GM To Focus On Four 'Keeper' Brands

PontiacGeneral Motors plans to sell Saab, Saturn and Hummer by the end of the year and eliminate Pontiac entirely by the end of 2010.

The timetable is part of a new viability plan that General Motor's new CEO, Fritz Henderson, presented to a media scrum in Detroit Monday. Henderson said the new plan reflects the government's insistence that GM move aggressively toward right-sizing, a point emphasized with the Administration's dismissal of CEO Rick Wagoner last month.

Mentioning that GM had already put Hummer, Saab and Saturn on the block, Henderson said the revised plan jettisons them sooner. "We don't expect to be building those products beyond 2009," he said, adding that GM had pondered saving Pontiac.

"We have, over the last 30 days, worked on developing scenarios in which Pontiac could be a successful niche brand, but my personal philosophy on brands is they only play offense well. They don't play defense well. You either have a strategy that could win for the brand even with the competition or you basically have to stop, and our conclusion was we didn't have a strategy we were satisfied with that could let us win with Pontiac. We don't have the resources or the marketing muscle to put behind the brand, and our conclusion from that was we need to discontinue the work we are doing there."



Henderson said the decision to kill Pontiac was "a tough decision ... because it was a brand with heritage in our company, and it was an intensely personal decision in many ways, but it had to be taken." He says the key is getting behind four brands in particular, and being able to support them with "adequate capital and engineering resources."

Now, he said, the company will focus on four brands that it defines as core: Chevrolet, Buick, Cadillac and GMC. Henderson said the four brands will also have fewer nameplates with 34 nameplates total next year, down from 48 nameplates last year. The move includes restructuring of GM's dealer organization, and an accelerated schedule to idle and close plants. The company said it would make an investment in R&D of $5.4 billion in 2009, and investments ranging from $5.3 to $6.7 billion from 2010 to 2014.

Henderson said Chevy Volt electric is on track for a late 2010 production date, with retail sales shortly after. Chevrolet Camaro, Equinox, Cruze; Buick LaCrosse; GMC Terrain; and Cadillac SRX and CTS Sport Wagon and Coupe are vehicles within the four "keeper" brands that GM will focus on this year. 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."

Henderson said the new plan means deeper cuts in dealership numbers incumbent with the shuttering of the Pontiac brand, and fewer nameplates overall. GM's February plans included cutting U.S. dealership count from 6,245 to 4,105 by 2014. The new plan cuts numbers to 3,605 by the end of 2010, meaning 500 more dealers done four years sooner.

In addition to cutting 13 plants, or 28% of total U.S. production facilities by the end of 2010, the company said it would also cut employee count by 34% from 61,000 last year to 40,000 in 2010. Some of those numbers are implied in the plant closings, but GM said it would also cut salaried and executive employment.

"The objective is not to survive, but to develop a plan to win," said Henderson. "I'm not focused on size and bigness; our job is to be basically lean, flexible and successful. We will have plenty of scale; the key is on converting scale to successful business results."

Market analyst Todd Turner of Car Concepts, Los Angeles, says it all makes sense ... except for GMC. "I think they need Chevrolet and Cadillac. But while they call GMC a profitable unit, it's only because there are no development costs allocated to it," he says. "How much more possible would it be for GM to succeed if they didn't have marketing costs associated with [supporting GMC]."

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