DETROIT -- General Motors Corp.'s Saturn unit is set to be sold to a new owner later this year, but any road to recovery for the slumping brand will be challenging.
Known for no-haggle pricing of inexpensive small cars, Saturn has for years struggled to escape its niche by building a broader customer base.
Known for no-haggle pricing of inexpensive small cars, Saturn has for years struggled to escape its niche by building a broader customer base.
Though its fortunes soured further in December, when GM said it would sell or close Saturn, they got a boost June 5 when Penske Automotive Group Inc. -- the big chain of auto dealerships owned by motor-racing mogul Roger Penske -- struck a deal to buy the brand. "We were on death row," said Saturn Marketing Director Kim McGill, in an interview. Now, the brand is in "remission," thanks to Mr. Penske, but "is not yet totally cured," she said.
Scott Davies, owner of Saturn of Wichita, Kan., continues to tout Roger Penske's plan to buy the brand, which GM has asked dealers not to overplay.
To spark interest and remind consumers that Saturn is still alive, its dealers have kicked off a new marketing campaign built around the slogan, "Wonder where the car business is headed? It's here." The slogan will be used on banners across Saturn storefronts and in a spate of email blasts, Facebook blogs and direct communications with buyers.
In the second week of July, GM will start advertising deals on Saturn vehicles in a bid to clear dealer inventories, Ms. McGill said.
In the second week of July, GM will start advertising deals on Saturn vehicles in a bid to clear dealer inventories, Ms. McGill said.
But at least for now, GM has asked Saturn not to trumpet the Penske connection -- even though some dealers think it is the biggest thing the brand has going for it -- lest it overshadow the Saturn brand name. The deal may not be sealed until late in the third quarter, Ms. McGill said.
Through May, Saturn's sales this year have tumbled 58% from a year earlier to 35,256 vehicles. By contrast, Kia Motors Inc. of South Korea sold four times as many cars in the U.S. over the same period, and Toyota Motor Corp.'s sold nearly as many Camry sedans -- 31,325 -- in May alone.
Through May, Saturn's sales this year have tumbled 58% from a year earlier to 35,256 vehicles. By contrast, Kia Motors Inc. of South Korea sold four times as many cars in the U.S. over the same period, and Toyota Motor Corp.'s sold nearly as many Camry sedans -- 31,325 -- in May alone.
Enthusiasm about the Penske deal helped Saturn in June, Ms. McGill said, drawing more traffic into Saturn showrooms and leading to a 35% year-to-year sales increase.
Mr. Penske, known for building an auto-retailing empire and for his career as a race-car driver and team owner, signed a memorandum of understanding earlier this month to buy Saturn from GM. The brand's dealers rushed to embrace the new owner, praising Mr. Penske's business acumen.
At Saturn of Oak Lawn, Ill., a suburban Chicago dealership, Saturn owners also showed support for the Penske deal. A handful of customers in the service department gave sales manager Marty Mollway a standing ovation as he wrapped up a TV interview the day the deal was announced. "I think people were simply responding to the idea that someone new was going to take over," he said.
Within a day of hearing Mr. Penske had a tentative deal, Scott Davies, owner of Saturn of Wichita, decided to let central Kansas know about it. "Finally, a car guy owns a car company," Mr. Davies proclaimed on billboards hovering over two of the city's busiest intersections in early June.
He said the ads increased traffic to his dealership. "People want to buy from someone they like," Mr. Davies said in an interview. "A lot of customers won't buy a car from GM, but they will buy a car from Roger Penske."
Not long after dealer initiatives like Mr. Davies's billboards began to crop up, Saturn dealers got a letter from GM executives asking them to not overplay the Penske deal, for fear of taking the spotlight off the brand itself.
Saturn of Scottsdale, Ariz., has continued to tout the Penske deal on its Web site, and Mr. Davies last week put up more signs, this time on his store's front lawn, saying "Penske buys Saturn, the fans go wild."
This year's plunge in Saturn sales has left the company's 350 dealers with an inventory of 32,647 vehicles -- enough to last for 105 days at the current rate of sales, according to Autodata Corp. That's one of the industry's biggest inventory backlogs. By comparison, dealers have a 74-day supply of GM's Buick brand.
Saturn also continues to face other, longer-term issues. Customer loyalty, once a strength, is faltering. In 2008, 37% of Saturn owners looking to buy a new car bought another Saturn, according to J.D. Power & Associates. That was down from 45% in 2007 and compares with retention rates of around 65% for Toyota.
Saturn's model lineup also is in flux. A new model, the Astra, flopped and is being discontinued, leaving the brand without a compact car. "They've gotten away from their roots in terms of offering an affordable small car," said Charlie Eickmeyer, a Saturn owner and founder of the 13-year-old Saturnfans.com Web site.
