General Motors has announced that it will be eliminating the Pontiac brand as part of an accelerated restructuring plan aimed at avoiding bankruptcy and keeping Detroit's largest automaker viable in the years to come.
Along with the nameplate, GM says it will cut 21,000 hourly workers by the end of 2010, a 34 percent reduction, and reduce the number of manufacturing facilities it owns from 47 to 34.
The company will also be trimming the number of dealerships that sell its vehicles to 3,605 from 6,246 in 2008, a reduction of 42 percent that reflects the recent drop in sales.
Further cuts will follow over the next few years, with an additional 3,000 jobs made redundant as GM brings its total number of factories to 31 by the end of 2012.
The struggling automaker announced details of its plan on Monday as it made an offer to its bondholders to swap debt for company stock. GM owes $28 billion to large and small bondholders, and under Securities and Exchange Commission rules, it must disclose its operational plans when it makes an exchange offer.
Efforts in the last few years to market Pontiac as performance-oriented brand failed. The company had said it wanted to keep Pontiac as a niche brand with one or two models, but is buckling under tremendous government pressure to consolidate its eight brands, several of which lose money.
Chief Executive Fritz Henderson has said the company will go further and faster in making its cost cuts to reduce the number of cars and trucks it needs to sell to break even. One of the people briefed on the plan said GM will accelerate many cuts previously planned for 2014 to instead take place between now and 2010, although specifics were not available.
The people said GM won't have much new information on Hummer, Saturn or other brands, including Europe's Opel. GM has indicated it wants to focus on four core brands, Chevrolet, Cadillac, GMC and Buick.
GM is living on $15.4 billion in government loans and faces a government-imposed June 1 deadline to restructure or go into bankruptcy protection.
The government's restructuring demands include swapping at least two thirds of GM's unsecured bond debt for equity in the company. Such a move would help GM straighten out its debt-laden balance sheet.
Chrysler LLC, which is living on $4 billion in government loans and is expected to get $500 million more, faces a Thursday deadline to restructure and ink an alliance deal with Italian automaker Fiat SpA. The government also wants Chrysler to exchange much of its $6.9 billion in debt for equity in the company, but with the deadline fast approaching, Chrysler and its secured debtholders remain far apart.
Both GM and Chrysler also must win concessions from the United Auto Workers union.
The UAW said late Sunday it reached agreement on concessions with Chrysler, Fiat and the U.S. government. Fiat CEO Sergio Marchionne was in the U.S. as talks continued for the automaker to take a 20 percent stake in Chrysler in exchange for its small-car technology.
The Associated Press contributed to this report.Click here for more auto news from FOX Car Report.