Analytical Wealth

Here is a look at a NY Times article discussing the demise of Pontiac, with a focus on how GM's brand strategy of just selling the same car under different names is largely responsible for the brand's demise.

(From the NY Times): "DETROIT — With its history of building muscle cars like the GTO and the low-slung Firebird, Pontiac had good reason to take pride in its best-known marketing slogan from the 1980s, “We Build Excitement.”...

...when General Motors asked the federal government for more bailout money, it also announced a reorganization plan that included demoting Pontiac to a “focused niche brand,” signaling that its lineup of vehicles would shrink and that it would no longer be a separate division.

To industry analysts and Pontiac’s longtime fans, the downgrade provides a case study of the product missteps that helped put G.M. in its precarious state, and a reminder of the dangers in straying from a successful formula.

“When you deviate too far from it, that’s when you run into trouble as a brand and a company,” said Jack R. Nerad, executive editorial director at Kelley Blue Book, whose 1968 Firebird made him feel “as cool as I could be.”

More than any other G.M. brand, Pontiac stood for performance, speed and sex appeal. Its crosstown rivals followed with similar muscle cars, giving Detroit bragging rights over the cars that Japanese automakers were selling based on quality and reliability.

Though still G.M.’s third-best-selling division, behind Chevrolet and GMC, Pontiac’s sales peaked in 1984, when it sold almost 850,000 vehicles, roughly four times as many as it sold last year…

...It gave Pontiac vehicles like the TransSport minivan, and the Sunbird, Sunfire and Phoenix cars that were barely distinguishable from models sold by Chevrolet and Oldsmobile.

Pontiac also garnered unwanted publicity in 2001 with the Aztek, whose tag line declared, “Quite possibly the most versatile vehicle on the planet.” Its bulky looks landed it on lists of the world’s ugliest cars. Indeed, Aztek won top honors in that category from The Daily Telegraph of London last year."

I can't say I disagree.

I'm a big fan of Pontiac, only the Pontiacs I love haven't been made in well over two decades or more. Like many of my fellow car enthusiasts who currently drive foreign cars, I still fondly remember the Pontiacs of old and still drool over early 80s/late 70s era Trans Am and the venerable Goat.

The company went wrong when it started selling minivans, SUVs, gussied up Chevy Cavaliers and boring family sedans. The company started to fall when GM believed it could sell driving enthusiasts cars from other divisions, yet claim they're "exciting" because they said "Pontiac" on them.

Even when they company built cars that had decent driving dynamics they often ruined them with the plastic cladding they throw on the cars, and the gaudy interiors that looked like a cross between Fisher Price and the 1950s Batmobile. The last round of Pontiac Trans Ams were fantastic from a driving dynamics perspective, but they looked god awful and the interior ergonomics were arguably worse. I drove many a Pontiac Grand Am (and it's cousin the Olds Alero) as rental cars whilst traveling for work, and both cars were fun to drive (for vehicles in that segment at least). The problem was that when compared to the Accord or the Camry, they were deficient in the areas of space, refinement, comfort and reliability.

It was a situation where you only liked the car when you got to flatten the gas pedal on a twisty country road.

The space the Nissan Altima and Mazda 6 hold in the mid-sized family sedan world as far as being mid sized cars that are sporty and fun to drive, could've been held by Pontiac if they hadn't made certain missteps that drove customers away. 

It was almost as the company would start building a great car, and would then decide to sabotage itself. Pontiac should've spent the last 25+ years building cars that lived up its legacy, instead of selling rebadged minivans and SUVs from other GM divisions.

All of that being said I think the future for Pontiac is actually quite bright (provided GM survives of course), because a Pontiac that is purely focused on high-performance cars can potentially regain its former glory. At the moment the new Pontiac G8 GXP is getting rave reviews in the automotive press, and is just the kind of car Pontiac needs to produce in order to get its old swagger back.

Pontiac doesn’t need to be a full-fledged division of GM to thrive, instead it needs to build the kind of cars that attracted many a car enthusiast to the brand in years past.

I.e. if Pontiac focuses purely on sports cars there might come a time when car enthusiasts are just as interested in new Pontiacs as they are Pontiacs from the 60s, 70s and very early 80s.

You can read more here.

Sources:

NY Times: "Its Muscle Car Glory Faded, Pontiac Shrivels Up" -- Micheline Maynard, February 19, 2009.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.