DETROIT -- General Motors Corp. will phase out its Oldsmobile division over the next several years and reduce salaried employment by 10 percent in North America and Europe next year, the company announced Tuesday.
Oldsmobile's current models will continue to be produced and sold until the end of their current product life cycles or as long as they remain economically viable.
The moves along with production cuts in Europe and North American will lead to a special pretax charge of $1.5 billion to $2.5 billion in the fourth quarter. GM also said that its fourth quarter earnings will be lower than estimates.
In recent years, GM has denied repeated rumors about plans to end the 103-year-old Oldsmobile brand. The automaker has defended its brand-management system as the best way to capture sales in a mature U.S. market for cars and trucks.
But GM president and CEO Rick Wagoner has said in the past several months that no division was sacred and each would have to prove itself over time.
In the past, a GM division was like a company within a company, handling its own manufacturing and engineering. Today the divisions -- except for Saturn -- are just marketing and sales arms, peddling vehicles from one engineering center.
Oldsmobile has been struggling as GM attempted to recast the division as an alternative to near-luxury import cars. 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 on all Oldsmobile models.
Sales for the entire year are down 18.5 percent, and last week GM said it will reduce production in the first quarter of 2001 by 15 percent from this year's total.
Oldsmobile is the oldest American automaker, started by Ransom E. Olds as the Olds Motor Vehicle Co. in Lansing in 1897. Worldwide, only Mercedes-Benz is older.
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