Grim outlook for Saturn, dealers remain anxious

Posted Today, 6:25 AM by Ralph Hanson

Some of the options GM has for Saturn include a new dualing pattern, a spinoff, a partnership, and even an outright sale

In the last couple of months there have been numerous reports that General Motors may be looking at dropping its poor performing Saturn brand, however the company’s vice-president of North American vehicle sales, Mark LaNeve, has pointed out that the process is not so simple. One of the biggest challenges, LaNeve explained, is determining whether giving up on a brand is the correct long-term decision.

While GM is admittedly throwing the brunt of its cash and labor at its most profitable brands - Chevrolet, Cadillac, and Buick - the company insists that the Saturn brand has both a "current and future" product program. Saturn dealers, on the other hand, are anxious about the brand’s future and have so far been kept in the dark.

The outlook isn’t looking good. According to Autodata vehicle statistics, Saturn’s sales figures in January dropped 59.8% on the same period a year ago and the brand’s share has dropped to below 1% - less than Buick and Pontiac. GM has also said it will drop eight nameplates by 2012 and many of them are likely to be Saturns.

Later this week, Saturn dealers are expected to receive a list of options for the future of the brand. Speaking with Automotive News, LaNeve said those options include "everything from a new dualing pattern to a spinoff to a partnership to an outright sale." GM management will narrow down this list of options together with the Saturn Franchise Operations Team and give the revised list to dealers.

LaNeve also revealed that GM is keen to make a decision on Saturn this month. "We're working all the options," he said. "We'd love to find a way to continue the brand, but there's nothing definitive I can tell you today."

One option that is proving unlikely is securing a foreign buyer to takeover the brand as Saturn doesn’t actually build any of its own cars, engines or transmissions. The entire lineup consists mainly of badge-engineered vehicles borrowed from other GM brands.

One key area GM will focus on is to figure out how to reduce the brand's structural costs and create a business model that is profitable. In the past 20 years, Saturn has been profitable for only one year. On the flipside, dumping Saturn and cutting its losses may seem like the easier choice than constructing a new business model for the brand, however doing so would put GM out of pocket by a significant amount of cash – something it currently does not have. To dump the brand, GM would be forced, by state law, to buy out the 211 Saturn dealers across the country at a cost of nearly $1 billion.