GTO Part Deux - Pontiac G8 a Slow Seller

[TriShield]

Unpopular Models Slow Down GM - Low-Volume Sellers, Eat Ad Dollars, Take Dealer Space



By SHARON TERLEP and NEAL E. BOUDETTE
September 9, 2008; Page B1

A few months ago, General Motors Corp. flooded the prime-time airwaves with commercials introducing the G8, a big, powerful sedan that is supposed to re-energize GM's Pontiac brand.

But the ad blitz hasn't had much impact. In August, GM's 2,712 U.S. Pontiac dealers sold only 1,915 G8s -- not even one per dealer.

GM has problems on many fronts, including high gasoline prices, falling truck sales and billions in losses. The G8 illustrates one problem that's often overlooked: The auto maker's lineup contains many vehicles that deliver barely any bang for the buck.

Consider the Saab 9-5 sedan. GM promotes its Swedish brand's smaller 9-3 sedan, but the midsize 9-5 gets little exposure and as a result draws little interest from shoppers -- or even dealers. At Saab of Troy, in suburban Detroit, a few 9-5s are in stock but none are in the showroom, where customers typically spend their time browsing. In August, GM sold just 198 9-5s nationwide.

Mark LaNeve, GM's top marketing executive in North America, said the additional costs of offering slower-selling models are "really very incremental" because most share parts with higher-volume models. The G8, for instance, is a version of a car that has been a strong seller for GM's arm in Australia. Yet auto analysts say slow sellers are a bigger drag on profit that GM acknowledges.

Ron Harbour, a partner at the automotive consulting firm Oliver Wyman, said each model, even if only a variation of another vehicle, requires some engineering effort. Producing models in small numbers lowers manufacturing efficiency. Every vehicle needs its own documentation, manuals and brochures. Dealers have to be trained to service each model and have to spend money to keep them in stock. And each vehicle needs a certain amount of advertising and promotion. "For every model, you've got some investment costs, and if you don't sell enough of them, you might not be able to cover the capital costs," Mr. Harbour said.

GM recently said it hopes to cut $10 billion in costs over the next 18 months. Frederick "Fritz" Henderson, GM's president and chief operating officer, has ruled out closing or selling any of GM's eight brands besides Hummer, which GM has put up for sale. But he hasn't ruled out getting rid of some of its slow-selling models.

Ford Motor Co. and Chrysler LLC have made simplifying their model lineups a central part of their turnaround plans. Ford has sold its Jaguar, Land Rover and Aston Martin lines. People familiar with the matter have said Ford also intends to sell its Volvo division, although the company denies Volvo is for sale. Volvo offers eight models, all slow sellers. Chrysler dropped four slow sellers last year and has said it plans to eliminate a third or more of its remaining models. Mr. Harbour noted that foreign auto makers also have a few low-volume models. In August, Honda Motor Co. sold just 2,606 Element cross-overs in the U.S., and Nissan Motor Co. sold only 2,178 Armada sport-utility vehicles.

GM has trimmed some models, too. It folded its entire Oldsmobile division several years ago. And in the last few years, it has reduced the number of nameplates offered by its Buick, Pontiac and GMC brands, which are usually housed together at dealers, to 16 from 30. Nevertheless, 20 or more of the 60 models GM offers in the U.S. often generate sales of less than 2,000 vehicles a month. Another half dozen or so fail to break the 3,000-vehicle mark in some months. Some are luxury cars, like the Cadillac STS full-size sedan, or specialty models like full-size vans, which generate profit even at low volumes. But many are mainstream cars such as the Saturn Astra hatchback and Pontiac Solstice roadster that don't command premium pricing.

GM's trouble with slow-selling models is closely related to another problem: weak brands. Pontiac, Buick, Saturn and Saab are such small players in the U.S. market that whole swaths of car shoppers don't even consider them. Each of those four brands was outsold in the U.S. market in August by Kia Motors Corp., the Korean maker that specializes in low-priced cars.

John Casesa, a veteran auto consultant and partner at Casesa Shapiro Group in New York, said GM may have trouble eliminating some of its low-volume models because some dealers carrying Saabs and Pontiacs need every model to stay in business. "Even if you have a model that's not making money [for GM], it might live on to allow showrooms to stay open," he said.

Even dealers that are in the black can struggle to move certain models. In May, Neil Norton Cadillac-Pontiac, a dealership in Joliet, Ill., ran TV ads pitching the Pontiac G5 compact, the kind of car many consumers are looking for with gas at $4 a gallon. But even with the extra advertising, he ended up selling only three, the same as the previous month. (Overall, the G5 has been a slow seller for GM.) Last month, the dealership sold about nine, better but hardly a barnburner. "It's still an important car for us," owner Larry Norton said. "We need to have a small car to offer our customers."

Write to Sharon Terlep at sharon.terlep@dowjones.com and Neal E. Boudette at neal.boudette@wsj.com

Corrections & Amplifications



General Motors Corp. sold 30,271 Chevy Impala cars and 55,765 Chevy Silverado trucks in August. A chart that accompanied a previous version of this Marketplace article about a GM slowdown listed the Impala as the company's top-selling car, but didn't indicate the more popular Silverado is a truck.

[ULTIMATEORANGESS]

thats too bad. G8s are great cars. GM still continues to struggle.

[WECIV]

GM does not need Pontiac.

W

[Codprice]

Too bad they are so expensive. The B-bodies were the closest to them id say, and werent they in the low to mid 20s? For close to the same performance of the base G8. And who wants a g5 when, it seems like most think including me, you can get a cobalt that looks so much more sportier. I always see the front of the g5 and think "oh kinda nice" and as it passes "wtf".
I just dont understand why these cars are so expensive (g8).
If they took the car, stripped it down some, and put in a lq9 which sell in mass quanities in silverados, why couldnt they have an affordable muscle car?

I just dont understand it.

[ULTIMATEORANGESS]

G8GTs cost the same as an RT charger and are much nicer imo and compare in performance to a much more expensive srt models. i think theyre a great car for the money. i just dont need 4 DRs.

[2002_Z28_Six_Speed]

I won't touch a G8 GT. You can't get them with a stick. Hello loss of fuel mileage for no reason.

Plus GM needs to stop offering things as packages. I want keyless without power windows, stabilitrack, or abs.

I don't want to pay for it. I don't want it. I won't buy it like that.

[TriShield]

Originally Posted by Codprice

Too bad they are so expensive. The B-bodies were the closest to them id say, and werent they in the low to mid 20s? For close to the same performance of the base G8. And who wants a g5 when, it seems like most think including me, you can get a cobalt that looks so much more sportier. I always see the front of the g5 and think "oh kinda nice" and as it passes "wtf".
I just dont understand why these cars are so expensive (g8).
If they took the car, stripped it down some, and put in a lq9 which sell in mass quanities in silverados, why couldnt they have an affordable muscle car?

I just dont understand it.

The Charger, 300 and Magnum are the G8's direct competition. Look at what they sell for and offer. All of them sell many times the amount of what GM is moving of the G8.

[bballr4567]

The materials are why they are so expensive. Almost everything that goes into building a car has more then doubled or tripled in the past 3-4 years yet car prices really havent gone up too much.

Then the fact that anything in their "class" is almost 4k over what they ask for MSRP its a deal. People just cant get over the fact that its a high end Pontiac.

Anybody notice that everybody wants a stick for the gas mileage? The A6 will get exactly the same gas mileage as a M6 these days. GM came out and said that the manuals are only 1-2% more efficent then the new A6s.

Also wasnt GMs sales goal for the G8 somewhere around 30k a year? So if they sell 2k a month they will have 24k. Ive tried to find the past months sells numbers but so far no good.

[TriShield]

Originally Posted by 2002_Z28_Six_Speed

I won't touch a G8 GT. You can't get them with a stick. Hello loss of fuel mileage for no reason.

Plus GM needs to stop offering things as packages. I want keyless without power windows, stabilitrack, or abs.

I don't want to pay for it. I don't want it. I won't buy it like that.

I think one massive mistake GM has made with the G8 (other than not selling it as a Chevy) was selling it with only an automatic for the US.

Holden already builds this car with a stick on both the V6 and V8 models and it would have been the easiest way to get more miles per gallon out of it. It even has the skip-shift light already built into the cluster.

Instead of paying to certify the car with a manual drivetrain for the US they chose to invest the money into cylinder deactivation and it doesn't use any less fuel than my LS2 does.

[TriShield]

Originally Posted by bballr4567

The materials are why they are so expensive. Almost everything that goes into building a car has more then doubled or tripled in the past 3-4 years yet car prices really havent gone up too much.

Not only that, but the G8 is a foreign car. With the currency situation there's really no profit in selling this car here. GM is eating it to keep the price of the car low just like they are on the Astra (another import) and Solstice roadster.

[ChaseSS]

Originally Posted by TriShield

I think one massive mistake GM has made with the G8 (other than not selling it as a Chevy) was selling it with only an automatic for the US.

Holden already builds this car with a stick on both the V6 and V8 models and it would have been the easiest way to get more miles per gallon out of it. It even has the skip-shift light already built into the cluster.

Instead of paying to certify the car with a manual drivetrain for the US they chose to invest the money into cylinder deactivation and it doesn't use any less fuel than my LS2 does.

I just can't understand why holden sells more models in australia, wouldn't it be cheaper to sell whatever holden cars are made over here and there, cut costs from differentiating between models and holden cars are cooler, sportier and would probably do better than some of the pontiacs.

[JD_AMG]

Originally Posted by TriShield

I think one massive mistake GM has made with the G8 (other than not selling it as a Chevy) was selling it with only an automatic for the US.

Holden already builds this car with a stick on both the V6 and V8 models and it would have been the easiest way to get more miles per gallon out of it. It even has the skip-shift light already built into the cluster.

Instead of paying to certify the car with a manual drivetrain for the US they chose to invest the money into cylinder deactivation and it doesn't use any less fuel than my LS2 does.

+10000
I was highly considering getting a G8 GT sometime after college, but not if its only available in a boring auto...

[ULTIMATEORANGESS]

Originally Posted by 2002_Z28_Six_Speed

I won't touch a G8 GT. You can't get them with a stick. Hello loss of fuel mileage for no reason.

Plus GM needs to stop offering things as packages. I want keyless without power windows, stabilitrack, or abs.

I don't want to pay for it. I don't want it. I won't buy it like that.

i wanted a manual too but chargers and 300s dont offer them and seem to sell ok. this is suposed to be a somewhat high end car with alot of options. not a low optioned musclecar.


but right now with emp. disc. you can get them pretty cheap.

[TriShield]

Originally Posted by ULTIMATEORANGESS

i wanted a manual too but chargers and 300s dont offer them and seem to sell ok. this is suposed to be a somewhat high end car with alot of options. not a low optioned musclecar.

but right now with emp. disc. you can get them pretty cheap.

The G8 really has no features or options. Chrysler's cars do (see 09 Charger press release in this forum). Both of them are muscle cars with four doors.

[bballr4567]

For the 08 model year there was only 7 different ways to get a G8 GT. On the Charger I think there was like 94 or something.

[TriShield]

Originally Posted by bballr4567

For the 08 model year there was only 7 different ways to get a G8 GT. On the Charger I think there was like 94 or something.

Holden does build the car in more configurations but GM doesn't offer most of them here. The reason is the car is expensive and it's a move designed to cut as much cost out of offering it as possible.

[ULTIMATEORANGESS]

Originally Posted by TriShield

The G8 really has no features or options. Chrysler's cars do (see 09 Charger press release in this forum). Both of them are muscle cars with four doors.

GXP. i expect it to be a much better car than its srt competitor at a lower price.

[bballr4567]

Plus the GXP is the only one of the big domestic 4 door cars that will offer a M6. That for me would the deal breaker if I was looking at an SRT8 or the GXP.

[JD_AMG]

Originally Posted by bballr4567

Plus the GXP is the only one of the big domestic 4 door cars that will offer a M6. That for me would the deal breaker if I was looking at an SRT8 or the GXP.

The CTS and CTS-V also have an available M6.

[bballr4567]

Originally Posted by JD_AMG

The CTS and CTS-V also have an available M6.

Ahhh but the CTS doesnt have a V8 option for it. Youll have to step it up to the CTS-V and thatll come in around 20-30K more expensive then the GXP.

Trying to stay within the price range of the V8 sedan family cars.