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GM mulling Pontiac sale?

by Drew Johnson

Just a few weeks ago General Motors announced it would be winding down its Pontiac division by 2010, but the Detroit automaker could be having a change of heart. After declining one dealer's offer to buy the Pontiac brand last month, GM CFO Ray Young has revealed the company would consider offers for the lame duck brand.

In an interview with Bloomberg Radio, Young said General Motors would be willing to listen to offers for the Pontiac brand. That is a reversal from last month when Tom Pyden, GM's vice president of communications, told an ABC affiliate that GM had no interest in selling Pontiac.

"It's not something we're actively discussing, but to Ray's point, everything's on the table," Pontiac spokesman Jim Hopson told The Detroit News.

However, there are several hurdles in the way that would make the transition from offer to purchase very difficult. Since the Pontiac brand is often lumped together with GM's Buick and GMC brands, there are currently only 35 stand-alone Pontiac dealers in the U.S. One of the lures of buying an established car brand is to gain access to its distribution network, which is not in place with the Pontiac brand.

It's possible GM could provide the "˜new' Pontiac with vehicles in the short-term, but a willing buyer would eventually either have to come up with its own designs or find another supplier. But if a buyer emerges that is willing to deal with the brand's limited dealer network and lack of future product, the Pontiac nameplate could be saved in its last hour.

GM has received at least one offer for the Pontiac brand, but it remains unknown how much that bid was worth. If GM decides it can make money on a Pontiac sale rather than letting it wind down, Pontiac could actually have a future beyond 2010.