One more shoe dropped in the ongoing auto industry crisis watch as General Motors announced the formal demise of its beleaguered Pontiac line. Despite earlier claims that planned to keep it on as a niche brand, GM's CEO Fritz Henderson said that the automaker's Excitement Division -- once the third best-selling marque in the country -- simply did not pencil out as part of the firm's new, downsized operations, and would be closed down by the end of 2010.
Today's formal mustering-out notice came as a bitter pill for the Pontiac faithful. Since introducing the Pontiac name in 1926, the marque has amassed a storied history that includes creating legendary models like the original GTO and the Firebird. Lately, it's been different. The resurrected 2008 GTO never managed to click with its perceived buyers while other badge-engineered newcomers like the performance-oriented G8, also based on the Australian-built Holden Commodore, and the econo-focused G3, a thinly disguised variant of the Korean-built Chevrolet Aveo, met with decidedly underwhelming public response. Currently, Pontiac accounts for less than two percent of total vehicle sales in the U.S. and just over 11 percent of GM sales.
In his statement, Henderson reaffirmed that the truck-centric GMC Division will live on as part of automaker's core group that includes the Buick, Cadillac and Chevrolet Divisions -- while efforts to sell or close HUMMER, Saab and Saturn will be completed by the end of 2009. Under this updated restructuring outline, GM's model count is being slashed from 48 last year to just 34. Henderson also said that GM will eliminate another 21,000 U.S. jobs by 2011, close at least one more factory in the near future and ramp up the pace of longer-term facility cuts to drop them from 47 last year to 33 in 2010 and 31 by 2012. The existing dealer network also will pared by some 42 percent during that period. Finally, a new overture to GM bondholders is offering to swap $27 billion in unsecured debt for equity. All of this comes in a final attempt to create a viable economic framework for future ongoing operations as well as to restructure its long-term debt position prior to a government-imposed June 1 deadline. Even so, Henderson admits that GM still faces the prospects of some type of structured "reorganization" or other form of bankruptcy proceedings.