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Saturn's rebirth vexes Chevy dealers

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Saturn's rebirth vexes Chevy dealers

Leslie J. Allen

Automotive News / February 20, 2006 - 6:00 am

Saturn dealer John Bergstrom is facing an unexpected dilemma. Weeks before the Sky roadster hits the showroom, it is generating so much buzz that he has started a waiting list at all six of his stores.

"Sky is just a flat-out home run," said Bergstrom, chairman of Bergstrom Automotive in Neenah, Wis. "I've never had that before. They've never even considered a Saturn."

Waiting lists are unfamiliar for Saturn, sometimes dubbed the brand for people who don't like cars.

General Motors is pouring money into the 16-year-old marque, hoping that a new arsenal of Euro-look vehicles will help Saturn steal buyers from the imports. The Sky debuts in the spring, followed by the Aura mid-sized sedan and the Outlook eight-passenger wagon.

But nagging questions remain: Will sales rise enough to justify Saturn's fatter marketing budget at a time when Pontiac and Buick must trim their own ad campaigns? And is Chevrolet, GM's strongest and biggest mass-market brand, actually a better candidate to battle the imports?

Chevy dealers say they could easily fit mid-priced vehicles like the Outlook and Aura into their lineups. They also note that GM is promoting Chevrolet as its mass-market global brand.

However, Saturn does have two big factors working in its favor: a group of dealers who enjoy bulletproof customer satisfaction ratings and some ability to attract America's import owners.

In the 2005 model year, 6.8 percent of Saturn sales were import conquests, according to R.L. Polk & Co. of Southfield, Mich. Polk defines a conquest as a customer who replaces or supplements an import with a newly purchased Saturn.

By contrast, import owners accounted for 13.6 percent of Hummer sales and 20.0 percent of Saab sales. But those are low-volume products.

It makes more sense to compare Saturn with Chevrolet. According to Polk, import owners accounted for 4.3 percent of Chevrolet's sales.

That's a fair number of vehicles but cold comfort to Chevrolet dealers who have complained quietly for years that an unprofitable Saturn sucked resources away from their brand.

If Saturn "is not making money, it shouldn't be anointed with such wonderful product," said Gordon Stewart, president of Stewart Management Group in Harper Woods, Mich., which has GM stores in Michigan and Florida. "Why does it continue to be fed at the expense of the other divisions?"

GM does not disclose the financial performance of individual brands.

Mike Maher, owner of Maher Chevrolet in St. Petersburg, Fla., said that if GM were to take what it spends on Saturn and put it into Chevrolet products, "you probably would have sold twice as many. If you take it away from a very strong division and give it to a weak division, you've likely diluted your outcome."

Happy customers

But if one judges Saturn by its customer satisfaction ratings, the division looks strong. Last year, consumers ranked Saturn ninth among all brands in sales satisfaction, as measured by J.D. Power and Associates.

The top eight were all luxury or near-luxury marques.

In addition, Saturn ranked third on J.D. Power's customer service index, which gauges the satisfaction of owners who visit service departments.

"Its reputation was based on customer satisfaction," said Tom Libby, a J.D. Power analyst. "Now they're adding this new dimension, which is styling. They have a challenge in doing both. I hope they will maintain a focus on customer relations because they've established that."

Saturn Marketing General Manager Jill Lajdziak said that relationship is Saturn's brand equity and the reason for GM's new investment.

According to GM's internal data, more than 70 percent of customers who buy Saturns would not have considered a GM brand otherwise, and about half of that number would have bought an import instead. Those statistics have held steady over the years, Lajdziak said.

"We've had strategies in place to make sure that we appeal to that intender who might be a little more import-predisposed," she said.

"It doesn't make sense for us to take business from Chevrolet or Pontiac or any of the other great brands within the GM family,"

Lajdziak said. "What we've got to do is bring in a different demographic and a different intender."

Different customers

The demographics of Saturn buyers do not appear to be all that different from those of Chevrolet buyers. Polk data show no significant difference in household income, for example.

But Bergstrom said his network of 22 GM dealerships draws different types of customers to the two brands. Trucks account for 65 percent of his Chevrolet sales, he said. Saturn, on the other hand, is an entry-level, value-priced product.

"A Chevrolet owner is a true-blue, bow-tie America consumer," Bergstrom said. "The Saturn guest is a little different guest. They might buy an Asian car or a Korean car or a Saturn. They are very much into safety and value, and how they're treated is critically important. I don't think we'd get those kinds of people in our Chevy stores if we didn't have the Saturn brand."

Jim Hall, an analyst for AutoPacific in Southfield, Mich., said he disagrees with the notion that investments in Saturn have siphoned money away from other GM brands.

Hall said that GM is investing in entire platforms, not just in Saturn, and that Chevrolet, Pontiac, Buick and GMC all have benefited.

For example, the Saturn Outlook shares GM's Lambda architecture with the basis for the upcoming Buick Enclave and GMC Acadia crossovers. The Saturn Sky has the same mechanicals as the Pontiac Solstice.

"Tell me how this is bad for these guys," Hall said.

No more Oldsmobiles

Other arguments aside, GM has no choice but to build up Saturn, said Art Spinella, president of CNW Marketing Research in Bandon, Ore. "You certainly can't terminate Saturn, because it's way too expensive, as they found out with Oldsmobile."

What role should Saturn play? Spinella said he believes there is nothing in the lineup that wouldn't fit with Chevrolet or Pontiac.

Perhaps GM should focus Saturn on "lifestyle" vehicles such as those designed for tuners - enthusiasts who currently opt for Honda, Mitsubishi or Subaru. Saturn took a step in that direction with the Sky and with its Red Line high-performance vehicles, Spinella said.

"One of the things they can do to distinguish themselves from the rest of General Motors is to be kind of the Scion of General Motors," he said. "You concentrate on lifestyle rather than on demographics in the old sense. Previously, Saturn wasn't distinctive in any way other than the sales environment."

The Sky might offer an interesting test of the brand's appeal to tuners. Can Saturn shed its fuddy-duddy image? Bergstrom seems to think so. He said he likes the idea of marrying Saturn's people-friendly philosophy with a potentially hot lineup: "This is going to be a real positive recipe, I think."

Link: http://autonews.com/apps/pbcs.dll/article?...B/60217086/1078

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If there's any dealership group that should complain about Saturn, it's Pontiac (or B-P-G). Chevy gets plenty of attention already.

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I know things are different in the States where many of the Pontiac and Buick dealers stand alone, but in Canada where P-B-GMC have been an entity for years, the situation is a little different. The Chevy stores up here used to have Oldsmobile, now we have lost a lot of our customer base (hopefully) to the P-B stores. The strongest stores in Canada are the P-B-GMC stores. Model for model, they have matched everything Chevy has (Wave, Torrent, Pursuit), have vehicles Chevy doesn't (Vibe) and then have the Buick line up to draw from, too!

I'm all for more products at Saturn and other makes - as long as they are noticeably different than what Chevy has to offer and not just half-fast rebadges.

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Is Saturn trying to be more like Honda or Toyota or is it trying to be more like VW or Acura?

I think Saturn should be selling VW or Acura sophistication at Toyota prices.

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im for saturn buliding a name but not in chevy's expense

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