What killed Pontiac

GM pulls the plug on a brand credited with originating the muscle car.

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By Peter Valdes-Dapena, CNNMoney.com senior writer

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Pontiac G8 GXP, RIP.
2008 GM Vehicle Sales
Chevrolet 1,801,131
GMC 376,996
Pontiac 267,348
Saturn 188,004
Cadillac 161,159
Buick 137,197
Hummer 27,485
Saab 21,368
Total 2,980,688
Source:General Motors
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NEW YORK (CNNMoney.com) -- The Pontiac car brand, once marketed as General Motors' "excitement division," will be killed off by the end of next year, the carmaker announced Monday.

The decision to shutter Pontiac was one of several aggressive steps GM spelled out in an updated survival plan Monday. The government has given the company until the end of next month to restructure and slim down in order to survive.

The new GM will focus on four core brands: Chevrolet, Buick, GMC and Cadillac.

The fate of three other troubled lines -- Saturn, Saab and Hummer -- will be decided at a later date, GM said. They are likely to be sold off or shut down, while Pontiac will be shuttered.

Pontiac's problem was not sales, GM Chief Executive Fritz Henderson indicated during a conference call Monday. In 2008, Pontiac was the company's third-best selling brand behind Chevrolet and GMC and sold twice as many vehicles as Buick, a brand that will apparently survive the changes at GM.

The problem for Pontiac has been profitability. GM doesn't generally break out profits by brand, but Buick and GMC, which are sold in dealerships alongside Pontiacs, are more profitable, Henderson said.

"We didn't have a strategy that we were satisfied with that would allow us to win with the Pontiac brand," he said.

Roots in the 1950s

Pontiac's identity as a "performance" brand dates back to the late 1950s and early 1960s. Pontiac cars were designed with wider bodies for cosmetic reasons and the wheels were pushed out to match. This "wide-track" design became a selling point and was advertised as giving Pontiac cars a distinct cornering advantage over other cars.

The idea of Pontiac as a performance brand was solidified in 1964 with the creation of the Pontiac Tempest LeMans GTO. That car quickly evolved into the GTO and is often credited with creating a new class of American car, the muscle car.

"There was a time, a long way back now, when you knew exactly what Pontiac stood for," said Kevin Smith, editorial director for the automotive Web site Edmunds.com.

More recently, under vice chairman Bob Lutz, GM tried to revive Pontiac's image.

One strategy floated for Pontiac was to sell only, or mostly, rear-wheel-drive cars. That would have set it apart from other GM divisions, and most cars sold in America. Rear-wheel-drive is associated with performance brands like BMW.

Unfortunately, the 2004 model year reintroduction of the Pontiac GTO name on a performance coupe imported from Australia didn't result in big sales. So far, the Pontiac G8, a rear-wheel-drive four-door sedan also imported from GM's Australian Holden division, hasn't been a sales success either despite good reviews.

Pontiac's most popular products remain the G6, a decent but unexciting midsize car available as a sedan, coupe or convertible, and the Vibe, a small wagon shared with Toyota, which sells it as the Matrix.

Any plans to return Pontiac to the heavy-horsepower days of the 1970s ended as gas prices rose and Congress prepared stricter fuel economy rules for the industry.

In response to those pressures, GM quietly introduced the Pontiac G3, which had been sold in Canada only. Once again, Pontiac was selling a rebadged Chevrolet product, this time the Korean-built Aveo subcompact car.

Pontiac's lack of focus as a brand may finally have brought its demise, said Smith. "That's just death in a marketplace where there's so much competition and so much quality," he said. To top of page

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