GM Dumps Pontiacs -- Car-Buying Opportunity of a Lifetime

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GM is so anxious to sell cars from the two divisions that it plans to close, Pontiac and Saturn, that it is offering dealers and consumers huge discounts to buy vehicles manufactured by the brands. The Wall Street Journal reports that some cars will be sold at 46% below sticker price. The sales will also push up GM's December sales by a substantial amount. The move could also "speed the company's restructuring," according to the Journal.For GM, the dumping of cars from its discontinued brands cuts two ways. The car company will be able to shutter Pontiac and Saturn sooner than expected, which will likely save money.

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But it could also be a big mistake by GM's interim CEO Ed Whitacre, the former telecom executive who recently pushed out Fritz Henderson, a GM veteran who took the company through Chapter 11. GM will obviously lose money on each vehicle by selling Saturns and Pontiacs at fire-sale prices. That could inflate the firm's red ink in the fourth quarter.

Perhaps the worst effect of the aggressive discounting is that some consumers will expect similar deals from GM brands that the company is keeping, like Chevy and Cadillac. GM may find that customers see it as a company prepared to offer sweet deals across all of its brands. That will make it hard for the car company to keep its market share, unless it is willing to create incentives across its remaining model lines well into 2010.
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