GM To Bid Farewell To Pontiac, Close More Plants

After 80 years, General Motors (GM) will soon end production of its legacy Pontiac brand. Plans are in place to close more factories as the once-thriving carmaker fights to avoid bankruptcy. Jeff Fortson, an auto industry analyst and founder of JeffCars.com, discusses whether GM's latest efforts will be enough to rescue the company.

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MICHEL MARTIN, host:

And now we check in on the latest news from the auto industry. General Motors has just announced that it will phase out the Pontiac brand and slash 21,000 jobs by the end of the year. It's part of GM's race against the clock. The company must drastically restructure business operations or face bankruptcy if it doesn't meet a Federally imposed deadline of June 1st. And Chrysler faces its own Federally imposed deadline on Thursday, to complete a partnership deal with Fiat. This weekend, Chrysler reached a tentative agreement with the United Auto Workers Union on concessions it hopes will save that company from bankruptcy. Joining us to tell us more is auto industry analyst Jeff Fortson. He is founder of JeffCars.com. Welcome, thanks for joining us.

Mr. JEFF FORTSON (Auto Industry Analyst): Hey Michel, thanks for having me on today.

MARTIN: Jeff, why the Pontiac brand? Why would GM feel the need to shut that line down?

Mr. FORTSON: Actually, that's a good question. Now we're looking at the Pontiac brand, it's been around for over 80 or so years. And when I did a quick analysis of actually looking at where sales are for the first three months of the year, for the first quarter, it's ironic that Pontiac's sold around 72,000 vehicles last year up until March. And this year they sold about 40,000 or so vehicles, which meant they were down about 44 percent, whereas the Cadillac brand, which they're going to hold onto, also sold about 23,000 vehicles this year, down from 46,000 last year around this time.

And the reason they're pulling the Pontiac brand is because it sort of overlaps with the core products in which General Motors needs to focus on, which they're going to retain Cadillac, they're going to retain Chevy, they're going to retain Buick and they're going to retain GMC. Now, although Pontiac has outsold the Buick brand, Buick is actually a very profitable brand outside of United States. When we go over to China, that's one of the leading brands for General Motors and that's one of the reasons why they decided to hold on to Buick and on to phase out the Pontiac brand, which they're going to phase it out in 2010.

MARTIN: What impact do you, sorry, what impact do you think that the shutting down of Pontiac is going to have on dealerships?

FORTSON: Okay, that's a good question. It's definitely going to have an impact but here's the thing, there is only about 39 as of end of 2008, only 39 exclusive Pontiac dealerships were out there. So, most of the GM dealerships who carry Pontiac deal with other brands. So, it will have an effect but it won't be a major effect. This will be the same thing that General Motors and other brands went through, case in point, when they eliminated the Oldsmobile brand. And - but they had a lot more Oldsmobile dealerships and a lot more dealerships that were actually exclusive.

In this case, it's not the same as that. So, it's more of the historical perspective of a lot of the vehicles that came from Pontiac. When we look at Pontiac, we look at it as being more of a sports car, a sports enthusiast's line up. But in recent years it really hasn't been that. There has been a lot of duplicate vehicles, case in point, Saturn carries a similar vehicle that Pontiac does.

MARTIN: But it's more the legacy I think of the brand. I think there's that sense of…

FORTSON: That's a good point.

MARTIN: …a continuing loss of sort of these legacy brands. Let's turn to Chrysler. What do we know about Chrysler's deal with the UAW?

FORTSON: Well, the latest that we know about Chrysler's deal is that they've actually, the union has actually agreed in the United States to labor, not labor but actually health care concessions. The details of it hasn't been revealed as of yet, as far as what they've agreed to. And as far as the Canadian auto workers, they also agreed on Sunday they approved that they're going to lower their labor costs and also lower their health care cost. As far as we know that, approaching this Thursday is the deadline for Chrysler to either form an alliance with Fiat or either to file for bankruptcy. Now, I've got to disclose, actually, I used to work for the Chrysler Corporation.

MARTIN: (Unintelligible)

FORTSON: And I actually reached out to quite a few colleagues that are still working for them. Actually, I left when the merger occurred between Daimler Chrysler and Mercedes back in the late '90s.

MARTIN: So what's the mood there, based on your reporting with your colleagues? And thanks for disclosing that. What's the mood?

FORTSON: You're welcome. Actually, the mood is actually kind of somber. I've talked to a lot of folks who've actually, most of the individuals with Chrysler were given a opportunity to take a buy out. Most of them had to look at it from a risk standpoint. For those who had only been with Chrysler for a short time period they decided to, that they could take a car, that's typically one of the things that comes along with it, where they get a car and half of their salary. For those who have a lot more invested - and time invested and family and homes, things of that sort, they've decided to wait it out.

There's a few of those actually taken a buy out and they're thinking, well, maybe we should have wait, kind of play wait and see, cat and mouse to see if it's best to see the future of Chrysler Corporation. Whereas others who are still there are just not sure as far as what the future is going to be for the company. Now, ironically as we all know, Chrysler has been through nine lives. So, a lot of folks are just hoping and thinking that they're gonna actually be able to make it through this process as we approach this Thursday.

MARTIN: But still, just a great deal of uncertainty?

FORTSON: It's definitely great deal of uncertainty.

MARTIN: Okay, we have to leave at it there, Jeff, keep us posted. Jeff Fortson is an auto industry analyst and founder of the blog, jeffcars.com. We'll have a link on our site and he was kind enough to join us from WABE in Atlanta. Jeff, thank you.

FORTSON: Thank you, Michel.

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