Who's going to fix my Pontiac?

John W. Schoen Senior producer • Profile • E-mail

With Chrysler now in bankruptcy court fighting for its life and GM slashing operations as it runs low on cash, owners and potential buyers of GM the car makers vehicles are understandable nervous about whether their warranties are still good. For now, at least, they're covered.

Now that GM is dumping Pontiac will anyone take care of the cars still under warranty?
— J. M. Miami, Fla.

With Chrysler now in bankruptcy court and GM running out of cash, owners of those model cars are covered in the short term. On Friday, the judge overseeing Chrysler's bankruptcy filing approved the company's request to continue funding its warranty programs for new and existing cars and trucks. Without those warranties, Chrysler says, it would make buying one of their cars an even tougher sell for dealers.

GM, meanwhile, has decided that after an 83-year run, Pontiac will come to the end of the road by the end of next year. General Motors had hoped to keep Pontiac going as a “niche brand.” But the collapse of car sales and the years of over-reliance on gas-guzzling SUVs and light trucks have forced big cutbacks to keep the company from running out of gas completely.

The brand enjoyed its heyday in the 1960s, when cheap gas prices and advances in engine design spawned an era of high-performance “muscle cars” that included the Grand Prix, Firebird and GTO. In the 1970s, Pontiac kept the brand’s success rolling with the Grand Am and Trans Am models.

But the brand entered a steady decline in the '80s and '90s, and GM was never able to get it back on track. Last year, Pontiac's market share slid to 2.1 percent — down from from 3.1 percent in 2002, according to industry tracking firm Edmunds.com

Pontiac isn’t the only brand that will be left by the side of the road. GM says it is going to focus its limited capital on just four core brands: Chevrolet, Cadillac, Buick and GMC. That means Hummer, Saturn and Saab will also be sold off or shut down. (The company has not announced final plans for those operations.)

According to the company’s Web site, Pontiac warranties are still good and the cars will continue to be serviced by GM dealers. Since 85 percent of Pontiacs are currently sold through combined Buick-Pontiac-GMC dealers, most people won’t have to find a new place to get service. GM says there are about 1,600 of these combined dealerships in the United States and that Pontiac parts will continue to be available “for the foreseeable future.”  Even if GM dealers eventually discontinue stocking parts for older Pontiac models, aftermarket parts makers will likely fill the void.

For other questions about the care of your Pontiac, you can give GM a call at 1-800-762-2737. (Try 1-800-263-3777 in Canada or 01 800 466 08 08 in Mexico.)

I am continually puzzled by this notion of certain financial institutions being "too big to fail."  Who or what entity made that arbitrary decision? Is there the possibility these firms will be broken up?  As an example, Fannie Mae and Freddie Mac could easily be broken up along the lines of the Federal Reserve districts. 
— Tim V., Grandview, Wash.

Of course no financial institution is too big to fail. Some of those now on government life-support have already failed. If or when they emerge again as going concerns they will be much smaller and pose much less risk of doing further damage to the global financial system and the economy. The ongoing shrinking of the banking industry may provide the best solution in the short term.

While there are measures in place to cope with the failure of a bank insured by the Federal Deposit Insurance Corp., the same is not true for hedge funds, investment banks, insurance companies and other financial institutions that making a living taking on risk. As regulators sift through the wreckage of the financial meltdown, that’s one big problem they’re hoping to correct.

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