Has the S.S. General Motors Hit The Iceberg?

GM announced they're cutting their earnings forcasts by 80% for 2005. GM is having trouble selling part of their finance arm [GMAC Commerce]. Now GM Vice President Bob Lutz is pondering dumping either Pontiac or Buick or both if sales of vehicles in those brands don't improve. GM officially killed the Oldsmobile brand last year.

Currently the General is sitting about 25% of US market share. The threat to kill those brands is odd news given that GM is putting $3 billion in new vehicles.

Lutz said earlier this week that GM had canceled plans to build some new
rear-wheel-drive cars off a new engineering platform, dubbed Zeta, as it juggles
resources to get its next generation of sport utility vehicles and pickup trucks
to market as soon as possible.

Yeah great idea, bring out a new generation of gas guzzling pickups and SUVs in an era of $2/gallon gasoline. I know the profit margins on those vehicles are high, but I think many people are finally figuring out how expensive it is to operate those beasts. I love my truck, but it cost me almost $30 to fill up the tank today and I only have a 14 gallon gas tank. Suburbans have 30 gallon tanks! How about you phase out the Hummer brand? H2 sales are down 14%. If GM VP Bob Lutz helped decide this I have to question his normally outstanding knowledge and decision making ability.

Zeta is was a large rear drive platform that a new GTO, for that ailing Pontiac brand, large coupes and sedans for the Australian brand Holden, full size sedans Pontiac G8 (Bonneville replacement) and Buick LaCrosse, and possibly something yummy like a real Chevy Impala SS was supposed to be built upon for 2007. Those big bad boys were meant to be Chrysler 300 fighters. Looks like the General is going to keep eating Hemi exhaust.

I doubt GM will file bankruptcy, but Toyota may be the #1 auto maker soon. Wow, how the mighty have fallen. Sad to say, not very surprising to me. 30 years of too many bad to mediocre products.