Chevy Equinox, an example of GM's promise

If General Motors Co. is going to climb out of the hole, repay taxpayers and get on the move again, it needs more cars like the 2010 Chevy Equinox.

This compact SUV looks a little like a Lexus, but at $28,000 for the top-of-the-line LTZ model, it has a much lower base price. The style is American all the way, with plenty of chrome, a spacious leather interior, a six-speed automatic and a peppy-yet-gas-friendly four-cylinder engine.

"The bottom line is to give the customer astonishing amounts of value," said GM Vice Chairman Bob Lutz. "This looks and feels like a way more expensive car."

After one of the worst years in a century of domestic automotive manufacturing, GM is desperate for a win. Its biggest financial problems have been solved, courtesy of bankruptcy court and $53 billion in federal aid. Now America's No. 1 automaker has to perform.

Its financial results this week showed progress. The company -- your company, because it is after all 61 percent owned by U.S. taxpayers -- generated a surprising $3.3 billion in cash during a truncated third quarter. It floated plans to begin repaying its loans early, and raise billions through an initial public offering next year.

But even as it's hitting the gas pedal, it's leaving a trail of parts behind. Employment fell 17 percent in the previous 12 months, to 209,000 worldwide. The U.S. hourly work force took a brutal 25 percent whack. Between June and the end of next year, GM expects to shrink its dealer network by 1,900 -- a scary thought given the nation's rising jobless rate.

GM is trying to speed along the things that traditionally take it forever. "Things like sales programs, changes in direction in advertising or modifying the product plan," Lutz said. "Things that used to be put on a monthly schedule are now on a twice-weekly schedule. We don't drown ourselves in a sea of numbers. We don't need in-depth studies if we all agree this is what we're going to do."

And now that the government has invested so much, it wants results -- and not only financial results. Bailing out GM was supposed to save U.S. jobs by preserving a bedrock U.S. industry.

Yet GM's latest numbers suggest that it will be selling a lot more Wuling microvans through a joint venture in China than SUVs at home. Even the definition of an American car has gotten squishy: GM made its test model of the Equinox in a Canadian assembly plant, sourcing 30 percent of the parts from outside North America, including a South Korean transmission.

Further, the government vision of a small-car fleet with triple-digit fuel economy runs up against long-standing American preferences. The Equinox may be a "compact" SUV, but it's not compact in the same way a jumbo shrimp is still a shrimp.

It feels big, and though it advertises combined fuel economy of 26 miles per gallon -- outstanding for its class -- a cold-weather drive around the city unmasks its SUV heart.

GM says the Equinox can more than make it from Chicago to Kansas City, Mo., or roughly 600 miles, on a tank of gas, and do it in style. For GM, that alone represents a step toward survival.

To see the All New Equinox for your self; stop by Bradshaw Chevrolet, Cadillac, Buick, GMC, Pontiac in Greer. Visit anytime at http://www.bradshawgreer.com/.

At Saturn, a Split Over Relying on the Penske Name .

By JOHN D. STOLL

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.

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.

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.

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.

Can a billionaire car mogul save Saturn?

Michael Vaughan, Autos.CTV.ca

Roger Penske is an American folk hero. He's the sports car racer who morphed into a billionaire car dealer. He seems to have the Midas touch in auto racing (his team has won the Indianapolis 500 fifteen times) as well as auto sales and leasing (you can rent a Penske truck almost anywhere or you can drop in and buy a car from one of his 250 car lots -- none in Canada).

But now he's taken on Saturn -- not the sixth planet from the sun but a discarded part of the General Motors disaster.

Saturn Corporation was established in 1985 by GM as a "different kind of car company." It was supposed to beat the Japanese at building small cars for the American market. Saturn succeeded in building a small, cult-like following among its buyers for the no-haggle pricing and "Family Reunions" -- but it never made a dime for GM.


The first Saturns hit the streets with dent-resistant plastic body panels. These were supposed to reduce repair costs and let the manufacturer change styles more rapidly. In fact, Saturns almost never changed appearance and the panels were something of a fire hazard.

Since the 2000 model year GM basically gave up on having Saturn separate or "different" and started putting a Saturn badge on cars from their European division -- Opel. They got some pretty good cars this way.


Penske has now waltzed in (financial terms not revealed) and picked up the Saturn brand, parts inventory and the right to distribute vehicles and parts through the Saturn dealership network -- about 350 in the U.S. and 60 in Canada. In addition, GM will continue to produce the Vue, Aura and Outlook for him for the next three years.

So how can Roger succeed where General Motors blew away billions? Well the first point is Penske won't have to worry about the factories that build the cars. This time around Saturn is only going to be a distributor of cars -- other people's cars.

Roger and his team can now shop the world for custom-made cars from other manufacturers that he thinks will fill the bill with his adoring American public.

Sure, he'll make do with the GM stuff -- good stuff by the way -- for the first few years. But in the meantime he'll cut deals with companies like Renault-Nissan to build the cars he thinks will sell.


Nissan has lots of under-utilized manufacturing capacity in the U.S. and it's expected that Roger will wrap himself in the flag and source only "American-made" cars. Flogging Saturns built in China or India wouldn't suit Penske's All American image.

Roger knows how to sell. He started with tires, moved into trucks and now the Detroit-based Penske Automotive Group is the world's second largest automotive dealer group.

Americans instantly recognize him as the serious looking, handsome guy wearing earphones in the pits as his team takes the checked flag. He's the representation of old fashioned American virtues of hard work and team play.


Gearhead blogs since the deal was announced have been overflowing with comments like "We love Roger" and "the guy has a golden touch."

If he pulls off the deal for Saturn, and makes it work, Penske will have caused the biggest change in how cars are sold since the dawn of the auto industry.