General Motors to dump Pontiac

General Motors Corp., surviving on $15.4 billion in federal loans, is expected to announce Monday that it will kill the Pontiac brand but keep GMC as part of a tougher restructuring plan being overseen by the government, sources familiar with the automaker's plan said Friday.

GM has started reaching out to Pontiac dealers ahead of a public announcement about the brand's future, when the automaker likely will also outline permanent plant closures, more job cuts and a tougher offer to bondholders to slash the automaker's $28 billion in unsecured debt.

The Detroit News has learned GM plans to notify members of Congress on Monday morning -- and has scheduled meetings with a few members of Michigan's delegation -- about plants to be shuttered.

Pontiac's demise could hurt Orion Township, which is home to a GM assembly plant that produces the Pontiac G6 and Chevrolet Malibu.

If the factory was closed permanently or downsized, the community could see scores of residents left jobless, businesses crippled by a drop in customers from the plant and a sharp decline in revenue from water sold to the factory, township Trustee John Steimel said.

"There's definitely a ripple effect," he said.

In a restructuring plan rejected by President Barack Obama's autos task force last month, GM proposed shrinking Pontiac into a niche brand with one or two models. But the task force wants GM to cut deeper and faster, prompting the decision to eliminate Pontiac, which leaves the automaker with four core brands: Chevrolet, Cadillac, Buick and GMC.

GM, which received another $2 billion injection from the government Friday, also is eliminating or trying to sell its Saturn, Saab and Hummer brands.

'Changes had to be made'

GM is racing to restructure and reach money-saving concessions from the United Auto Workers and bondholders ahead of a June 1 deadline imposed by the Obama administration. If GM cannot reach deals, the automaker could be forced into a Chapter 11 bankruptcy filing.

The move to cut Pontiac is not a surprise considering GM was going to shrink the brand.

"Once their plan was not approved by the government, you knew changes had to be made," said Joe Serra, president of Serra Automotive Inc. in Grand Blanc, who owns two Pontiac franchises. "If they have to make further cuts, it seems like a natural one."

GM declined to confirm its plans Friday.

"Contrary to media speculation, General Motors has not announced any changes to its long-term viability plan or to the future status of any of its brands," the company said in a statement. "GM is continuing to review its restructuring plan to go further and faster and best ensure its future success. Additional information will be released as any decisions are finalized."

Pontiac sales fell 25.3 percent in 2008 to 267,348, down from its peak in the late 1970s, when about 900,000 Pontiacs were sold.

Pontiac, established as the Pontiac Buggy Co. in 1893 in the Oakland County city that shares its name to build horse-drawn carriages, became synonymous with fast-driving V-8s and muscle cars in the 1950s, 1960s and 1970s. GM has sold more than 35 million vehicles in the 83-year-old brand's life.

In 1907, company founder Edward Murphy moved to cars, creating the Oakland Motor Car Company. GM bought half of Pontiac in 1909 and later bought the rest. In 1926, GM created the Pontiac brand -- priced between Chevrolet and Oldsmobile, debuting the Series 6-27 at the 1926 New York Auto Show. Just $825, Pontiac sold 76,742 cars in the first year.

Legacy of muscle cars

The company built a $15 million assembly plant in Pontiac -- the largest construction program in the United States in 1926 -- which built the Oerlikon 20 mm anti-aircraft cannon for the U.S. Navy during World War II. By 1953, Pontiacs, with the new V-8 engine, sold 385,000 vehicles -- more than Dodge and Mercury.

Pontiac hired legendary designer John DeLorean in 1957 and ushered in the muscle car era with the GTO in 1964, followed by the Firebird in 1967 and redesigned Grand Prix in 1969 and the Firebird Trans Am.

Pontiacs have had a role in popular culture. A Pontiac convertible was used by Lucy and Ricky in episodes of "I Love Lucy" in a drive across the country. Pontiac Firebird Trans Ams were featured in the 1977 film "Smokey and the Bandit."

Those muscle car models are a key part of Pontiac's legacy.

"That was the high-water mark," said Jim Hall of 2953 Analytics in Birmingham. "They were overstated for the market but found some resonance from buyers who wanted cars like that."

He discounted any notion that Pontiac would permanently disappear and said it could emerge once the market rebounds as a niche brand of one or two models.

"Killing Pontiac is probably the wrong word," Hall said. "Putting it to sleep is probably far more accurate. Don't count Pontiac out forever, but it's definitely going fallow for a while. You'll see something from Pontiac in the future providing you see something from General Motors in the future."

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