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DETROIT (Reuters) - General Motors Corp., which issued a shock profit warning last week and has been losing market share, may phase out one of its weaker car brands if sales fail to meet projections, company Vice Chairman Bob Lutz said on Wednesday.

GM's Buick and Pontiac are both "damaged brands" due to lack of investment over the years, and GM is working to correct that with an array of new vehicles coming to market, Lutz told a Morgan Stanley automotive conference in New York.

But if some of its brands fail to meet sales projections, "then we would have to take a look at a phase-out. I hope we don't have to do that. What we've got to do is keep the brands we've got."

Financial analysts have said for years that the world's largest automaker has too many brands to support, even with the gradual phase-out of the Oldsmobile brand a few years ago, particularly with its weaker U.S. sales.

Sales for both Pontiac and Buick have lagged in recent years. But GM is in the midst of a $3 billion investment in new vehicles for Buick, and Pontiac showrooms and they will have four new vehicles this year, including the Solstice roadster, Torrent SUV and the G6 mid-size coupe.

GM, which last week cut its earnings outlook for 2005 by as much as 80 percent, posted a 6 percent drop in U.S. sales for the first two months of the year. GM's U.S. market share fell to about 25 percent, far below its share of 27.5 percent for all of 2004.

Analysts said last week that GM's March sales could fall as much as 10 percent in March, while foreign automakers such as Toyota Motor Corp., Hyundai Motor Co. Ltd. and Nissan Motor Co. Ltd. would continue to gain U.S. market share.

Lutz said GM will post relatively flat U.S. sales for March, however, performing much better than expected.

"I think we're going to be just about even, our best guess at this point. Either a percent over or a percent under," he said. "It is a substantially better month than January or February, and it looks like the whole industry is up."

"A HUGE ALBATROSS"

No details about an expected restructuring at GM, the largest private U.S. provider of health care, have emerged since it roiled markets with its warning last week.

But the company, which has about $300 billion in outstanding debt, said on Wednesday it was in talks to sell a stake in its GMAC Commercial Mortgage unit after potential investors expressed interest in the unit.

And Lutz and Gary Cowger, GM's president for North America, spoke of possible demands for a cut in mounting health care benefits for the company's hourly union employees in remarks on the sidelines of the New York auto show on Wednesday.

An elimination of any one of GM's brands would likely mean plant closings and a shrinking of GM's hourly work force.

"An across-the-board competitive health care plan for salaried and hourly employees could literally save us billions," Cowger said. Health care costs, added Lutz, are "a huge albatross hanging over American industry today."

Lutz particularly acknowledged that the automaker, which will struggle to make a profit this year, faces challenges. But he said GM was "taking the necessary step to right this ship."

"Sure, we face short-term challenges, and this is not going to be a banner year," he said. "It's a difficult period of adjustment. But we will get through it."

He said some of GM's new cars, such as its Chevrolet Cobalt small car and the Pontiac G6 mid-size car, will post their best sales to date in March, and told the Morgan Stanley conference "I don't know where all the gloom and doom is coming from."

He quoted one car reviewer who said, referring to GM's troubles, that the quality of the Cobalt convinced him that "the Titanic may yet turn fast enough to miss the iceberg."
 

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They should get rid of Buick and GMC ! Why do they need the same trucks you can buy at a chevy dealer across the street at the GMC dealer !?!?!?!

They already killed the Z28 and Trans AM now they want to kill off pontiac all together ! We dont need buick the heck with buick ! if the elderly want a nice car give them a decnet entry level cadillac ! We already lost oldsmobile so you can forget about a 442 comeback !

GM should keep Chevy Pontiac and Cadillac and if they want a truck division keep the GMC brand but do away with the chevy versions of the same truck !
 

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Yeah, Let the Buicks go, expand the Cadillac line, and cut the Chevy trucks. Then kick out the recent bad pontiac stylists that did the Asstek, and 2004 Grand Prix. The Camaro and Trans Am should have been replaced. Thank goodness Lutz is creative, and brought the GTO from Australia!
 

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Discussion Starter · #4 ·
TorridGoat said:
Yeah, Let the Buicks go, expand the Cadillac line, and cut the Chevy trucks.
While I agree they should expand the Cadillac line of vehicles I can not conceivably imagine that they would drop the Chevy Truck Line (1500, 2500, Tahoe, Suburban, etc.) because they are extreme cash cows for GM and the GMC line only adds to their bottom line as they are marketed as the Upper Class Edition of the two.

GM certainly has a major crisis on their hands moving forward into Q2 and without "cleaning house" inevitably we will see more and more models drop from production. Highly doubtful that they will drop entire lines in addition to Oldsmobile but certainly downsize production outlooks and number of models available to the public. Just some food for thought...
 

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Was amazed that Lutz would say something like that in public. It spooks people who are considering purchasing Buicks and Pontiacs -- because they think they're going to be stuck with an "orphan" car like an Eagle, Renault or some other brand that crapped out in the U.S. Truly a stupid move on Lutz's part. He should know better than that.

Here are some thoughts on what GM should do with its brands. My best friend and I wrote a thesis on GM brands back in the 80's -- where our stategy was for GM to basically do knock offs of other manufacturers stuff. People, for some reason, are biased against domestic product -- so do what the Asians and Europeans do -- and do it well.

1. Chevrolet: Leave it alone. Toyota successfully has sold everything from POS Echos to high-dollar Supras under the same label. GM can do the same and focus resources on this brand. Chevrolet -- an American Toyota. Single word position in people's minds: Quality.

2. Corvette: Expand the nameplate to other top line GM performance products. No, not some Cobalt with extra thick vinyl on the seats and a big decal on the hood. Stuff like the nicest SUVs (Escalade), sedans (CTS-V), and coupes (GTO) GM makes. Premium priced rear wheel drive V8 cars -- but a bargain relative to the Europeans. Look, if Porsche can sell an SUV, there can be a Corvette brand one. That said, anything with this name on it would have be GREAT. Corvette -- an American BMW. Single word position in people's minds: Performance.

3. Cadillac: Take it waaaaaay upmarket. The equivalent of Mercedes-Benz's AMG brand. Luxury, exclusivity and power, power, power. Six figures minimum -- and more than worth it with V12s and 16s and other insane stuff like twin turbos under the hood. Cadillac -- an American Mercedes-Benz (or higher). Single word position in people's minds: Money.

4. Buick: Move it into the slot where Cadillac is now, a.k.a. an American Lexus, or flush it like yesterday's brand muffin. Buick -- an American Lexus. Single word position in people's minds: Style.

5. Hummer: Dump it as a stand alone brand and roll it into GMC or Chevrolet.

6. GMC Truck: This should be dumped -- but won't be touched because their SUVs have been printing money for GM for the past few years. Realistically, it's an expensive nameplate to market because of its relatively low volume -- and product always gets diverted to Chevy during production because they want to outsell Ford. Hummer/GMC -- truly a standalone American brand. Single word position in people's mind: Tough.

7. Pontiac: If the Corvette brand is expanded, then dump this. If it isn't, make this a no holds barred performance division. Screw stuff like the G6, Solstice and all that other crap. Make Pontiac the brand that even knuckleheads know means that you're going to get your ass kicked if you're not driving one. Pontiac -- An American BMW (and the GTO is one damn fine 3-series couple, BTW). Single word position in people's minds: Performance.

8. Saturn: Take it out back and shoot it. That said, take the no dicker pricing model and all the other politically correct stuff the people who know nothing about cars love about this brand and apply it to Chevrolet.

9. Saab: Take these dealerships and expand their product lines with a bunch of interesting, low volume cars. Make it the funky European division of GM -- where you can get really neat stuff that's designed and sold in Europe. Stuff like Holdens, Opels and Vauxhalls. Saab: The American Mini. Single word position in people's minds: Import.

There. Now who at GM should I send my consulting bill to?
 

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TorridGoat said:
Yeah, Let the Buicks go, expand the Cadillac line, and cut the Chevy trucks. Then kick out the recent bad pontiac stylists that did the Asstek, and 2004 Grand Prix. The Camaro and Trans Am should have been replaced. Thank goodness Lutz is creative, and brought the GTO from Australia!

Hear, hear!

Man...I coulda wrote that!

Errr..and what b a better person said too!
 

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b_a_betterperson said:
2. Corvette: Expand the nameplate to other top line GM performance products. No, not some Cobalt with extra thick vinyl on the seats and a big decal on the hood. Stuff like the nicest SUVs (Escalade), sedans (CTS-V), and coupes (GTO) GM makes. Premium priced rear wheel drive V8 cars -- but a bargain relative to the Europeans. Look, if Porsche can sell an SUV, there can be a Corvette brand one. That said, anything with this name on it would have be GREAT. Corvette -- an American BMW. Single word position in people's minds: Performance.
I concur with your business model. Just wondered if you've checked out chevy.com lately. Specifically the SS Lineup.
http://www.chevrolet.com/chevyss/

Looks like chevy is putting the LS2 in the trailblazer and 5.3L V8 in the Monte and the Malibu. Now I wonder if they will make the cars rwd like they should be.
 

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b_a_betterperson said:
2. Corvette: Expand the nameplate to other top line GM performance products. No, not some Cobalt with extra thick vinyl on the seats and a big decal on the hood. Stuff like the nicest SUVs (Escalade), sedans (CTS-V), and coupes (GTO) GM makes. Premium priced rear wheel drive V8 cars -- but a bargain relative to the Europeans. Look, if Porsche can sell an SUV, there can be a Corvette brand one. That said, anything with this name on it would have be GREAT. Corvette -- an American BMW. Single word position in people's minds: Performance.
Make Corvette a brand?
That's a pretty rediculous idea.
 

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Let's face it...GM has screwed up their choice of vehicles marketed under the Pontiac name horribly over the past 25 years or so, and has done little to prove themselves as a viable entity.

The latest fiasco (besides the brain-meltingly inept marketing of the GTO, a clusterfeck since Launch Date) is the whole G6 thing. Um....Pontiac is supposed to be the performance brand of GM...the "Excitement" arm, right? Then, they have none other than that icon of high-perfomance enthusiasts everywhere-- Oprah freaking Winfrey-- give away hundreds of the Honda wannabees.

WTF, over?

I have said this before...I wish GM sold the GTO under the Holden / HSV Monaro CV8 name, much as Ford marketed those bitchen EuroFord XR4Ti s under the Merkur name in the early-mid Eighties. This is actually a bad example because Merkur folded pretty quickly from Ford's branding. From an enthusiast's point of view, however, those were hot cars in a very sad era for Domestic vehicles. A buddy of mine had one...and often let me borrow it. After that, I quickly fell in lust with Euro cars.

My point is that, no matter what the fanbois say, Pontiac has been a bit of a very bad joke for the last two decades. Naming the capable, comfortable, well-built Holden Monaro a GTO was another major mistake, IMHO. Wrong marketing segment. They pandered to the muscle-car NASCAR types when they should have been gunning for the enthusiast disillusioned by BMW's recent marked emphasis of gizmo-laden luxury over honest performance.
 

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First of all, the spelling is ridiculous. Second, the Corvette brand suggestion is merely an idea -- if the plug was pulled on Pontiac. Clearly, the way to go is to get the Pontiac brand healthy again -- but it's now selling less cars than Olds was when it was killed off.
 

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more rumination

Hey, it's a globally competitive market these days, and Pontiac and Buick are not globally competitive, not even on the home market. So... Darwinian forces in play... make tough calls. GM Goodwrench shops would continue to service any Pontiac/Buicks, so one can try to diminish the pain of those who recently buy a Pontiac or Buick.

How's this strategy?... dump Buick and Pontiac, and bring Holden to the US as a GM brand (the full product lineup)and position it against BMW and Audi/VW products, not unlike SAAB. By focusing on importing from Australia in the early stages, the specific products that take off can eventually be made in NA if financially reasonable.

With such savings from dumping Pontiac and Buick, they can focus on making Chevy competitive against Toyota and Honda. Perhaps I am in the minority but the Chevy lineup looks like it is improving dramatically.


Ok, now where do I send my consulting bill!! lol
 

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In 3 hours of watching TV tonite, I saw 3 Chevy ads and 2 Toyota ads.
C'mon Pontiac !! Wake Up ! You want to sell cars ?? Then advertise !!!
You have to spend money to make money !!!! You want to move product, you have to advertise it !
 

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Having been a top exec in marketing in several industries for more than 20 years, and now owning my 3rd GTO ('66, '67, '05) thought I'd kick my two cents in the kitty...

1. "b" makes some good points about positioning, and that's refreshing to see. But, the trick to positioning is this... if someone already "owns" a position in the minds of the public, it is near impossible to take that positioning away from them. It's like Coca-Cola is "the real thing." Pepsi would lose trying to push itself as "the original cola" or "the real cola" or "the best cola" or anything like that. So, they went for "the young cola" (Pepsi Generation) in contrast to "coke" that had been around since cars were invented.

Having said that, Pontiac has owned the positioning of the performance branch of GM. The problem they're having is they only SOMETIMES put out a performance car. They try to "shotgun market" something for everybody and lose focus in the minds of the public.

Getting rid of the Trans Am was a huge mistake, as was putting out some cheap Pontiac SUV. Neither move enhanced their "performance" image. Marketing that does not strengthen the position already owned, or which can be owned, in the public mind always fails.

Modern marketing schools don't teach real marketing, which is a time-line of PR, promo, ads and consumer feedback. Instead, they teach "trend riding." This is basically surfing on successful marketing of another when it comes along. Always takes a back seat good-old tried and true marketing know-how.

The smartest recent move Pontiac has made is bringing back the GTO with real muscle under the skin, not merely relying on a long-retired name. The styling is pretty lame but can be enhanced easily enough. The key point was making sure it had the oats, as nothing enhances that initial positioning like "muscle."

Don't know why they bothered with the G-6. It's an indefinite market niche as you don't know where the car fits... best described as self-competition for the Grand Am.

Anyway, Pontiac needs to get off the "everything for someone" shotgun approach and focus on a performance line. Real performance, not just name badges and paint.

The Solstice could be a winner but needs more poop under the hood and some real roadster performance machinery. The Miata already owns the low-end roadster market, Porsche the high-end. So, the Solstice needs to take that middle bracket of "a Porsche at half the price" with real performance to back it up.

I think they could focus on four cars: Grand Am, Trans Am, GTO and Solstice (stupid name tho - doesn't speak performance - sounds aroma therapy/mantra crystals). If they just pushed those four vehicles into real performance machines for the next few years, they'd make headway in their market niche, which is "performance".

2. Cadillac owns a long-term positioning as "America's luxury car brand." Their styling people are geniuses and they've really done good work in recent years. Tho killing the El Dorado line was premature, I think. It just needed modernization.

3. Buick is a has-been brand. It doesn't mean anything anymore. It conjurs no images in the minds of the public. The mid-class sedan category has long since been taken over by Toyota. And Buick cannot own that category because robots don't require less work for more money. This is GM's weakest link.

4. Chevy should focus on three things, Corvettes, pick-ups, and performance-based family cars. Their positioning has long been "economic and stylish performance". Impala, Monte Carlo, Corvette (the cheaper Ferrari), Chevelle... all fit that positioning. Their pick-ups are an entirely different animal and their long-term positioning is "last's longer than a Ford." Doesn't matter what the ad slogans say, that's what the consumers over several generations "know."

5. GMC trucks will always have their niche because they slant toward professional-grade and industry. Only a complete marketing moron would tamper with that positioning... one they own outright, though don't always enhance in their marketing.
 
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