General Motors to phase out Pontiac brand

2009-04-27 16:17:50 (GMT) (Caymanmama.com - Automotive Top Stories News)

General Motors Corp. outlines the closure of 21,000 American factory jobs by 2010 and phasing out of the popular Pontiac brand.

Syracuse, New York (CaymanMama.com) — Struggling U.S. automaker, General Motors Corp. can look forward to being majority owned by the federal government and the United Auto Workers after a heavy restructuring plan takes effect, which outlines the closure of 21,000 American factory jobs by 2010 and phasing out of the popular Pontiac brand.

In the new plan, GM proposed an offer to swap approximately $27 billion in bond debt for GM stock, which would leave current shareholders holding a mere 1 percent of the company.

GM is currently existing solely on $15.4 billion in government bailout funds and is up against a strict June 1st deadline to finalize a proper restructuring if they want to be eligible for more government money. If the restructuring doesn’t satisfy the administration, GM could go into bankruptcy protection.

“We’ve got a cadence plan to it,” Mark LaNeve, vice president of North American sales and marketing, said. “I don’t want to get rid of any dealers.”

LaNeve also acknowledged that that General Motors has had a surplus of dealers for quite some time.

CEO Fritz Henderson said the new outline for the company lowers GM’s North American break-even point to an annual U.S. sales volume of 10 million vehicles, only a small percentage more than the current sales rate.

“This lower break-even point better positions GM to generate positive cash flow and earn an adequate return on capital over the course of a normal business cycle, a requirement set forth by the U.S. Treasury,” GM said in a statement.

General Motors also confirmed it would phase out its Pontiac brand no later than next year2010, and the economic future of other popular brands like Hummer, Saturn and Saab will be figured out by the end of 2009, by either selling them or phasing them out.

This move could prove saddening for many car enthusiasts who have always known the Pontiac brand for its muscle cars including the Trans Am and the GTO. Henderson said in a news conference that the company is drying too desperately to revive the company as a whole to make Pontiac work.

“We didn’t think we had the resources to get this done from a product perspective,” or marketing, he said.

Henderson said the decision was extremely difficult for many at GM because of the 83-year-old brand’s brand.

General Motors to phase out Pontiac brand

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