- The Washington Times - Wednesday, December 13, 2000

DETROIT Oldsmobile, the oldest brand name in the U.S. auto industry, will die a slow death over the next several years as General Motors Corp. spends its money on brands with less history and more future.
The world's largest automaker also said yesterday that it was cutting 13,700 jobs from its payrolls in North America and Europe, and trimming production.
The decision to kill Oldsmobile, reminiscent of DaimlerChrysler's abandonment of the Plymouth brand last year, was an admission from GM that its best efforts to revive the brand once synonymous with middle American prosperity failed.
"We had a good core to position the brand around," said GM President and CEO Rick Wagoner. "Where we fell short was bringing in the degree of the customer base we wanted."
Oldsmobile's current models will continue to be built and sold as long as GM can make money on them. The 2002 Oldsmobile Bravada sport utility vehicle coming out next year will be the last new Oldsmobile model.
Like other GM divisions, Oldsmobile used to be a company within a company, with thousands of employees and responsibility for its own engineering and manufacturing. But GM's divisions today with the exception of Saturn are just marketing and advertising arms that sell vehicles designed by a corporate center; the modern Oldsmobile has about 50 employees.
Mr. Wagoner said the decision to kill Oldsmobile was made now because it was clear GM could spend its money more wisely supporting its other brands, such as its new Hummer truck lineup. The biggest gains may go to Saturn, which has had success at luring import buyers to GM.
In recent years, GM has denied repeated rumors about plans to end the 103-year-old Oldsmobile brand. But Mr. Wagoner has said in the past several months that no division was sacred and each would have to prove itself.
Mr. Wagoner said yesterday that Oldsmobile had been unprofitable for some time.
"We tried to do a very difficult thing, which is to move away from our customer base," said Ron Zarrella, president of GM's North American Operations. While the new Oldsmobile customers were younger and more educated, "the problem is there weren't enough of them."
Oldsmobile is the oldest American automaker, started by Ransom E. Olds as the Olds Motor Vehicle Co. in Lansing, Mich., in 1897. Worldwide, only the Daimler name of Daimler, Mercedes-Benz and now DaimlerChrysler is older.
After four years of selling cars to the wealthy, a factory fire forced Olds to build the only model he had left, a tiny runabout with a one-cylinder, 5-horsepower engine. The Curved Dash model sold for $650, a bargain at the time, and by 1904, 12,500 Curved Dashes had been sold.
In 1908, Olds' company was absorbed into GM. It soon assumed its place as the middle-class, middle-age car in GM's lineup more expensive than Chevrolet and Pontiac and just a step below Buick and Cadillac.
Oldsmobile grew steadily over the years and in 1977 became the first GM division outside Chevrolet to sell more than 1 million cars. Its high point was 1985, when it built 1,168,982 vehicles.
But since then, Oldsmobile has been in a slow downward spiral. Buyers have moved from the midsize cars that Oldsmobile was known for to minivans and sport utility vehicles.
Imports and "transplants," cars from import automakers built in the United States, took larger shares of the midsize market.
Oldsmobile tried to follow the trends, adding a minivan and an SUV, but it had to share those vehicles with other divisions. GM also has struggled to shed the image of Oldsmobile as a car for older people and dropped popular but plain models like the Cutlass Ciera and the Eighty Eight in favor of sleeker, more luxurious cars like the Aurora and Intrigue.
But those models have not caught on. Oldsmobile sales totaled 352,197 in 1999, and through November the brand had sold 265,878 vehicles an 18.5 percent decline. November sales were down 28 percent, despite an incentive program that lets buyers forgo a down payment, monthly loan payments and interest charges for one year.
The death of Oldsmobile is "unfortunate, because the Olds brand on the car side had some of the better products in GM," said Wes Brown, an industry analyst with Nextrend. "It's just that no one 45 and younger wants to be seen driving an Oldsmobile."
The other moves GM made affected a wider swath of the company. GM said it will cut salaried and contract workers in North America and Europe by 10 percent, or 7,700 jobs. Those jobs will be eliminated through attrition or early retirement.
GM also said it was reducing hourly jobs in its U.S. plants by 4,000, including the idling of an engine plant in Lansing, Mich., and previously announced production cuts at Saturn plants in Wilmington, Del., and Spring Hill, Tenn. Those workers will receive 95 percent of their regular pay under contracts with the United Auto Workers and may be placed into a jobs bank where GM would offer them jobs in other plants.
GM also said it would end production at its car plant in Luton, England, in 2002. That move will cut 2,000 jobs. GM has 388,000 workers worldwide.
"We're doing this to get faster and leaner in an ever more competitive environment," said Mr. Wagoner.
The moves will lead to pretax expenses of $1.5 billion to $2.5 billion in the fourth quarter. GM said that its fourth-quarter earnings before the charge will be between $550 million and $600 million, or $1.10 to $1.20 per share far short of current Wall Street expectations of $1.70 a share, and the $1.1 billion it earned in the fourth quarter of 1999.
Automaker earnings have been under pressure, as sales incentives remain high while the U.S. market for new vehicles slows down.

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