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GM Moves Up Saturn Execution, Plans to Drop 2,600 Dealers

Pontiac, Hummer also headed for the scrap heap as GM releases new strategy

By Truman Lewis
ConsumerAffairs.com

April 27, 2009
Consumers sometimes get fed up with their car and decide to dump it earlier than planned. Now General Motors is doing the same thing. GM said today it will build its last Saturn vehicles this year, ditching the struggling brand two years earlier than planned. Pontiac and Hummer will be scrapped next year, leaving GM with just four U.S. brands: Chevrolet, Cadillac, GMC and Buick.

The four-brand strategy will "enable GM to better focus its new product development programs and provide more competitive levels of market support," the company said.

GM CEO Fritz Henderson released the company's revised survival plan today, moving up the execution date for Saturn. In a conference call with reporters, he also said that the Hummer will be retired after the current model year.

"We are taking tough but necessary actions that are critical to GM's long-term viability," said Henderson. "Our responsibility is clear — to secure GM's future — and we intend to succeed. At the same time, we also understand the impact these actions will have on our employees, dealers, unions, suppliers, shareholders, bondholders, and communities, and we will do whatever we can to mitigate the effects on the extended GM team."

Henderson said GM expects to reduce its U.S. dealer count from 6,246 in 2008 to 3,605 by the end of 2010, a reduction of 42 percent. He said the reduction would create "a more competitive dealer network and higher sales effectiveness in all markets."

The Saturn brand may survive. GM is negotiating to sell it to a private investor group, which would contract with foreign manufacturers to build the vehicles.

Pontiac, however, will disappear entirely, Henderson said. The new G8 sports sedan and the Solstice sports car will both be dropped and will not be rebadged and sold as Chevrolets, as some industry analysts had expected.

Henderson's announcement is a blow to Saturn dealers. Many have inventories of 100 or more vehicles, which won't be easy to sell now that GM has pulled the rug out.

The Volt

Henderson said that despite the cutback, GM will continue to invest future products and new technologies, with an investment of $5.4 billion in 2009, and investments ranging from $5.3 to $6.7 billion from 2010 to 2014. Development and testing of the Chevy Volt extended-range electric car remains on track for start of production by the end of 2010 and arrival in Chevrolet dealer showrooms soon thereafter, he said.

"The Viability Plan reflects the direction of President Obama and the U.S. Treasury that GM should go further and faster on our restructuring," Henderson said. "We appreciate their support and direction. This stronger, leaner business model will enable GM to keep doing what it does best - provide great new cars, trucks and crossovers to our customers, and continue to develop new advanced propulsion technologies that are vital for our country's economy and environment."

Dollars flow

GM got $13.4 billion in U.S. loans last December. The government agreed today to loan the company another $2 billion to keep it afloat while it assembles its viability plan.

"We appreciate President Obama's and his Administration's ongoing support of GM and the domestic U.S. auto industry as we undertake the difficult but necessary actions to reinvent our company. We will continue to work closely with members of the President's Auto Task Force throughout our reinvention and together we will continue to monitor our liquidity needs during this period," the company said in a statement.

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