GM Vice Chairman Bob Lutz recently described Pontiac and Buick as "damaged" units and said the company would consider eliminating another brand if sales didn't pick up. He later amended his remark to say the company might cut various poor-selling models rather than an entire brand.
Between 1994 and 2004, Pontiac's volume fell 23% and Buick's sales plunged 43%. Buick is GM's oldest brand, with a median buyer age of 70; Pontiac is aimed at younger customers and has a median buyer age of 45. The two brands have languished because they were saddled with outdated models, analysts say.
"They haven't been taking many risks" in product design, Bruce Belzowski, an auto analyst at the University of Michigan, said of GM.
The company hopes to stem the slide with a new lineup. But its Buick LaCrosse, Pontiac G6 and Chevrolet Cobalt have some of the highest buyer incentives of any new models, reducing their profit margins. And sales of GM's most profitable offerings -- sport utility vehicles such as the Chevy Suburban and the GMC Tahoe -- are slowing as gas prices remain aloft.
The company has relied heavily on rebates, low-interest financing and discount pricing to lure buyers. GM spent more than $3,000 per vehicle on incentives last year, the highest in the industry. All of GM's profit in 2004 came from GMAC, its financing and insurance arm.
Further, as Toyota and Honda Motor Co. created buzz with their gas-stingy hybrid cars, GM's first hybrid -- a Chevy Silverado pickup -- was lampooned by some critics for getting only two extra miles per gallon.
Instead of putting money into the development of fuel-efficient, low-emission engines years ago, GM spent it on a misguided expansion in Europe and Japan, said Peter Morici, a business professor at the University of Maryland. As a result, GM now has to buy 60,000 low-emission six-cylinder engines a year from Honda for its Saturn Vue SUV.
Wagoner has acknowledged that GM allotted too little effort to new products in the past but says that's changing.
The 73-year-old Lutz, credited with a string of hit products when he was president of Chrysler Corp. in the 1990s, was hired out of retirement in 2001 to pump up GM's product strategy. The company is "taking the necessary steps to right this ship," Lutz said during the New York Auto Show in late March.
Lutz-influenced designs will start appearing with the two-seat Pontiac Solstice roadster this year and a sister model, the Saturn Sky, in 2006. New GM pickups and larger SUVs will follow next year and in 2007.
As General Motors puts its hope in future models to get back its momentum, some of the rank and file remain worried about the present.
On a break from her job assembling prototype vehicles at the factory in Pontiac, Jill Christian summed up her employer's plight: "We are no longer the innovator; we're the albatross."
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Times staff writer Jerry Hirsch contributed to this report from Pontiac, Mich.
