Here are some of the questions facing Oldsmobile now that General Motors has announced plans to kill its oldest marketing division:
How long will GM produce Oldsmobile cars and trucks?
GM says it plans to continue selling Oldsmobiles as long as demand warrants. Sales could continue for as long as three years, said Ron Zarrella, president of GM North America. The redesigned Bravada, due in showrooms in the first quarter, will be the last new model.
Demand could dry up fast if dealers immediately give up on the brand. GM says it will fight this tendency.
What happens to Oldsmobile dealers?
Their outlook is grim. The value of the stores has plummeted. GM says it has started a crash program to contact dealers and begin efforts to wind down their dealerships, said Darwin Clark, general manager of dealer affairs.
Some dealers could receive other GM franchises. This will be difficult, however, because GM has too many dealerships in many areas. Under the Oldsmobile franchise agreement and various state laws, GM likely will compensate dealers for various items, such as special tools, unsold inventory and lease and mortgage payments, said Walter Forehand, an auto franchise attorney in Tallahassee, Fla.
How many Oldsmobile dealerships are there?
2,800. However, only 63 are stand-alone stores. The rest are dualed with another GM or non-GM franchise.
Will Oldsmobile dealers sue GM?
Count on it. Many dealers are outraged that their businesses were, in effect, canceled without warning. Much depends on what sort of compensation GM offers dealers. GM's plans are hazy because GM made the final decision to pull Olds' plug within the past two weeks.
A key issue will be who will compensate Oldsmobile dealers for so-called blue sky, the intangible value of such things as their location and the loyalty of customers. Attorney Forehand expects much litigation over blue sky.
GM said last week it will take a charge against earnings of up to $2.5 billion to cover restructuring costs. It is unclear how much of that will cover Oldsmobile, however, because it also will cover layoffs, plant closings and certain legal matters announced last week.
How will GM try to keep Oldsmobile customers?
GM sent letters to 700,000 Oldsmobile owners last week to explain the situation. It is offering Oldsmobile customers $1,500 to buy a new Oldsmobile or $1,000 for another new GM vehicle.
Clark said GM will continue substantial efforts to sell Oldsmobiles as it winds down the brand and its dealerships. The company does not plan to steer customers to other GM dealerships, he said. Oldsmobile advertising will shift from building the brand to promotions.
Which GM brand stands to benefit from the death of Oldsmobile?
Saturn. Oldsmobile was pitched as GM's import fighter. With Oldsmobile gone, Saturn will inherit its mission. Saturn will get a new sport-utility, the Vue, due in fall 2001 at around $20,000. A minivan is expected in the 2003 model year.
However, the company said it does not plan to add more Saturn dealerships as Oldsmobile is wound down.