A reader recently emailed me in response to my Kill Pontiac post, and pointed out that killing a whole nameplate would be devastating to the GM dealers, and in turn devastating to GM. That is true.
There is just too much auto capacity on the market. With Hyundai/Kia gaining, Chrysler gaining, BMW gaining, Toyota gaining, there has to be some big losers. And China is on the horizon. Unfortunately for us Detroiters, the market share has to come out of GM and Ford.
The goal for GM and Ford is not "how do we win back the market". The boat has sailed, Americans are buying foreign carmaker's products with abandon. The goal is "how do we stay profitable, and retain the market share we have now". The only way to do this is to figure out how to make money as a smaller company than you were 10 years ago. The way to do this is not to pile cash on the hood of sub-par products, you'll just high-volume yourself to death. GM needs to shrink. It will be painful and destructive. The company is getting rid of 2000 salaried heads, and it will need to close plants as well.
GM will lose dealers if they kill Pontiac. But GM will also lose dealers in some areas if its market share keeps dropping--they will just starve to death.
Staying Afloat in a Shrinking Boat
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