http://www.businessweek.com/bwdaily/dnflash/content/may2009/db20090521_339302.htm
Why Isn't Pontiac Up for Sale?
BusinessWeek reader Jeff Warg argues that General Motors mishandled Pontiac, an iconic brand he feels should live on under a new owner
By Jeff Warg
BusinessWeek reader Jeff Warg is a market researcher with a large automotive dealer group in Racine, Wis. He has a bachelor's degree in marketing from the University of Wisconsin at Parkside and is the proud owner of a 1988 Pontiac Fiero.
I was disappointed to hear that General Motors (GM) will discontinue its iconic Pontiac brand in 2010. Why hasn't GM put Pontiac up for sale? As I commented on the article "GM: The Government Is in Charge," Pontiac is GM's third-best-selling brand and would have significant value on the open market. Selling it would help repay the government loans.
My proposal: GM should eliminate Saturn while keeping Pontiac alive. GM could sell the Saturn dealer network rights as part of a package with the Pontiac brand, allowing the new owner to have 450 standalone Pontiac dealerships. It could include all Pontiac trademarks and the Wilmington (Del.) plant in the sale.
A series of lightweight, plastic-paneled, five-star crash-rated cars could be built on a space frame chassis similar to those of the Pontiac Solstice and Saturn Sky, both currently built in Wilmington. A space frame can be easily widened or lengthened, allowing historic Pontiacs like the Trans Am, GTO, Grand Prix, and Fiero to be built on a common platform. Ironically, none of these cars is even in the current Pontiac lineup. As demand varies, production volumes of each model could be adjusted, ensuring 100% plant utilization.
How GM Drove Pontiac's Decline
Who recently approved spending billions of dollars on Saturn, with 450 dealers, and Saab, with 260 U.S. dealers, while starving 2,600 Pontiac dealers of high-volume product? GM Vice-Chairman Bob Lutz, who brought the 2004 GTO to market, and who mentioned that it wasn't targeted at previous GTO buyers. What a great way to alienate customers. Lutz, a self-described "car guy," forgot about the vehicle's most important attribute: style.
Despite the GTO being a nice car, not many people wanted an oversized Cavalier, even with 350-400 hp. The fact that the legendary GTO was built overseas shows how oriented to trucks and sport-utility vehicles GM and its U.S. plants have become.
GM next decided to discontinue the Grand Am, claiming it was a damaged name. Nothing was wrong with the name; it was GM's second- or third-best-selling car. The new G6 can't match the Grand Am's sales volume.
The 2006 Pontiac Solstice hit the market with great expectations. It was a pet project of Bob Lutz's. What Lutz failed to consider were the 370,000 Pontiac Fiero owners who wanted a new Fiero. A coupe would have sold two or three times the number of units that the seasonal convertible does.
The Solstice is a series of compromises: limited head- and legroom, a very small trunk, and it is sold at a loss. The Fiero was roomy, with a decent-size trunk, and turned a profit every year sold. The Solstice convertible doesn't have the aggressive look that defines a Pontiac. The fastback Fiero GT was Pontiac excitement personified.
The Pontiac Grand Prix won the J.D. Power Initial Quality Award for the large-car segment in 2007 and 2008, beating the Toyota Avalon. Toyota (TM) isn't canceling the Avalon, so why did GM cancel the Grand Prix?
Failed Branding 101
I am sure companies known for excellent brand management, like Procter & Gamble (PG) and S.C. Johnson, can't believe how GM ran Pontiac into the ground through mismanagement and not understanding its customer base. Recently, GM tried to market Pontiac like an foreign brand with exotic names, not the heritage-inspired classic model names many Americans grew up with. Japanese manufacturers wish they had the heritage that GM discarded. After all, when people visit classic car shows, what do they see? Mostly, it is American cars. Indeed, GM's marketing is one of its weaknesses.
Pontiac has been known for performance and style since the 1960s. In March, GM tried repositioning the brand. Vice-President Susan Docherty stated on GM's corporate FastLane Blog that fuel economy was the most important purchase consideration. The current "Pontiac is CAR" slogan is amateur compared to the "We Build Excitement" campaign of the late 1980s.
The proposed G8 Sport Truck was the answer to a question no one asked. It would make a great Chevy El Camino, misbranded as a Pontiac; it would have been the next Aztek. Usually companies want to minimize risk on new product introductions.
GM really didn't consider the implications of shutting Pontiac down. A lot of younger buyers see Pontiac and Saturn as an alternative to Chevy. They will not buy a Buick, and many won't switch over to Chevrolet. Chevy doesn't offer a Malibu coupe, so what will Grand Am/G6 coupe owners buy? Will the Impala be sporty enough for the legions of Grand Prix owners? Chevy likewise doesn't offer an affordable two-seat sports car. For these reasons alone, Pontiac is still a core brand and deserves a second chance—under a new owner.
Why Isn't Pontiac Up for Sale?
BusinessWeek reader Jeff Warg argues that General Motors mishandled Pontiac, an iconic brand he feels should live on under a new owner
By Jeff Warg
BusinessWeek reader Jeff Warg is a market researcher with a large automotive dealer group in Racine, Wis. He has a bachelor's degree in marketing from the University of Wisconsin at Parkside and is the proud owner of a 1988 Pontiac Fiero.
I was disappointed to hear that General Motors (GM) will discontinue its iconic Pontiac brand in 2010. Why hasn't GM put Pontiac up for sale? As I commented on the article "GM: The Government Is in Charge," Pontiac is GM's third-best-selling brand and would have significant value on the open market. Selling it would help repay the government loans.
My proposal: GM should eliminate Saturn while keeping Pontiac alive. GM could sell the Saturn dealer network rights as part of a package with the Pontiac brand, allowing the new owner to have 450 standalone Pontiac dealerships. It could include all Pontiac trademarks and the Wilmington (Del.) plant in the sale.
A series of lightweight, plastic-paneled, five-star crash-rated cars could be built on a space frame chassis similar to those of the Pontiac Solstice and Saturn Sky, both currently built in Wilmington. A space frame can be easily widened or lengthened, allowing historic Pontiacs like the Trans Am, GTO, Grand Prix, and Fiero to be built on a common platform. Ironically, none of these cars is even in the current Pontiac lineup. As demand varies, production volumes of each model could be adjusted, ensuring 100% plant utilization.
How GM Drove Pontiac's Decline
Who recently approved spending billions of dollars on Saturn, with 450 dealers, and Saab, with 260 U.S. dealers, while starving 2,600 Pontiac dealers of high-volume product? GM Vice-Chairman Bob Lutz, who brought the 2004 GTO to market, and who mentioned that it wasn't targeted at previous GTO buyers. What a great way to alienate customers. Lutz, a self-described "car guy," forgot about the vehicle's most important attribute: style.
Despite the GTO being a nice car, not many people wanted an oversized Cavalier, even with 350-400 hp. The fact that the legendary GTO was built overseas shows how oriented to trucks and sport-utility vehicles GM and its U.S. plants have become.
GM next decided to discontinue the Grand Am, claiming it was a damaged name. Nothing was wrong with the name; it was GM's second- or third-best-selling car. The new G6 can't match the Grand Am's sales volume.
The 2006 Pontiac Solstice hit the market with great expectations. It was a pet project of Bob Lutz's. What Lutz failed to consider were the 370,000 Pontiac Fiero owners who wanted a new Fiero. A coupe would have sold two or three times the number of units that the seasonal convertible does.
The Solstice is a series of compromises: limited head- and legroom, a very small trunk, and it is sold at a loss. The Fiero was roomy, with a decent-size trunk, and turned a profit every year sold. The Solstice convertible doesn't have the aggressive look that defines a Pontiac. The fastback Fiero GT was Pontiac excitement personified.
The Pontiac Grand Prix won the J.D. Power Initial Quality Award for the large-car segment in 2007 and 2008, beating the Toyota Avalon. Toyota (TM) isn't canceling the Avalon, so why did GM cancel the Grand Prix?
Failed Branding 101
I am sure companies known for excellent brand management, like Procter & Gamble (PG) and S.C. Johnson, can't believe how GM ran Pontiac into the ground through mismanagement and not understanding its customer base. Recently, GM tried to market Pontiac like an foreign brand with exotic names, not the heritage-inspired classic model names many Americans grew up with. Japanese manufacturers wish they had the heritage that GM discarded. After all, when people visit classic car shows, what do they see? Mostly, it is American cars. Indeed, GM's marketing is one of its weaknesses.
Pontiac has been known for performance and style since the 1960s. In March, GM tried repositioning the brand. Vice-President Susan Docherty stated on GM's corporate FastLane Blog that fuel economy was the most important purchase consideration. The current "Pontiac is CAR" slogan is amateur compared to the "We Build Excitement" campaign of the late 1980s.
The proposed G8 Sport Truck was the answer to a question no one asked. It would make a great Chevy El Camino, misbranded as a Pontiac; it would have been the next Aztek. Usually companies want to minimize risk on new product introductions.
GM really didn't consider the implications of shutting Pontiac down. A lot of younger buyers see Pontiac and Saturn as an alternative to Chevy. They will not buy a Buick, and many won't switch over to Chevrolet. Chevy doesn't offer a Malibu coupe, so what will Grand Am/G6 coupe owners buy? Will the Impala be sporty enough for the legions of Grand Prix owners? Chevy likewise doesn't offer an affordable two-seat sports car. For these reasons alone, Pontiac is still a core brand and deserves a second chance—under a new owner.
