Sunday, June 18, 2006

We Build Confusion

Backseat Driver

We Build Confusion
Jerry Flint, 06.06.06, 6:00 AM ET

New York -
General Motors' once-mighty Pontiac division is in a terrible slump. As recently as 1999, Pontiac sold 616,000 vehicles, but sales have been falling every year since. Last year, volume fell to 438,000 cars and trucks, and sales are off another 8% through the first five months of this year. Another troubling sign: GM is merging its once-independent Pontiac dealers into a confusing amalgamation that will sell Pontiac, Buick and GMC trucks in single showrooms.

GM has revived Pontiac at least twice in my lifetime, so turning it around again should not be that hard. Pontiac does best when its cars are fast and furious. Alas, the executives of GM keep forgetting that lesson.

In 2003, GM Vice Chairman Robert Lutz, the company-car guy, promised, "The excitement division is back with a vengeance." Lutz also said that the cars should be "athletic, dynamic and spirited." In order to give the division some quick pizzazz, he revived the legendary Pontiac GTO nameplate, but he did this by importing a coupe from GM's Australia operation. The new two-seat Solstice roadster is another Lutz inspiration. The GTO was not a big hit and Pontiac is withdrawing the current model from the market after the end of this year, but dealers sell every Solstice they can get.

Now there seems to be a new plan for Pontiac: make it more or less a pure performance division, with only rear-wheel-drive cars. GM will not verify the story, but Automotive News, which is usually on target, says that it is so and that Pontiac will eventually stop selling trucks and front-wheel-drive cars. A transition of this magnitude would take at least five or six years, and I think it could doom Pontiac as a volume operation.

I am not against seeing rear-wheel-drive cars in Pontiac showrooms. Auto enthusiasts prefer rear-wheel drive to front-wheel drive, so Pontiac could carve out a niche by offering RWD models for consumers who do not want to spend the money or cannot afford a BMW, Mercedes or Lexus. My problem is with the 180-degree shift in strategy and with what Pontiac might be losing in its quest to distinguish itself from GM's other divisions.

For starters, an auto division cannot survive today without offering trucks, such as sport utility vehicles and minivans. Even Porsche, BMW and Mercedes sell SUVs. Having GMC trucks in the same showroom may help the dealers reach sales quotas, but the absence of Pontiac trucks could seriously decimate that nameplate. Another issue: If Pontiac offers only RWD passenger cars, where does that leave Buick, the third division in these new, combined-sales outlets?

I also question a complete retreat from front-drive cars. In fact, most high-volume cars are front drive because of their reputation for better handling in bad weather, plus an advantage in interior room. Rear-drive's handling characteristics make it the choice in luxury and performance models, although DaimlerChrysler is finding success with the family-size Dodge Charger and Chrysler 300, which sticker between $24,000 and $40,000.

Without front-drive cars or SUVs, it's hard to see Pontiac selling hundreds of thousands of vehicles per year. The secret to success is making cars that consumers want to buy.

Today, the front-wheel-drive Pontiac Grand Prix and G6 passenger cars are nowhere near as successful as the FWD Honda Accord and Toyota Camry. What makes GM think things would be different if Pontiac converted to an all rear-wheel-drive lineup? If all it took for success were rear-wheel-drive vehicles, Ford Motor would not have killed the Thunderbird or the Lincoln LS.

The arrival of Lutz in 2001 was a breath of fresh air, but last year he lost his authority over GM's domestic cars. I fear GM might be regressing back to its bad old ways. Yes, Pontiac needs more models. But it also needs vehicles that are distinct from other GM offerings--a move Chrysler has made with its new cars and trucks.

Instead, GM is again slapping different grilles on Chevrolets and calling them Pontiacs. The Pontiac Torrent, a small SUV, is a warmed-over Chevy Equinox, and the word is that Pontiac dealers will eventually get a "version" of the little Chevy Cobalt. We call that badge engineering, and it's no way to build success.

Last year, Lutz called Pontiac "a damaged brand," starting rumors that GM would kill it entirely. And Lutz was right; Pontiac is a damaged brand. The fault is with a management that seems to have forgotten how GM became the world's leader--by spreading a few platforms among its divisions and doing a great job of differentiating the look, power and handling of various models derived off these platforms.

Pontiac was in the dumps in the middle '50s, when Bunkie Knudsen--the son of a GM president and an impressive leader in his own right--took over. Knudsen was a GM vice president, which meant he actually had the power to change the cars. That was the beginning of Pontiac's great years.

Then came the '60s, and John DeLorean, who created the famous Pontiac GTO. The division fell into the doldrums again, until the early '80s when Bill Hoglund, another fine leader, revived Pontiac under the slogan, "We build excitement."

The problem today is that Pontiac is just a marketing arm, not a true automotive division. Pontiac does not have its own vice president. The current head of Pontiac does not even have the power to order a chrome strip put on or taken off a new car.

I hope I am wrong, but recent talk of a new generation of rear-wheel-drive cars from Pontiac does not necessarily mean great cars. To create great cars you need talented leaders, like Knudsen, DeLorean and Hoglund, with the power to get things done.

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