General Motors Corp., facing the threat of a bankruptcy filing if it can’t meet a June 1 U.S. deadline, will preserve the GMC truck line and drop its 83-year- old Pontiac brand as part of a government-led recalibration of its business plan, people familiar with the decision said.
The Detroit automaker, which received an additional $2 billion in federal assistance on April 22, will keep the GMC, Chevrolet, Cadillac and Buick brands, after a review that included profitability with the Obama administration’s automotive task force, said the people, who asked not to be named because the decisions have not been announced.
GM may reveal next week the end of the make that produced the Grand Prix, Bonneville and Firebirds, they said.
“I hate to see these brands go, they are a part of the American experience,” said John Wolkonowicz, a forecaster and auto historian at IHS Global Insight Inc. in Lexington, Massachusetts. “If you were growing up in the 1960s, Pontiac was the hottest thing going.”
Pontiac spawned the “muscle car” era in 1964 when it stuffed a 389-cubic-inch V8 engine into a Tempest and called it the GTO. Killing the brand highlights the changes GM is being forced to make to survive in its second century of carmaking.
GM had already decided late last year to cut Pontiac to a niche brand, possibly with just one model, to sell alongside Buick and GMC in combined showrooms. To trim from its roster of eight U.S. brands, GM has said it will sell or shut Hummer, Saab and Saturn.
Steve Harris, a GM spokesman, declined to comment on the brands.
Savings Needed
“I should have seen the signs: You can’t even order a 2010 Pontiac G6,” said Russ Shelton, a Pontiac-Buick-GMC dealer in Rochester Hills, Michigan. “Once they make this announcement, those are basically sales-proof.”
Chief Executive Officer Fritz Henderson is in a race against the June deadline set by President Barack Obama to find more savings from unions, creditors and operations.
A Pontiac announcement next week may be part of an outline of a plan to close plants and scrap models as much as four years sooner than planned to lower its break-even point, the people said.
Lower Break-Even
The cuts may mean GM can be profitable in a U.S. market with sales of as few as 10 million autos, said the people. The annual sales rate was 9.9 million in March, after GM said Feb. 17 its break-even target was 11.5 million to 12 million.
The number of brands is part of a discussion on how to speed up the winnowing of GM’s 6,200 dealer locations to 4,100 sites as quickly as possible, said one person.
The U.S. Treasury said today that it provided an additional $2 billion to keep GM operating. The new money is part of $5 billion disclosed this week in a report by the special inspector general for the Troubled Asset Relief Program. GM has received $15.4 billion from the Treasury.
