GM to streamline brands: Sell Saab, shrink Pontiac, close or sell Saturn
General Motors announced today that it plans to refocus its dwindling resources on its core brands - Chevrolet, Buick, Cadillac and GMC - and sell Swedish automaker Saab, shrink Pontiac to a niche brand and either discontinue or sell Saturn depending on its value. The automaker will cut one-third of its current nameplates by 2012 and lose about 1,700 of its 6,400 dealerships.
The new, streamlined GM will debut by 2012, the automaker told the United States Congress today as a part of its restructuring plan.
GM President Fritz Henderson told reporters that Saab is essentially on the market effective immediately, though the automaker is conducting an "expedited and strategic review" of the brand. GM has owned Saab since 2000, though it has had a stake in the Swedish luxury automaker for nearly 20 years. Potential suitors for Saab haven't been named.
Henderson told Automotive News that Saturn "is just not successful." He declined to specify whether the brand would be folded or sold off, though most analysts say that Saturn's value is quite limited. Henderson said that the automaker would discuss the brand's future with its dealer group before making an official decision.
Pontiac will become a "specialty niche" brand, according to Henderson. This likely means the brand will be trimmed down to core performance models and that the volume models, G5 and G6, will probably not be replaced. Speculation earlier today about the future of the slow-selling G8 leads us to believe it will probably not be replaced, either, and the automaker has reportedly canned the next-generation Solstice.
"Pontiac will be more of a high-value performance brand, like Corvette to Chevrolet," Mark LaNeve, GM's North American vice president of sales, told the Detroit News.
GM says it will continue cutting up to 30,000 workers by 2012 and continue closing up to at least nine plants. The automaker said it will also slash more than 1,700 of its 6,400 dealers.
The automaker's plan calls for negotiating with the UAW to help cut manufacturing costs further, as well as with lenders and bondholders to cut back about $35.6 billion of the automaker's $66 billion in debt.
GM requested $18 billion of the $25 billion the three automakers are asking in low-interest loans from the U.S. government. That figure is quite a bit higher than the $10 to $12 billion that CEO Rick Wagoner requested two weeks ago when he first met with Congress.
Four billion dollars are needed by the end of December, GM says, or, according to Henderson, "the company cannot fund its operations." He refused to confirm or deny that GM would go into bankruptcy, but the statement is still pretty clear about how dire GM's need has become.
Absent such assistance, the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the U.S. economy," the automaker wrote in its report to Congress.
In response to concerns about executive compensation, Wagoner will take a $1 annual salary.
Henderson, who received $1.9 million last year, will take a 30 percent cut, while three others - Vice Chairman Bob Lutz, Chief Financial Officer Ray Young and Tom Stephens, executive vice president of GM powertrain and global quality - will all take 20 percent cuts.
GM's Board of Directors will also reduce their annual retainer to $1 in 2009.