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Saturn: Can GM Renew the Affair?


 

2006 New York Auto Show Coverage by TCC Team (4/10/2006)

 

Daily Edition: Apr. 11, 2006 by TCC Team (4/10/2006)
Saturn Outlook, Aura and Sky Red Line for New York.

 

 

by Ken Zino

 

With the introduction of the Sky performance convertible, Aura mid-size sedan, and Outlook crossover, and hybrid production and concept versions of the Vue compact SUV at the New York International Auto Show, GM is pouring more product development money into its Saturn brand at any time since its $3.5-billion debut in 1990.

 

And it’s not a moment too soon. After peaking at 286,000 units in 1994, Saturn sales have been basically drifting downward to 214,000 in 2005. During the first quarter of this year, Saturn sold 47,000 vehicles. In an attempt to counter the trend, Saturn will add those five new vehicles to its lineup by the end of this year.

 

“Our owners don’t want us to lose the honesty of our brand, how we do business without haggling,” says Jill Lajdziak, Saturn general manager. “But they do want a different more dramatic look and feel.”

 

Maybe so, but the plan to retain the four million Saturn owners on the road while attracting new ones is potentially a deal with the devil — one that trades Saturn’s autonomy and uniqueness for a common corporate platform approach with some products virtually identical to Opel versions in Europe.

 

Given GM’s own struggles with supplier Delphi, overall declining market share, and plans to shut a dozen or so factories and make redundant 30,000 workers in North America , the company has no choice but to continue its ongoing forced march toward commonality. GM lost $10.6 billion in 2005, and is scrambling to pare its engineering, material, and personal costs. It’s abundantly clear why GM needs to avoid duplication of work, cut costs, and increase revenue. With this round of products, Saturn is now fully integrated into the GM product development mainstream.

 

“Like always, like never before” is the tag line of a new advertising campaign that kicks off next month, says Lajdziak, who insiders claim has done more to keep Saturn alive during the past three years than any other GM executive.

 

“Like always” means that Saturns will continue to be sold by 225 exclusive dealers with 440 outlets. “Like never before” means the cars are no longer unique and no longer inexpensive as the brand is being repositioned upward as a sort of sporty European line. The Sky and Aura were developed by Opel. Even the innovative plastic panels that resist dents and still make ten-year-old SL models look new are an endangered species, since unique body parts are the anathema of the continued push for commonality that will come with the next-generation Ion, based on the Opel Astra.

 

Gone too are the unprecedented profit-sharing labor agreement with the United Auto Workers union. Even the exclusive plant operation in Spring Hill , Tenn. , that was once going to revive American manufacturing with its Toyota-like approach is currently without replacement products, and faces an uncertain future as GM struggles to revive its fortunes. The first shift that makes the Ion will be laid off at the end of this year, and the future of the plant, which also makes the Vue, will likely be determined by UAW contract talks in 2007. Whatever the outcome, Saturn products will no longer come from an exclusive plant.

 

2007 Saturn Sky Red Line This begs the real question: what’s left for existing or potential Saturn customers? Can GM provide compelling reasons to buy a new Saturn other than its ongoing “no haggle” selling philosophy, the cornerstone of the original success? Even here, the current “value pricing” at other GM brands is only a half step away from no haggle itself, awaiting only a bold and therefore highly unlikely move at GM to go all the way.

 

The Sky just now on sale and still in the ramp-up stage of production is “sold out for months.” It’s a great image-builder. Contrary to conventional industry wisdom, the Red Line version quickly follows this summer. Lajdziak says by splitting the volume with the nearly identical Opel GT versions, there’s money in the plan to do something other than the usual performance version to promote the sports car after the initial glow wears off. We’re speculating on a coupe version shared with Pontiac and Opel in three years or so.

 

The Aura sedan, deliberately delayed for months according to insiders, to put more emotion into it, looks like a $30,000 sedan and is clearly a much better product than the disastrous L-Series that was cancelled early for lack of interest. Time will tell whether this is a rebirth. Critics say it could be a re-run of the end at Oldsmobile, when that division had the best product lineup in decades but nobody in the market cared.

 

The Vue mild hybrid looks to be the lowest-cost hybrid-powered SUV in the market, starting at less than $23,000, and offering fuel economy improvements of about 20 percent in stop and go driving estimated by GM at 27 mpg city. It uses a combination electric motor/generator mated to a 2.4-liter four-cylinder engine and four-speed automatic transmission. If Saturn can get the word out, this one could be a big, big success.

 

This leaves the Outlook, a three-row, eight-passenger crossover, the last product into an overcrowded segment that still thinks crossovers should be SUV-like. The Outlook goes into production late this year in Michigan . Along with the Buick Enclave and GMC Acadia, the Outlook faces brutal competition.

 

Nevertheless, GM has no choice but to see this strategy through, and hope that in a marketplace over-crowded with established offerings some of the old Saturn magic will reappear.

 
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