General Motors Plans 'Fire Sale' To Move Final Saturns, Pontiacs

December 31, 2009

With the first of the year just around the corner, General Motors is making preparations to find buyers for the last of its Saturn and Pontiac models. It is planning a fire sale with an interesting twist.

Normally, new cars are sold to their first buyers on what is known as a CO or Certificate of Origin. That piece of paper, which identifies the specific vehicle to the dealer and the company becomes the start of a vehicle's paper trail. It is the document that is transferred before the dealer receives any final payments that are owed.

15,000 left on lots

And, with 15,000 Saturns and Pontiacs such as the G6 still in some dealers lots the automaker must make them disappear not only from the lots but also from their books to close the chapter on Pontiac, once a mainstay of General Motors and Saturn, which was to be the automaker's import fighter.

The plan, as described to CNN and other money reporters, is the heart of simplicity itself. Instead of waiting for new-car buyers to come in to purchase the write deals on any cars that are still waiting to be sold, General Motors is paying each dealer about $7,000 and it is letting the dealer put the new car on the road.

Instantly, the new-car becomes a used car because the CO has changed hands and since the dealership is also given about $7,000 in incentive money, it can offer buyers huge savings. One local TV station here in Boston put the savings at as much as 50 percent.

Doing business this way is somewhat unorthodox, in a business that is known for its hard-nosed orthodoxy (for example, Saturn proved that one-price-fits-all cars won't sell, didn't' it? That Saturn, from the day it was launched with lots of fanfare by Roger Smith in 1985, was treated like an orphan division of the automaker didn't make a general manager's life any easier, but that was how it felt to many Saturn dealers. It's a shame, too, because the Saturn product itself was good in concept, it's execution was lousy body seams that never quite lined up, huge gaps where there should have been none, engines that seemed to want to become part of history before their time. GM's more traditional dealers wanted to pass on this because they feared for their profits.

(Pontiac, in the more traditional universe of General Motors was the second-level vehicle and its performance division. The way The General worked things was that entry level buyers bought Chevys and, if they liked what they found, they stayed Chevy customers, but, if they were not quite satisfied there was an upwardly mobile path. Pontiac offered a bit more panache and was a bit more upscale. It was to have paved the way to the Olds Division, but that went away about nine years ago, so the next step in the upward path was Buick. Buying a car like the current Crossfire Buick's version of the vaunted Malibu was a statement saying you had arrived almost. The real arrival occurred when you purchased a Cadillac.

(Interestingly, Cadillac has returned to its performance roots. Back in the early 1950s, there was a series of Caddies, like the Cadillac-Healy that offered plenty of performance and was the equal of anything that was coming out of Mercedes or BMW. Now, it is advertising itself as the performance division of GM.)

Given this scenario and the usual orthodoxy that buyers negotiate a deal, get the best pricing, arrange financing and then shake hands and put the cars on the road, the GM plan allowing dealers to buy the Saturn and Pontiac stock so that it is now used means that dealers can offer their customers vehicles that have not only had its first year depreciation taken care of, but they can also offer the buyer a used-car with a huge savings.

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