Thursday, December 04, 2008

To The Moon With Saturn

No! No! My car! Am I going to be driving the Edsel of the 21st Century? Make them stop!:
General Motors Corp. launched its Saturn division in 1985 as a "different kind of car company," one given the task to sell cars in a new way and compete with Japanese juggernauts like Honda and Toyota.

The idea, simply, was to make money on the small, economical vehicles that had always been losers for the Detroit giant.

Now GM may be abandoning the brand altogether.

The sweeping restructuring plan GM released this week in hopes of squeezing $18 billion in aid out of Congress includes a pledge to "explore alternatives" for Saturn.

GM officials say options include overhauling the lineup, partnering with another carmaker, selling the brand and, potentially, sending Saturn off to the junkyard.

GM's Swedish luxury brand Saab might also be sold, and Pontiac could be transformed into a "niche" brand inside other dealerships.

But the decision to consider pulling the plug on Saturn, the agile little start-up that GM developed to reinvent the way it produced and sold cars, is a bitter reminder of just how deep the automaker's troubles run.

Saturn, after all, was created to do almost everything that GM, industry experts and many members of Congress say a modern car company has to do to survive in today's market: Make a limited range of small, fuel-efficient cars, then sell them through a small network of dealers for a profit.

There was just one hitch: GM says Saturn never made a profit.

At its plant in Spring Hill, Tenn., Saturn made simple, unfussy cars designed to appeal to penny-wise drivers. But the price point of the vehicles -- in recent years as low as $12,000 on some models -- was far too low to cover the cost of producing and marketing them, analysts say.

In response, the company raised prices substantially, to an average of about $17,000 two years ago and about $24,000 today. To accomplish that, however, the company had to stock the lineup with larger, fancier vehicles like the hulking Outlook sport utility vehicle.

The Outlook, which seats eight, starts at $31,000 and seemingly has nothing in common with the no-fuss economy sedans like the S-Series, which debuted in 1991 with a sticker price of $7,995.

"To broadly stereotype, Saturn buyers are single women teachers," said Eric Noble, president of Car Lab, an industry consulting firm in Orange. "They don't need an eight-person SUV."

So far this year, Saturn sales are down 21% from 2007 levels, compared with a 16% drop for the auto industry as a whole.

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