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Rumors from late last week have come home to roost, and as part of its restructuring efforts, General Motors has just announced that Pontiac will be "phased out by the end of 2010." GM will continue to build its accelerated viability plan around four brands: Chevrolet, Cadillac, Buick, and GMC.

As part of its latest announcement, GM also announced that it plans to have "the resolution" of Saab, Saturn, and Hummer by the end of 2009 "at the latest." In total, GM plans to end up with just 34 nameplates for 2010, as compared to 48 for 2008 – a reduction of some 29%. Further, as part of its viability plan tendered to President Obama's Auto Task Force, the automaker's revised viability plan projects that GM's total market share will dip to 18.4 to 18.9% – the plan is banking on a 19.5 percent share for this year.

A media conference call is scheduled for later this morning and we will have more details and analysis following that, but for now, the official press release after the jump.

*UPDATE: LIVE WEBCAST
of GM press conference embedded after the jump... going on right now!
(Concluded)

[Source: General Motors]



PRESS RELEASE:

FOR RELEASE: 2009-04-27

GM Accelerates its Reinvention as a Leaner, More Viable Company

Updated Viability Plan Speeds, Deepens Restructuring of U.S. Operations


DETROIT -- General Motors (NYSE: GM) today presented an updated Viability Plan that will speed the reinvention of GM's U.S. operations into a leaner, more customer-focused, and more cost-competitive automaker.

The Viability Plan is included in an exchange offer whereby GM is offering certain bondholders shares of GM common stock and accrued interest in exchange for certain outstanding notes.

Revised Viability Plan goes further and faster

The Viability Plan announced today builds on the February 17 Viability Plan submitted to the U.S. Treasury. http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewpressreldetail.do?domain=2&docid=52168. The revised Plan accelerates the timeline for a number of important actions and makes deeper cuts in several key areas of GM's operations, with the objective to make us a leaner, faster, and more customer-focused organization going forward.

Significant changes include:

* A focus on four core brands in the U.S. - Chevrolet, Cadillac, Buick and GMC - with fewer nameplates and a more competitive level of marketing support per brand.
* A more aggressive restructuring of GM's U.S. dealer organization to better focus dealer resources for improved sales and customer service.
* Improved U.S. capacity utilization through accelerated idling and closures of powertrain, stamping, and assembly plants.
* Lower structural costs, which GM North America (GMNA) projects will enable it to breakeven (on an adjusted EBIT basis) at a U.S. total industry volume of approximately 10 million vehicles, based on the pricing and share assumptions in the plan. This rate is substantially below the 15 to 17 million annual vehicle sales rates recorded from 1995 through 2007.

"We are taking tough but necessary actions that are critical to GM's long-term viability," said Fritz Henderson, GM president and CEO. "Our responsibility is clear - to secure GM's future - and we intend to succeed. At the same time, we also understand the impact these actions will have on our employees, dealers, unions, suppliers, shareholders, bondholders, and communities, and we will do whatever we can to mitigate the effects on the extended GM team."

Fewer U.S. brands, nameplates, and dealers

As part of the revised Viability Plan and the need to move faster and further, GM in the U.S. will focus its resources on four core brands, Chevrolet, Cadillac, Buick and GMC. The Pontiac brand will be phased out by the end of 2010. GM will offer a total of 34 nameplates in 2010, a reduction of 29 percent from 48 nameplates in 2008, reflecting both the reduction in brands and continued emphasis on fewer and stronger entries. This four-brand strategy will enable GM to better focus its new product development programs and provide more competitive levels of market support.

The revised plan moves up the resolution of Saab, Saturn, and Hummer to the end of 2009, at the latest. Updates on these brands will be provided as these initiatives progress.

Working with its dealers, GM anticipates reducing its U.S. dealer count from 6,246 in 2008 to 3,605 by the end of 2010, a reduction of 42 percent. This is a further reduction of 500 dealers, and four years sooner, than in the February 17 Plan. The goal is to accomplish this reduction in an orderly, cost-effective, and customer-focused way. This reduction in U.S. dealers will allow for a more competitive dealer network and higher sales effectiveness in all markets. More details on these initiatives will be provided in May.

Sales volume and market share projections

The Viability Plan anticipates improved financial results despite more conservative U.S. sales volume expectations going forward. The lower volume expectations are the result of managing the business with fewer nameplates and dealers, leaner inventories, and reduced market share. To address the inventory issue, GM on April 23 announced U.S. production schedule reductions of approximately 190,000 vehicles during the second and early third quarters of 2009.

The Viability Plan also reduces GM's market share projections to adjust for the impact of the brand and dealer consolidation, as well as for the short-term impact of speculation regarding a GM bankruptcy. The plan assumes a 19.5 percent share in 2009, with share stabilizing in the 18.4 to 18.9 percent range in subsequent years.

"We have strong new product coming for our four core brands: the Chevrolet Camaro, Equinox, Cruze and Volt; Buick LaCrosse; GMC Terrain; and Cadillac SRX and CTS Sport Wagon and Coupe," said Henderson. "A tighter focus by GM and its dealers will help give these products the capital investment, marketing and advertising support they need to be truly successful."

Lower structural costs, lower breakeven point

The Viability Plan also lowers GMNA's breakeven volume to a U.S. annual industry volume of 10 million total vehicles, based on the pricing and share assumptions in the plan. This lower breakeven point (at an adjusted EBIT level) 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 in its March 30 viability plan assessment.

GM will lower its breakeven point by cutting its structural costs faster and deeper than had previously been planned:

* Manufacturing: Consistent with the mandate to accelerate restructuring, we plan to reduce the total number of assembly, powertrain, and stamping plants in the U.S. from 47 in 2008 to 34 by the end of 2010, a reduction of 28 percent, and to 31 by 2012. This would reflect the acceleration of six plant idling/closures from the February 17 plan, and one additional plant idling. Throughout this transition, GM will continue to implement its flexible global manufacturing strategy (GMS), which allows multiple body styles and architectures to be built in one plant. This enables GM to use its capital more efficiently, increase capacity utilization, and respond more quickly to market shifts.

* Employment: U.S. hourly employment levels are projected to be reduced from about 61,000 in 2008 to 40,000 in 2010, a 34 percent reduction, and level off at about 38,000 starting in 2011. This further planned reduction of an additional 7,000 to 8,000 employees from the February 17 Plan is primarily the result of the previously discussed operational efficiencies, nameplate reductions, and plant closings. GM also anticipates a further decline in salaried and executive employment as it continues to assess its structure and execute the Viability Plan. More details will be announced as soon as they are finalized with the various stakeholders.
* Labor costs: The Viability Plan assumes a reduction of U.S. hourly labor costs from $7.6 billion in 2008 to $5 billion in 2010, a 34 percent reduction. GM will continue to work with its UAW partners to accomplish this through a reduction in total U.S. hourly employment as well as through modifications in the collective bargaining agreement.

As a result of these and other actions, GMNA's structural costs are projected to decline 25 percent, from $30.8 billion in 2008 to $23.2 billion in 2010, a further decline of $1.8 billion by 2010 versus the February 17 Plan.

Strengthening GM's balance sheet

Another key element of GM's restructuring will be taking the necessary actions to strengthen its balance sheet. GM today took an important step in improving its balance sheet by launching a bond exchange offer for approximately $27 billion of its unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity.

"A stronger balance sheet would free the company to invest in the products and technologies of the future," Henderson said. "It will also help provide stability and security to our customers, our dealers, our employees, and our suppliers."

Another important part of improving the balance sheet will be the ongoing discussions with the UAW to modify the terms of the Voluntary Employee Benefit Association (VEBA), and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50 percent of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50 percent of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions.

In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction.

Throughout the Plan, GM will continue to make significant investment in future products and new technologies, with an investment of $5.4 billion in 2009, and investments ranging from $5.3 to $6.7 billion from 2010 to 2014. Very importantly, development and testing of the Chevy Volt extended-range electric car remains on track for start of production by the end of 2010 and arrival in Chevrolet dealer showrooms soon thereafter.

"The Viability Plan reflects the direction of President Obama and the U.S. Treasury that GM should go further and faster on our restructuring," Henderson said. "We appreciate their support and direction. This stronger, leaner business model will enable GM to keep doing what it does best - provide great new cars, trucks and crossovers to our customers, and continue to develop new advanced propulsion technologies that are vital for our country's economy and environment."

# # #

About GM - General Motors Corp. (NYSE: GM), one of the world's largest automakers, was founded in 1908, and today manufactures cars and trucks in 34 countries. With its global headquarters in Detroit, GM employs 243,000 people in every major region of the world, and sells and services vehicles in some 140 countries. In 2008, GM sold 8.35 million cars and trucks globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. More information on GM can be found at www.gm.com.

Forward-Looking Statements - In this press release and in related comments by our management, our use of the words "plan," "expect," "anticipate," "ensure," "promote," "believe," "improve," "intend," "enable," "continue," "will," "may," "would," "could," "should," "project," "positioned" or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors. Among other items, such factors might include: our ability to comply with the requirements of our credit agreement with the U.S. Treasury; our ability to execute the restructuring plans that we have disclosed, our ability to maintain adequate liquidity and financing sources and an appropriate level of debt; the ability of our foreign subsidiaries to restructure and receive financial support from their local governments or other sources; our ability to restore consumers' confidence in our viability and to continue to attract customers, particularly for our new products; our ability to sell, spin-off or phase out some of our brands, to manage the distribution channels for our products, and to complete other planned asset sales; and the overall strength and stability of general economic conditions and of the automotive industry, both in the U.S. and globally.

Our most recent reports on SEC Forms 10-K, 10-Q and 8-K provide information about these and other factors, which may be revised or supplemented in future reports to the SEC on those forms.


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    • 1 Second Ago
  • 151 Comments
      • 5 Years Ago
      Goodbye sweet G8. We hardly knew thee!
      • 5 Years Ago
      They are cutting *down* to 38? Thats a whole lot more than any other auto maker :/
      • 5 Years Ago
      Mr. Oak's comments above are right on about the Solstice. Good looking little sports car, especially the coupe. At least giving it to Corvette might address the testers complaints about lousy cupholders, no door pockets and tiny storage space on the ragtop. Why the Pontiac boys could'nt or would'nt design a one or two piece,if necessary, removable top that could be stored inside is a real big mistake. Corvette did it for years starting in 1968. A few did'nt even leak. T-tops or hatch-roofs designs were common before(ditto the leaks). Sad to see Pontiac go, but maybe like a Phoenix,(not the 1980 x car) it will rise and wide track a future road.
      • 5 Years Ago
      The G8 could became a Buick. Give it some interior bits from the Holden Stateman and it could became the NEW Grand National.

      Or a Chevy Impala. Lame!
      • 5 Years Ago
      Okay kids, since noone has been paying attention, let's go over this again.

      GMC has the highest profit margin of all the GM brands, not to mention their commercial trucks.

      Buick is a huge seller in China.

      they would be stupid to let either one of those brands die.
        • 5 Years Ago
        "This is a sad day and it's made sadder by the fact that GM killed an older brand in favor of one of their newer ones(just like when they killed Oldsmobile while building up saturn)."

        What are you rambling on about? Pontiac hasn't been around as long as GMC, Chevrolet, Buick or Cadillac.
        • 5 Years Ago
        Although I agree with you I must point out that it is possible that if there were no GMC, Chevy would be more profitable. And those commercial trucks you mention are also sold as the exact same Chevy commercial trucks.
        • 5 Years Ago
        @jv2k
        They are supposed to split development costs. Like Chevy, Cadillac and GMC split the cost of the GMT900 platform. And Chevy and Cadillac split the cost of developing the LS9 and LSA engine. At least that is what they claim. You have to think that because each division has its own staff that gets paid on its own division's performance, there would be a lot of upset Chevy execs if they had to bear all the costs just to cook the books for GMC's execs who are getting fat and happy.
        • 5 Years Ago
        @ jv2k

        G i wonder where they went wrong? G whiz.
        • 5 Years Ago
        Of course GMC has the highest profit margin. All GM did was stick a gmc badge on the front of a chevy and call it a day. They don't have to take into account development costs because GMC doesn't have any! GM would make just about as much money if it killed GMC and just sold more chevy trucks instead.

        "But what about the buick/pontiac/gmc dealerships"
        They are already screwed now that they lost most of their lineup.

        This is a sad day and it's made sadder by the fact that GM killed an older brand in favor of one of their newer ones(just like when they killed Oldsmobile while building up saturn). At the same time I'm glad that buick is not dead and with Pontiac out of the picture Buick has more room to stretch it's legs.

        The saddest thing about pontiac is that before the economy tanked they had so much potential. They were right about to improve by leaps and bounds.

        -The G3 did not exist in the US.

        -The G5 was going to be built on the rwd alpha platform.

        -The G6 was due for a model refresh and the car isn't that bad right now. Some stylistic tweaks and an improved interior and powertrain would have made it a really solid midsized choice.

        -The G8 finally hit our shores and was about to spawn some variants.

        -The solstice may have gotten updated and an livelier steering + storage space + new gm interior = top contender .

        I really am disappointed and I hate that GM was finally going to make pontiac a damn good brand again only to have that taken away by a failing economy.
      • 5 Years Ago
      Someone spoke of car makers changing names of their cars often, and this is one of GM's biggest problems. I see no articles about it online, but the consistency of their naming has been awful across the board. Why in the hell did Buick do away with the Regal name? It's an awesome name, and that could have easily been the LaCrosse. I guess the letter "L" is more important than keeping a good name.

      Ford seemed to figure that out when Alan Mulally took over, and the Taurus name was brought back, and possibly will restore it to its former glory. Kudos to him for that.

      Companies who stick by their cars and continue to make them better, have retained the names of those cars.

      Accord, Camry, Altima, Maxima, Legacy, Sonata, Civic, Corolla, Sentra, Impreza, Mustang, You get the point.

      Those cars listed have been successful. The names that have changed a time after time, haven't.

      See a trend?
      • 5 Years Ago
      I hate to see the name die, but on the other hand, as a former owner of two '60s Pontiacs (a '64 Grand Prix and a '68 Bonneville), I see the brand as a mere shell of it's former self.

      All those orphan car shows will have a lot more entries now.
      • 5 Years Ago
      If all of you Pontiac fans had actually BOUGHT their cars, this would not be happening. No one misses Plymouth, for example. In a few years, Pontiac will be just as forgotten.
        • 5 Years Ago
        Pontiac is far more distinct than plymouth was before it died even with the g3 and g5 being literal clones. Plymouth was clone central, they didn't even bother changing the names of their cars.
        • 5 Years Ago
        100% agreed, MajorGeek. Pontiac to Buick was exactly like Plymouth to Chrysler.

      • 5 Years Ago
      I still drive a 97 Bonneville, and is a great car. I will drive it forever as the 3800 motor seems to go that long. Living in the north we have winter and the FWD sedan is great for winter. The G8 looks nice but would be unsuitable for winter driving so no point in having one. G6, G5, and G3 are not competative in the market place so death is a good place for them.
        • 5 Years Ago
        I live in CT, and I had absolutely no problems this past winter with the STOCK all-seasons on my G8 GT. I drove to work every day during the winter, and yes, this means during those few bad snow storms we had, and had no issues.


        Didn't even have any extra weight loaded in my trunk. Just drive intelligently and you'll be fine no matter what vehicle you're driving.
      • 5 Years Ago
      If GM hadn't tried to make the Pontiac-Buick-GMC dealer stores full line, this would not have been necessary. The only reason Pontiac needed a G3 or G5 or Daewoo LeMans was so that those stores would have small cars to sell, and not have to send people to Chevy dealers. Meanwhile they diluted the Pontiac brand and look where we are now?
      • 5 Years Ago
      This is an out rage that GM has done this!! First of all they should have gotten rid of Saturn, they are crap my god mother got t-boned in one and it crumpled like it was made from a tin can she almost died from the accident. then you would have all that money to keep the Pontiac name and there cars alive I'm almost mad enough to go and buy a Japanese car :(
      • 5 Years Ago
      So I guess killing "Jazz" in the first Transformers was a foreshadowing of things to come for GM*

      I understand why they need to get rid of Pontiac, but it would be nice if they just kept a couple cars under Pontiac like the Solstice and G8 that aren't really available in any other brand in NA.

      (I know there's the Sky but Saturn is on the chopping block right now too.)
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