Saturn Hopes Broader Lineup Will Finally Send It Into Orbit
Gordon Brown is eager for the newest sport-utility vehicle to hit the crowded SUV market late this year: the affable, affordably priced Saturn Vue.
“There’s an awful lot of interest in the Vue. We’ve been getting a lot of requests for information about it after people saw it at the L.A. auto show,” said Brown, general manager of Saturn of Monrovia. “It’s going to be nice to have an additional product.”
Saturn languished with just one model for its first 10 years as parent General Motors Corp. turned its attention to developing big trucks and trying to save Oldsmobile.
After sales quickly built up from the brand’s 1990 debut to a peak in 1994, volume steadily declined for the rest of the 1990s. The original Saturn compact S-Series has never been redesigned. Its big brother, the L-Series, had a slow start in 1999 and is still selling well below initial hopes.
Worst of all, the brand that made its name as “not just another car company” has never made a dime for GM. Instead it lost $850 million last year, or $3,248 per car sold, according to a GM report obtained by Bloomberg News.
“In fairness to the Saturn brand, they’ve been assigned to operate in a segment of the market that is pretty tough to be profitable in,” said GM Chief Executive G. Richard Wagoner.
Tough enough for Cynthia Trudell, Saturn’s president (Saturn is set up as a car company rather than a division), to abruptly jump ship in March to head Brunswick Corp.’s Sea Ray pleasure boating unit. Trudell was succeeded by Annette Clayton, who previously managed a GM truck plant in Oshawa, Canada. Clayton declined to be interviewed.
“Financially, Saturn’s a drag,” said Greg Salchow, an analyst who follows GM for investment bank Raymond James & Associates in Detroit. “Their biggest problem is that they could have been profitable at least on an operating basis if they had added new product.”
Known for Customers’ Fierce Loyalty
Saturn was conceived in the late 1980s as GM’s answer to imported cars that were gobbling up market share among small and mid-size models, at the time most auto makers’ bread and butter.
Shoppers who hated negotiating with salespeople loved Saturn’s no-haggle policy, the trained-to-be-friendly staff, the jelly doughnuts at the dealerships. Saturn sits at No. 2 in J.D. Power & Associates’ coveted sales satisfaction ranking, behind only Lexus.
The brand developed a cult status among its fiercely loyal customers, many of whom gather regularly for reunions at Saturn’s original factory in Spring Hill, Tenn.
“Saturn’s not like Ford or Chevy, where you have to change the models all the time to get people in the showroom,” said Brown, who also runs Saturn of Baldwin Park. “Just being Saturn, and treating people the same, with no favoritism when they come in, is enough.”
Saturn is doing just what it’s supposed to do: bring import-inclined shoppers into the GM fold, said Jill Lajdziak, Saturn’s vice president for sales, service and marketing. Research shows that 75% of Saturn buyers would not have bought a GM car otherwise, she said.
“This brand is about innovative product, the quality of products and industry-leading customer experience,” Lajdziak said. “It’s something no other competitor has.”
Despite the lack of profit, Saturn still has a valuable place in GM’s lineup, Salchow said. “I don’t think GM would want to walk away from Saturn because of its access to customers who otherwise wouldn’t shop any other GM vehicle,” he said.
“I think they’d want to hold on to that. They’re one of the divisions that has the most growth potential.”
Nonetheless, the steady sales decline of the second half of the 1990s is only now being reversed. The market’s shift to trucks, along with vigorous competition from the likes of Volkswagen and South Korean auto makers, took their toll on the lonely Saturn S, which has never had a complete make-over in its 11 years. (Most models get them every four to five years.)
The prosperity of the 1990s and cheap gas prices also nudged consumers into bigger cars. When the L-Series was launched, behind schedule, the car was considered bland, and consumers hardly noticed.
Saturn “had an ‘invisible launch’ for the L because they thought the car was distinctive, that it would sell itself on the road after that,” said James Hall, a senior analyst at consulting firm AutoPacific in Detroit. “But it was neither. It was a classic example of how not to launch a new car.”
The L-Series, which has drawn praise for its acceleration, handling, interior space and value, is starting to attract attention. Saturn sold 11,910 of them in May, the model’s best monthly showing ever. But it was still dwarfed by sales of 39,230 Toyota Camrys and 37,954 Honda Accords the same month. It even trailed GM’s Chevy Malibu and was ranked along with GM’s Oldsmobile Alero and Pontiac Grand Am and Hyundai’s Elantra.
And the L, expected by Saturn to sell 100,000 this year, marginally higher than last year’s 94,034, is still well short of GM’s initial projection of annual sales of 180,000.
“The L-Series is just incredibly nondescript, unbelievably bland. It is absolutely indistinct,” Salchow said.
“We’ve certainly listened to that feedback,” Lajdziak said of the criticism of the L-Series.
Targeting the Small-Car Owner
Now, with the Oldsmobile brand on its way out and a new generation of GM trucks pouring into dealerships, plans are in full swing for Saturn to roll out four new vehicles in the next four years, starting with the Vue at the end of 2001. Later, Saturn will unveil a small sedan and coupe to replace the S-Series, followed by an as-yet-undisclosed vehicle.
“I’d simply say that we are very confident that it can be a good, profitable brand in the marketplace and it can grow,” GM’s Wagoner said in a recent interview. “So our strategy with regard to Saturn is to try to grow it by expanding its product lineup and leveraging what are really some great brand loyalty and customer satisfaction data and some unique capabilities on the distribution side.”
The Vue is a logical extension of the Saturn line. Though many drivers of mid-size cars stay with the category, a majority of small-car owners graduate to bigger vehicles. Studies show that 18% of people who leave the small-car segment go to SUVs, and GM wants to offer them a Saturn choice.
The compact-SUV segment is one of the few looking at significant growth, estimated by Saturn to balloon from 300,000 today to 850,000 in five years.
The Vue is a sleek, low-lying SUV with gentle curves presenting a softer image than those SUVs built to look like rugged off-roaders. It has several powertrain combinations: 2.2-liter four-cylinder and 3.0-liter V-6 engines pushing out 138 to 181 horsepower, with automatic or manual transmissions and front-wheel or all-wheel drive.
It also will be the first American car to offer a continuously variable transmission, a mileage-enhancing technology in which gears shift incrementally so there is no discernible jerk between gears.
Like its Saturn brethren, the Vue will have polymer side panels that practically eliminate parking-lot dings and dents.
It also has Saturnian attention to ergonomic details, such as a low step-in height that is more like a car’s than a truck’s, and floodlights that illuminate the area under the rear gate when lifted.
The Vue is expected to come in at under $20,000, going up against the Honda CR-V, the Toyota RAV4 and the Subaru Forester.
“The only thing that could mess it up is pricing,” said analyst Hall. “If they get that right, the 50,000 annual forecast will be grossly overrun. If they built 120,000 of them a year, they could sell them all.”
And Saturn would no longer be GM’s neglected child.
New View
GM’s import-fighting Saturn brand quickly grew to record sales in 1994, but declined in the late 1990s as consumers gravitated toward trucks and Saturn added no new products to its single compact car. Saturn hopes that as more customers pay attention to the mid-size L-Series and the new Vue compact sport-utility vehicle, the brand’s sales will grow dramatically.
Sales in thousands
2000: 271,800
Source: Autodata
