159 for Cadillac, 137,197 for Buick, 27,485 for Hummer and 21,368 for Saab, for a total of 2,980,688 vehicles. Certainly these figures were way down from sales figures of the past, however the problems for the Pontiac Division were many-fold.

One of the biggest problems for all GM brands is that younger buyers are no longer as loyal to particular brands as they once were. Few buyers now characterize themselves as lifelong Chevrolet or Ford owners these days as in the 50's through 70's.

Another big problem is that $4 gas could someday return, and the Pontiac brand was built on high performance type models and now suffers from many buyers wary to buy fuel hungry cars. Further Congress continues to demand better fuel economy from automobiles and lower pollution, pressuring GM to cut back on models that produce less mileage in order to allow for more trucks from the GMC Division or the more profitable Cadillac or Buick Divisions to sell vehicles.

So the bottom line troubles for the Pontiac Division boil down to a profitability issue. GM can make bigger profits selling higher priced vehicles such as GMC trucks, Cadillacs or Buicks, but the Pontiac Division works on a much tighter profit range as well ass facing modern problems with Congress over fuel mileage and the possibility of expensive gas in the future returning.

While Pontiac will merely die as a brand, GM still hopes to eventually sell off the Saturn, Hummer and Saab brands. Ford was able to sell of Jaguar to a company in India that also owns Land Rover as well. And hopes are that a foreign buyer may be attracted to the Hummer and Saab brands. The Saturn brand will be a much harder sell for GM. The brand hardly looks that attractive to many buyers, unless some upstart into the American market Chinese or South Korean brand has some interests in breaking into the U.S. market by buying the brand so that it can use the existing dealerships to jump start it's American entry. India's Tata which is the world's eighth largest automaker and current owner of Land Rover and Jaguar might be tempted to make a bid for a brand like Hummer as well.

As GM looks to slim down in hopes of survival from this bleak economy, the Pontiac Division's future became doomed. It lost too much money, although it still sold a reasonable number of cars. And a return to high performance cars seemed unlikely as new environmental and mileage rules continue to pressure modern automakers to build cars much different than the past.

Sadly, Pontiac quickly became the odd man out at GM. The division quickly looked like a good bet to save lots of money by giving the brand the ax, as well as satisfying the demands of Congress and environmentalists to kill off. Today, the only "excitement" the Pontiac brand is making is by the news that the brand will soon shut down.


At 6:02 AM, Blogger Andy Volodin said...

Here's the full list of Pontiac problems, recalls and complaints for last 15 years.


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