More from the GM losing a brand rumor mill.
Link:Survivor: Buick vs. Pontiac
Comment from GM exec raises speculation that one -- or both -- of the venerable makes could go away.
March 29, 2005: 1:29 PM EST
By Chris Isidore, CNN/Money senior writer
NEW YORK (CNN/Money) - Pontiac and Buick could become the stars of their own reality show in the coming years: Survivor GM.
That's because the two mid-level brands of the nation's No. 1 automaker look like they're on the bubble. At an analysts' conference last week, GM Vice Chairman Bob Lutz said both lines are "damaged" and that dropping one of the venerable names -- both date back more than a century -- was possible unless there's a turnaround.
Lutz said closing a brand, as it did with Oldsmobile after the 2003 model year, was something that GM hoped to avoid. But he said that, if the carmaker's brands don't hit sales targets, "then we would have to take a look at a phase-out. I hope we don't have to do that. What we've got to do is keep the brands we've got."
GM officials have tried to backtrack somewhat on Lutz's comment, saying there are no plans to drop a brand and that he was only answering a question about a hypothetical. They say they're confident the brands will get the investment needed to grow.
"There's no strength in dropping a brand," said GM spokesman Dee Allen. "Pontiac, Buick and (truck brand) GMC together are stronger than two would be. They represent different customer bases."
But auto experts look at GM's continued slide in market share along with the financial problems caused by its current cost structure, and say the possible end of another GM brand isn't as much a surprise as the fact that a top GM executive would raise the possibility.
"It's a signal to folks that it's going to happen," said Walter McManus, director of the Office for the Study of Automotive Transportation. "They're very careful not to speculate about things that aren't going to happen."
Buick lags Pontiac in sales
Buick had 1.8 percent of the U.S. market in 2004, just ahead of the 1.7 percent share that Oldsmobile had in 2000, when GM announced the end of that line. Pontiac had a 2.8 percent share.
Both brands have recently had trouble attracting customers to new models that GM was hoping would give them a lift -- the Pontiac G6 and the Buick LaCrosse. Next up for the brands are the Solstice roadster from Pontiac and the Lucerne sedan from Buick.
But even the brands' advocates admit that getting potential buyers to look at these cars is a challenge.
"The G6, when we get people to test drive it, they love it," said Conrad Darby, a Florida Buick and Pontiac dealer. "We're just not getting sufficient people in to test drive it. And I think the Lucerne is going to be a home run. It's a gorgeous automobile. It's the problem we have with the rest of them. It's a four-door sedan and there are a million four-door sedans out there."
Still the dealer groups are a powerful constituency within GM, and dropping either Buick or Pontiac -- which would take the livelihood away from some operators -- would be a bigger battle than dropping Oldsmobile, which was seeing much of its sales from GM employees and rental car companies by the time the plug was pulled.
"I don't think Buick will go away," said Frank Bellavia, a Long Island, N.Y., dealer and president of the Buick Dealer Council. "The dealers do well. What we need is just more product."
But many experts think it's a tough road ahead for both brands, and that the end of the line could be near for at least one.
In fact, McManus said there's arguments to be made for GM dropping both brands. However, other analysts said it's unlikely that GM would want to drop both and have no mid-level brands in the space between Chevrolet and Cadillac.
Right now, many see Buick as running somewhat behind, with a somewhat older customer base to go with its smaller share.
"If I had to bet the farm, I'd say Buick will be the one that goes," said Mike Chung, auto analyst with Edmunds.com.
Chung said the weakness both brands have attracting new buyers is balanced by the strength both brands have in customer loyalty. That will make it difficult for GM to drop either brand with the hopes they would be able to hang onto the Buick or Pontiac customers with their remaining lines.
"I wouldn't rush to get rid of either line because of the costs associated with the move," said Chung. "But if GM's share continues to drop and gets down near 21 percent, I see them taking steps to phase out Buick."
Other experts say the decision could be a few years away, and that could give either brand a chance to win the race with the other.
David Cole, chairman of the Center for Automotive Research, said that if either brand ends up with a hot vehicle while the other flounders, it could be a deciding factor in which one survives.