Should GM Close Pontiac?
By: Fusion2.3h
Summary- Close GMC
- Funnel development money into Pontiac
- Develop A-C class vehicles
- Increase leverage of turbocharging and lightweight materials
The majority of the brands at General Motors are losing sales, and in the wake of higher gas prices management has tough choices to make in deciding which brands will make the cut. Hummer will most likely go, but recently the focus has shifted to GMC and Pontiac. Some say that Pontiac isn’t a performance brand, that it doesn’t have enough RWD vehicles or V8 powered engines, its sales are fleet, and it’s sales are in the gutter.
In an era of $4 (and $5 in California) gasoline does it make sense to be designing vehicles with a traditional focus on V8 engines? Despite the common notion that performance vehicles, and especially ‘Merican performance vehicles need have a V8, they have fallen in market share while I4s have risen from 28.2% of the market in March 2004 to a whopping 45.6% in May 2008.
Another common misconception is that RWD is required for a performance brand. While many luxury marques such as BMW, Cadillac, and Mercedes-Benz focus on RWD vehicles, comparable competitors to Pontiac such as Mazda, Subaru, and even VW incorporate Front-wheel drive and AWD systems. Despite the power going to the front or all wheels, they have been able to retain customers and build a brand image.
Another charge heaped onto Pontiac is that it’s sales are from fleets. General Motors has been the only Big 3 to see a percentage decrease, year over year in it’s overall sales percentage. During the last publication of fleet statistics Pontiac’s fleet percentages were on average with the industry, and if GM’s fleet reductions are correct they are below segment averages now.
What about it’s sales though, surely this is a nail in Pontiac’s coffin. Compared to GMC’s sales which are down 17.5% for the year and 39% last month, Pontiac’s are only down 10.7% for the year and down 20.9% last month. So why are Pontiac’s sales down then? Pontiac’s fleet queen (71% fleet in 2006), the Grand Prix lost 28,000 units for the year and 10,981 units last month, because of it’s decline in production. If we add in the Grand Prix’s near 100% fleet sales into the totals we come up with a 32% sales rise for the year. The only other nameplates that have declined this year are the G5 (down 515 units for the year) and the Solstice (down 2003 units for the year).
Despite rising gas prices and being out on the market for nearly 4 years the G6 has managed a 20.3% increase in sales volume for the year and outsells competitors such as the Sonata, Passat, Mazda6, Optima, Aura, Milan, Avenger, Sebring, and Galant. This is without increasing fleet sales and with only $1,000 incentives (compared to $1,500 on the Camry or $1,250 on the Altima). The new G8 has managed to handily sell 1,831 units last month and the new Vibe increased its sales volume by 2,000 units to 5,527 units. This is all without high incentives or increasing fleet sales.
GMC on the other hand has languished under poor sales despite seeing more funding from GM. Is this really a brand we should be keeping around? Despite incentives, every nameplate from GMC declined in sales last month, including the once-popular Acadia, and even though it is managing a 20% increase in yearly sales, it is likely to further decline in sales on monthly basis due to the gas crisis. Some of GM’s most shocking sales declines have occurred in this division such as the 58.8% drop in Savana sales, Envoy down 67.5%,, Sierra down 31%, and even the Canyon has fallen in sales despite the Tacoma’s rising.
Every vehicle in the GMC lineup is available at a Saturn, Buick, or Chevrolet dealership. GMC’s star, the Acadia will soon have a third competitor from Chevrolet this summer along with the Outlook and Enclave. The Envoy is being cut; the Yukon, Yukon XL, Sierra, and Canyon are all available at Chevrolet. In an era of shifting consumer preferences to small vehicles and movement towards a European market structure the sales support are no longer there for a truck division, even if they are uni-body platforms.
Instead, I recommend GMC be cut from the lineup, and instead of spending millions on developing face lifted Chevrolets, funnel their development money into the Pontiac’s vehicle program. Pontiac deserves to have vehicles that can Zoom-Zoom like Mazda’s or give them a reason to love their car like Subaru. The customers have spoken and they prefer Pontiac to GMC, lets listen to what they have to say and give them an ‘Merican car that has turbocharged I4’s and possibly even a sports car version of the Volt, now that’s a concept. Despite it’s limited resources Pontiac has managed to make exciting vehicles, and can go even further given the chance.
2009 Pontiac Vibe
2009 Pontiac Solstice Coupe