GM May Eliminate GMC and Pontiac, Close Dealerships Faster

GM’s dealers may have been dealt a double whammy today, as reports are saying that the General may drop its GMC and Pontiac brands, and is hoping to speed up its plan to close 1700 dealerships.

Citing sources close to discussions, Bloomberg reported this morning that GMC and Pontiac could be casualties of GM’s effort to restructure outside of bankruptcy. Chevrolet, Cadillac and Buick are likely safe, said the sources.

Although Pontiac has been moving more G8 sedans than ever in the last two months, those sales are likely spurred by significant incentives. And with marketing that is severely mismatched with product, it’s hard to make the case that Pontiac should be kept around, despite promising models like the G8 and Solstice. GMC, however, is more complicated; despite the absence of a single unique model (all of its vehicles are rebadged Chevrolets), its lineup of all trucks and SUVs is likely very profitable for GM. Out of Pontiac and GMC, GMC has a better chance of survival.

A decision has not been reached concerning what would happen to the brands if GM decides not to keep them, the sources said.

“We are continuing to assess our global operations, brand portfolio and nameplates, and will take further actions to more aggressively restructure our business,” GM spokeswoman Renee Rashid-Merem said yesterday. “It’s premature to comment on what those actions could entail.”

In a separate report, Reuters said that GM will work to drastically accelerate its dealer consolidation plan, according to people with knowledge of the discussions. GM had initially proposed to shed 25 percent of its 6200 dealer locations within five years, but President Obama’s task force on autos has demanded that the consolidations occur much faster.

GM is counting on the sale or closure of Saturn and Hummer, along with tight credit and declining business, to account for half of its targeted cuts. For the rest, GM will end franchise agreements with poorly-performing dealerships – without the sort of payouts it handed out when it closed Oldsmobile. Closing Oldsmobile cost GM north of $1 billion.

Source: Bloomberg, Reuters

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