GM Under Government Pressure To Consider Shedding GMC - Sources

General Motors Corp. (GM) is under pressure from the government to consider shedding its GMC brand as the company races to transform itself by June 1, people familiar with the discussions said.

The brand, comprised mostly of pickup trucks and sport-utility vehicles, was slated to remain a part of GM even if the company restructured. However, the U.S. government is not convinced that GMC has a viable future with the struggling auto maker, according to people familiar with the talks. GM is already in the process of shedding its Hummer, Saab and Saturn brands, which have been hurt by slumping sales.

A spokesman for the auto maker on Thursday said the company's strategy, which includes combining Buick, Pontiac and GMC into a single sales network, remains unchanged. A decision on the GMC brand's future has not yet been reached.

The future of GMC is being discussed this week as GM meets with officials from President Barack Obama's automotive task force, which is overseeing the company's restructuring, people familiar with the talks said.

The move would be a major step beyond the downsizing GM had been planning as part of a government-mandated downsizing of the business.

The pressure to divest GMC shows just how far the government may be willing to go to push GM into restructuring itself into a profitable company. The Obama administration is now a player in the auto maker since GM is asking the U.S. Department of Treasury for access to low-interest loans to keep its company out of bankruptcy. Bloomberg News first reported GM was considering axing GMC along with the much smaller Pontiac brand

The White House last month shot down GM's recovery plan as insufficient and gave the company until June 1 to come up with a more satisfactory strategy or face bankruptcy.

"GM is continuing with its strategy to complete the channeling of Buick, Pontiac and GMC," GM spokesman Tom Wilkinson said Thursday.

GMC sales fell 25% in 2008 as the economic slump and volatile gas prices drove down demand for pickup trucks and SUVs. The company's overall sales fell 22%. GMC accounts for around 12% of GM's sales, far larger share than the other brands GM plans to shed. The GMC vehicles also tend to deliver higher profit margins.

But as pressure mounts for GM to slash costs and deliver a more fuel-efficient lineup, GMC has become a target. GM said on Wednesday it has several potential buyers for its Saturn brand, and the company said last month it's received interest in Hummer as well.

-By Sharon Terlep; 248-204-5532; [e-mail].