After 103 Years, GM to Shelve Oldsmobile

Having failed to reinvent Oldsmobile as a hip car division that appeals to younger buyers, General Motors Corp. will announce today that it is eliminating the 103-year-old brand, sources at GM said.

Chief Executive Rick Wagoner and Ronald Zarrella, president of GM North America, at a morning press conference are expected to declare the end to a marque that as an independent company was a founding member of the firm that went on to become General Motors, the largest auto maker in the world.

Dealers will hear about the Oldsmobile decision simultaneously from other GM executives who will address them nationwide via closed-circuit television.

“We’re announcing it upfront and doing it, rather than setting it up for months and then saying it’s done,” said one source, who would not be further identified.

“This has been done with other companies, so it’s not new,” said the source, referring to DaimlerChrysler’s decision in recent years to do away with the Plymouth and Eagle brands. GM itself quietly phased out the Geo brand a few years ago.

The company issued a statement Monday saying there would be “a significant announcement regarding GM’s global business operations.” There will be other moves regarding cost cutting in North America and Europe, the source said.

Wagoner “has been on the job as CEO for about six months now, and this is kind of his coming out,” the source said. “The message is this is not business as usual anymore. It’s all about getting costs under control.”

Despite a torrid U.S. market that is expected to eclipse last year’s record for new cars and trucks sold, Oldsmobile sales fell 18.5% from January through November compared with the year-earlier period. That marks the second-worst decline in the U.S. market after Plymouth. Market share for the 11 months fell to 1.6%, down 2.1% year over year.

“We have a big problem with awareness,” said Oldsmobile spokesman Gus Buenz, reached Monday night by telephone. “We’ve got good product, but not enough people know about it.”

Buenz would not confirm today’s announcement, but he acknowledged that although Oldsmobile’s efforts to attract younger buyers have been successful, they have fallen short of hopes.

“Twenty-five percent of our buyers are 35 years of age or younger. Our customers’ average age is 49, and that’s down from 60 in 1996,” Buenz said. “But there aren’t enough of them. There aren’t enough people who know what we are and what we’re about.”

GM executives acknowledge that Oldsmobile has suffered from an old-fogy image. To reverse that, the auto maker tried to transform Olds into a hip brand among youth, sponsoring Olympic beach volleyball and rock concerts.

But sales have nonetheless sunk, and discounts have set in. Oldsmobile is offering customer incentives of $750 on its compact Alero and mid-size Intrigue, $1,000 on the Silhouette minivan and Bravada sport-utility vehicle, and cheap financing on the full-size Aurora.

The company was formed by Ransom E. Olds in 1897, and taken over by investors in 1904 when Olds left and formed REO. The legendary Billy Durant bought Oldsmobile in 1908, combining it with Buick--and thus GM was born.

Earlier Monday, GM shares gained 56 cents to close at $51.56 on the New York Stock Exchange.