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YSSMAN
Pretty close, but I prefer to say straight up that GM mismanagement is what killed Pontiac, via what I like to call "brand dilution".
Remember, until the mid-70s, each of GM's brands were extremely distinct. They had their own styling studios and even engineering staffs turning out their own stuff. Buick, Oldsmobile, and Pontiac used significantly different engines that Chevrolet, and sometimes differed among themselves as well, while GMC was usually "Chevy Truck +1", with a few unique ideas such as their mega-displacement V6 engines. Inefficient, perhaps, but it gave buyers a reason to choose one over another depending on what they needed, wanted, and were willing to spend.
Then, someone somewhere decided that inefficiency wasn't worth its benefits to brand differentiation, and so all GM brands, at least to a significant degree, would share bodyshells and running gear. Furthermore, they decided that, in order to be all things to all people, every possible brand should have a version of every possible car, which leads to things like selling the same car under four different names with, often, only superficial differences. Additionally, in order to achieve even greater practicality and efficiency, every car would be designed by criteria, with differentiation being reduced to throwing a few brand cues on a common overall shape and putting a nice shiny bow tie, arrowhead, or coat of arms on it. Don't believe me, read
Car Guys vs. Bean Counters: The Battle for the Soul of American Business by Bob Lutz. He saw it from the inside in full detail.
And that's how Pontiac went from selling low-budget luxury coupes and factory racers to selling slightly "sportified" versions of mind-numbing Chevrolets. My own car is a perfect example: the Pontiac Sunbird was just a Chevrolet Cavalier wearing a polo shirt and slacks for a job interveiw. In every detail related to going, stopping, or turning, it was the same car, and you could probably get a lot of the same equipment too. GM's minivans are another: From the beginning, the same car was sold as a Chevrolet, an Oldsmobile, and a Pontiac, and after Oldsmobile was cut, they added a Buick version and a Saturn version for the vehicle's third generation. The Chevrolet Equinox could also be had as a Pontiac. The Solstice had a Saturn variant, which I honestly think looked better than the Solstice anyway. They did occasionally throw the performance/practicality buyer a bone, such as with the Torrent GXP, or the performance variants of the FWD Grand Prix that could easily outrun any Chevrolet or GMC (and perhaps sometimes Buick) product on the same platform until the Impala and Monte Carlo got the 231/SC, but for the most part Pontiac had become an empty shell kept around to attract incremental volume. The image of performance remained, carefully maintained by what little advertising GM still did, but the cars were boring enough to pass muster as rentals - and very often, they did.
Meanwhile, along comes the Aztek and, instead of cashing in on the midsize crossover trend that was about hit the scene, it sponged up desperately needed moniez while scaring away potential buyers with its high price and wretched styling.
Perhaps if the Aztek had been better planned (and styled), if the recession had happened a little later, or if GM had started to shore up its legacy cost issues sooner, Pontiac could have been saved, but as it is, when the excrement finally hit the rapidly rotating blade assembly, Pontiac was still a bit too close to ground zero. With a blend of performance and practicality seemingly finding less and less favor by the day (at least if this site is an accurate view of mainstream car enthusiasts), they just weren't worth trying to save at that point.
According to Bob Lutz, Pontiac was to receive a major overhaul of it's lineup. All RWD lineup, ATS based G6, new GTO, etc.
It was the government that told GM "No bail out money unless Pontiac goes".
China was the reason Buick was rescued from the gallows, even though Tiger Woods couldn't even sell them in the US.
I'm almost willing to call conspiracy on that one. Well, maybe not conspiracy, but perhaps opportunism. I mean, come on, one of the most leftist administrations in history making the removal of the company's low-budget performance brand a condition of assistance? Seems to me those people knew about GM's plans for Pontiac, and didn't like the idea of a "car guy's perfect lineup" actually making it into production.