GM sees its new SUV as the rebirth of the Saturn brand.
by Paul A. Eisenstein
It was meant to be the American answer to the Japanese small car. But after an auspicious introduction, General Motors has allowed its Saturn brand to languish, raising serious questions about its long-term viability.
So all eyes will be on the VUE, Saturn’s third and newest model, when it makes its debut next month. With trucks and crossovers now accounting for half the American market, this car-based sport-ute is likely to be the most significant Saturn since the marque’s 1989 debut. But it will be essential for the automaker to avoid the sort of mistakes made two years ago, with the botched launch of the mid-size L-Series sedans and wagons.
“It’s all about product,” said Jill Ladjziak, Saturn’s vice president of sales, service and marketing. And that is one thing Saturn hasn’t had enough of, she conceded during a media preview of the new VUE.
Saddled with mediocrity
For nearly a decade, the GM division was saddled with one basic product, a subcompact in sedan, coupe and wagon configurations. Initially, Saturn did quite well, despite its lineup limitations. It built a reputation based on customer-friendly sales policies, which scored points among buyers who hated haggling over price.
At its peak, in the early 1990s, the brand had a loyalty rate of 54 percent, meaning more than half its buyers bought another Saturn when it came time to trade in. “But over the years, that number came down because we didn’t have (other) products to get people into,” said Ladjziak. By the end of the decade, with loyalty slipping to just 27 percent, sales began sliding and Saturn was forced to trim production for the first time.
Corporate bickering was part of the problem, GM insiders reveal. Other, more established divisions, such as Chevrolet, battled for tight product development dollars, and Saturn, seen as something of an interloper, was left starved of cash. It took a full decade to bring the L-Series to market. And when it finally rolled out, many potential customers couldn’t tell.
“We were never able to clearly break out the L and let people know it was a different car from the (subcompact) S,” lamented William Bradshaw, a Saturn dealer from Spartanburg, South Carolina.
The midsize model looked too much like the smaller S-Series. And an off-the-mark introductory ad campaign muddied the waters even more. With sales running barely half their initial expectations, the carmaker was forced to re-launch the line less than a year later.
Gun shy
These days, Saturn officials are noticeably gun-shy about making forecasts. They note they’ve tooled up their factory in Spring Hill, Tenn., to produce “at least” 50,000 VUE SUVs. They hope to sell more, but no one is saying how many. That figure is modest in a market where sport-utes, in general, make up the fastest-growing segment. And many analysts believe that subcompact crossover vehicles are likely to be the big winners between now and mid-decade.
Several things could work in the VUE’s favor. There’s the low price tag, starting at barely $16,000. By using a car-based platform, instead of a conventional body-on-frame truck design, the VUE offers a more comfortable, controllable ride, along with markedly better fuel economy.
Saturn is also hoping the new crossover will win converts with its innovative features, ranging from a pop-up storage bin to its continuously variable transmission, or CVT. Unlike a conventional transmission, which steps through a series of gears, a CVT continuously alters the gear ratio, so the engine always operates at the optimum speed—whether that be tuned for performance, fuel economy, or a blend of both. Dubbed VTi by Saturn, the new transmission will be available as an option on the four-cylinder version of the VUE, either with front or all-wheel-drive.
GM officials bill the VUE as a hint of what’s coming at Saturn. The L-Series will be updated next year, and the new look will better differentiate it from the smaller S models. An all-new version of the Saturn subcompact will follow. And it will get a new name, ION.
“We don’t want any confusion that this is just a warmed-over S-Series,” explained Ladjziak. “We want people to know this will be all-new.”
A fourth Saturn model will follow, roughly two years from now, and others “could be” under development, Ladjziak hinted during a drive through the winding mountain passes connecting North and South Carolina.
In contrast to years past, “We intend to give Saturn a lot of support,” GM CEO Rick Wagoner has promised on several occasions. But that support comes with a price.
As initially conceived by former GM Chairman Roger Smith, Saturn operated as an independent company, almost disdainful of its ties to General Motors. But heavy losses and declining sales forced the automaker to rethink that strategy. Today, Saturn has little more autonomy than any other GM division. While it does have its own president, she primarily oversees operations at the Spring Hill plant.
Perhaps most significantly, Saturn engineers now work with the rest of their GM colleagues, and share platforms, rather than developing products entirely on their own. According to VUE chief Jesse Ortega, that reduces costs and provides access to a wide range of additional technology, such as the VTi transmission. To give the division bragging rights, GM is letting Saturn introduce VTi in the U.S. It will then roll out on other General Motors models.
Saturn officials admit they can’t repeat the mistakes of the L-Series introduction. They’re under more pressure than ever to reach the so-far-elusive goal of profitability, and that will require selling every VUE they can build. A failure would raise serious questions about Saturn’s long-term viability. But if the crossover-ute scores a hit with consumers, it would provide a foundation for future growth.
Copyright © 2001 by the Car Connection
