The unsurprising “shockers” of the week
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 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.
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 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 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.
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 brand, or the U.S. distribution chain, are attractive to companies like 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.
The main point is that none of this news is great, but none of this also means these companies are over.