General Motors Corp., or GM, announced Monday that it will discontinue the company's Pontiac brand by next year and cut 21,000 jobs.
The company will phase out the 83-year-old historic Pontiac brand that has created such muscle cars as the Trans AM.
The move is part of a larger restructuring plan by the company to swap roughly $27 billion in bond debt for GM stock, which would leave current shareholders holding just 1 percent of the century-old company.
General Manager of Markley Motors, 3401 S. College Ave., Roger Belisle said that losing the Pontiac name will have a marginal impact on his dealerships that also sells Buick, GMC and Honda.
"We don’t sell a heck of a lot of Pontiacs so it's not going to have a huge impact on us," said Belisle, who added that Pontiac is no longer a high volume franchise for GM. " New cars are more fuel efficient and less expensive."
Belisle said while the brand will fade from Markley's lots, anyone who currently owns a Pontiac can continue to receive services through any GM dealership.
In light of the restructuring and elimination of Pontiac, Belisle said GM is attempting to get to the point where it is profitable.
He attributes the decline of Pontiac to the overcrowded sports car market that is seeing increased com-petition from Japanese and European automakers.
In comparing Pontiac to Toyota, Belisle notes that Pontiac is one faction of the larger GM Company, where Toyota is one entity.
Belisle recognizes the nostalgia of seeing a long time American car brand go by the wayside. One of Be-lisle's favorite cars is the 1967 Pontiac GTO, which was state of the art at the time, but is a relic now, he said.
Faced with one of the worst auto sales climates in 27 years, GM could go into bankruptcy protection if the restructuring fails to satisfy the government. GM has received $15.4 billion in federal loans, and has a June 1 deadline to restructure and get more government money.
GM said in a filing with the U.S. Securities and Exchange Commission that it will ask the government to take more than 50 percent of its common stock in exchange for canceling half the government loans to the company as of June 1. The swap would cancel about $10 billion in government debt.
The auto company plans to accelerate the closure of six unidentified factories and three more factory closures in 2010. The closures, expected to be made public in May, include assembly, engine and trans-mission and parts-stamping factories.
The company also plans to reduce its dealership ranks by 42 percent from 2008 to 2010, cutting them from 6,246 to 3,605.
According to Mark LaNeve, vice president of North American sales and marketing, GM will reduce about 450 dealerships by elimination or sale of Saturn, Hummer and Saab. GM would then look to end relationships with dealers that do only a small volume of business with GM, and then move on to other dealers.
The announcement to eliminate Pontiac comes on the heels of GM's February announcement that it will phaseout its Saturn dealers by 2011. However, in Saturn's case GM will consider offers by other investors or dealers to buy the franchises.
Belisle said Saturn has four or five viable companies positioning themselves to buy it, and anticipates an official announcement as early as this summer.
For more on this story see Tuesday's Coloradoan.
* The Associated Press contributed to this story.
SOURCE: coloradoan
