The unsurprising “shockers” of the week

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The Detroit bailout: it ain't over, don't be surprised

This past week there were two big automotive bombshells: Pontiac may disappear, and Chrysler may file for bankruptcy. If you’re a car enthusiast and follow the news, then neither should be a big shock. But neither fate may be as bad as it sounds.

Let’s take them each individually:

Pontiac’s demise When General Motors submitted its viability plan in February is when the Pontiac bomb was dropped. According to that plan, Pontiac Pontiac would “serve as a focused brand with fewer entries.” That says it all. While many were hopeful that the plan was just reducing Pontiac to a few distinctive cars, GM is still fulfilling its promise if Pontiac is used to slap a few badges on special edition cars.

2009 Pontiac G8 GXP pricing announced

Pontiac as a stand-alone will be dead, and the viability plan was just softening the blow. Pontiac is supposed to be the performance car division, and it would hard from GM to justify a whole division of gas-eating, niche cars while taking government money. Yes, Pontiac has smaller cars like the G3 and the Vibe, but it would be a PR nightmare to try and talk about slimming down while trying to move individualized cars like the G8 GXP and the (surprising economical) Solstice . If GM wants to land safely in the government’s arms, Pontiac must die.

But there may still be a silver lining for Pontiac enthusiasts. The greatest thing about a dead brand is that it can be brought back to life on the legend it created. Mini Mini is a great example. By the time the original Mini died off in 2000, the only redeeming quality that remained was its retro coolness. BMW BMW was able to base a whole new car, then a whole new brand off this image. If Pontiac gets stripped down to nothing then GM will be able to get the public nostalgic again for their performance brand, and hopefully it can return in a limited capacity on special edition cars. It that would cut out any mass-market needs, which would make every Pontiac special – sort of like the Abarth of GM.

Chrysler’s bankruptcy Chrysler can’t live in its current state. A deal with Fiat wouldn’t have been the ultimate savior, because product scale would still have to be reduced, and factories would still have to be closed.

Bankruptcy does not end Chrysler; in fact it may be what many of it potential buyers are looking for. Bankruptcy allows for more breathing room from creditors, makes products easier to break up, and may lower the selling price for assts that potential investors, like Fiat, would want without having to pick up “dog” brands.

Jeep Wrangler Ultimate

There still is some good news to be had from Chrysler. Because Chrysler still has elements that other companies want, it’s unlikely that bankruptcy will ensure that brand will be completely lost. Assets like the minivans, the commercial truck/van operations, the Jeep Jeep brand, or the U.S. distribution chain, are attractive to companies like Mahindra Mahindra and Fiat. Most or all of the remaining Chrysler will likely be lost to foreign ownership, but that’s better than being lost completely.

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The main point is that none of this news is great, but none of this also means these companies are over.


23 comments:

it’s the "big 3" thing that’s keeping the product development slow.

Heads up display (origin Corvette), Cyl deactivation, first 5-speed auto built by gm for bmw, airbags, etc. I agree that the American auto makers have made some bad decisions. They are credited for their own demise when they were making what americans wanted. Americans, up until last year, 60-70% of the vehicles on the road were SUV’s. When gas went up, all the sudden, its the automakers fault for making the gas guzzlers; what people wanted. Ford has the focus, gm the cobalt/g3 and chrysler the neon replacement (cant remember the name), that all get around 30mpg. People like the space, driving position, luxury and ride they provide. So much so, every auto maker around the world has one now. VW, BMW, Mercedes Benz, Toyota, etc. I might like american cars more than the next man, but you can’t just blame them for making what people were buying. Again, the european auto makers already got bail out money from their government. No questions asked. There were no questions when the banking industry needed money to continue. But the automakers; there were many questions. I do believe that the American auto industry needs to make more advancements towards cleaner vehicles and fuels. But, I remember when they did about 3-4 yrs ago. It was an electric vehicle from gm. It wasn’t taken seriously and they were laughed at. Everyone looked at the suvs and said thats what i wanna drive. How much is that? When is that coming to market? We need to think about these things when we critisize companies for their actions.
On another note, I admit that the small cars offered in america are not all the way up to par with others around the world. But their small cars were not making them money at their inception.

since I was specifically mentioned, all I can say is that maybe you should blog about american cars, so we’ll know about the "contributions" of these companies to the automotive industry. because... i haven’t heard any. and i’m serious too.

To gcut, I perfectly understand your your sentiments but I think what everyone is saying is true.

To mike100 and hanzo;

american car companies have made several advancements in the car industry. For some reason, everyone thinks were are inferior!! Engine, transmission and safety improvements have been pioneered here in america!! They’re just as dependable as your hondas and nissans and all that as well. You talk about our cars, what about nissan having a problem with their 4 cyl. motor all around the world? Nobody wants to talk about that. I love all cars, but it seems that everyone on this post thinks american cars are trash!!! I don’t agree in the least. By the way, I am a automotive/diesel tech. The import/foreign cars break down just as much as the domestics.

I’m an american and I disagree with all the comment left here. Our car companies were very strong at one point. The global economy and gas prices had a large part in what’s going on. VW, Mercedes-Benz and BMW all got help from their governments. Everyone wants to say that americans make gas guzzlers. That’s partly true. But I don’t here anyone talk about the 16.4 Veyron that VW produces, the 12 cyl. motors that Merc and BMW make, SUV’s and all. Truth be told, GM was making transmissions for BMW at one point. All i’m saying is don’t be so quick to judge american vehicles when you have problems of your own. It’s the world economy, not just america.

Really? They are just about to file bankruptcy? I thought they already died gazillion years ago. LOL. But this means a sad state for car companies. It seems that they are not just affected by the economic crisis but the climate change as well.

I think that American cars lacked the courage to experiment on new things, to invest in research and improve their own lines. i observed that they just kept on following the researches of other car companies like those from Japan and in Europe. They are so left behind and this is totally expected that will happen.

In my opinion there is no excuse to why they let themselves reach this point!

- Suspension was rarely developed - while japan and EU surpassed the US

- Engine technology - EU and Japan ahead by 10 years min.

What the point of having these huge engined loud gas wasting cars??

I know the US has big open roads... you know a standard GAS not diesel car such as audi A4 or Golf.... 700 KM on one tank!! thats a minimum, with driving speed up to 120kmh!

while the US produce the 5.7 liter engine since the 60’s and are still convinced its the best !!

a 4 cylinder Turbocharged car can beet most US V8’s.....

I simply can not comprehend how GM let themselves die.... no innovation and no creativity !!!

The only car that is acceptable is the Corvette... but look how huge its engine is and how much gas it spends compared to a 6cylinder Porsche...

I think that more than just being able to foresee the market behavior is also the company’s initiative to enact their social corporate responsibility. It is almost on a daily basis that we hear reports on climate change and global warming. Other car companies have started working on environmental friendly cars so many years ago. They must have joined the trend, then. This would not happen to them.

In contrary to what everyone is saying, I just thought that I have never expected that this would happen. I expect that big car companies hire good employees that can actually predict the market behavior. This way, they would have foreseen the need to change their image. I think that if they will still decide to come up with a new line of environmental friendly cars, it would be too late. So I guess, they partly have a share on why they are filing bankruptcy.

I think this is quite expected from car companies who refuse to change their image from too much gasoline consumption to a more environmental friendly cars.

Well that lack of research came late for Ford to realize. But Not all American cars can be called as trashes they have also contributed a lot in the development of car industry.

My personal opinion is, I hope both GM and Chrysler go bankrupt. That way life will become much better not having so many retarded cars taking up space and making our planet dirty!

I hate American cars for their lack of development, research, and creativity !!!!
For 50 years they have barely advance, and now they are in trouble !! What did they expect ?!?!

Well, that is sad and that is also practical for GMC, there is no way I think, Pontiac has to die for the mean time.

Yes, that is true, although Pontiac line up is also good I like their sports pick up. But reality bites, some performance line up wont make it these days for the reason that the market needs something else other that these posh cars.

What is surprising and shocking is if GMC will continue making the Pontiac knowing that it’s a government money that they are using. But don’t get me wrong I like the Pontiac line up its just that during the hard times, best decision is needed and its the best so far for GMC.

It a good decision for GMC, anyways its not a complete loss for Pontiac besides using the stimulus package for something that does not hit the market sales expectation is not a wise use of government money. Maybe this decision will boost the Pontiac on-stock sales.

New York Times says Chrysler bankruptcy will be declared next week. While protecting its UAWU’s (United Automobile Worker’s Union) members are protected. Fiat of Italy will continue its alliance with Chrysler. Its not a bad sore after all but just being practical.

Yup thats a fact. In fact these corporate decision of declaring bankruptcy saves the company a lot rather than waiting till everything drops to zero.Its the most humane and moral way to keep the standard and the integrity of its company name and people.

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