End Of The Road For Olds
Sagging sales and waning appeal led General Motors Corp. to announce that its Oldsmobile division had come to the end of the road Tuesday, CBS News Business Correspondent Anthony Mason reports.
The elimination of Oldsmobile is part of a sweeping restructuring at GM, which will eliminate nearly 14,000 mostly white-collar workers jobs in the United States and Europe.
"We stretched to find profitable ways to ways to further strengthen the Oldsmobile product line, including developing products with our global alliance partners, but in the current environment there was no workable solution," GM president and CEO Rick Wagoner said Tuesday.
"We're doing this to get faster and leaner in this ever more competitive marketplace," said Wagoner.
In recent years, GM has denied repeated rumors about plans to end Oldsmobile. But Wagoner has said in the past several months that no division was sacred and each would have to prove itself over time.
Oldsmobile was founded in 1897 by Ransom E. Olds, who started by selling cars to the wealthy before developing a small, cheaply-priced car called the Curved Dash that found a market waiting for cars they could afford.
In 1908, Olds' company was absorbed into GM.
It soon assumed its traditional place as the middle-class, middle-age cars in GM's lineup — more expensive than Chevrolet and Pontiac, just a step below Buick and Cadillac. It spawned a number of popular songs, including In My Merry Oldsmobile and Rocket 88.
Oldsmobile sales peaked in 1985 at more than a million cars, but it's been downhill ever since.
Since the mid-1980s, buyers have moved from midsize cars that Oldsmobile was known for to minivans and sport utility vehicles, and from American brand names to foreign car brands.
Oldsmobile tried to follow the trends, adding a minivan and a SUV, but it had to share those vehicles with other divisions.
GM has also struggled to shed the image of Oldsmobile as a car for older people — remember the ad line "Not Your Father's Oldsmobile?" — 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.
Just 300,000 were sold this year. GM tried everything to revive the brand, even organizing pep rallies for it's dealers, but nothing worked. GM was spending about $3 billion to keep the division going and losing money on every car it sold.
Some analysts think its longevity might have been part of Oldsmobile's problem.
"Oldsmobile got old," said Wendy Needham of Credit Suisse First Boston. "It aged. It didn't change with the times. It didn't grab the American consumer the way a lot of other products out there did."
The brand will be phased out gradually. Analysts say it will all be over for Olds in two years.
"I'm sorry to see it go, but this is definitely the right decision for General Motors," said Needham.