DRIVING SATURN

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Saturn Corp. has a different kind of problem.

The General Motors Corp. division, touted as "a different kind of company" since its 1990 debut, is readying its biggest new-product blitz since driving onto the scene as an import fighter. But Saturn, which is seeking an agency for the crucial fall '02 launch of its Ion entry model, no longer looks so different.

The once-independent, risk-taking brand was brought into GM's orbit nearly a year ago. "The real question is, can Saturn maintain its purity?" said Jim Sanfilippo, exec VP of auto consultancy AMCI. He said consolidating Saturn's marketing, sales and engineering operations into GM "created a conflict from its original path ... so it's very hard to maintain your sense of values."

Saturn started an agency review two weeks ago for the fall '02 launch of Ion, the first complete redo of the original small S-Series car (AA, Nov. 19)-a launch that could snare the lion's share of Saturn's estimated $300 million budget. Publicis Groupe's Publicis & Hal Riney, San Francisco, which has handled the brand since launch, will be in the review. Saturn plans to pick an agency by the end of the first quarter.

"It's clear whoever cracks this [Ion review] gets the whole thing," said one executive familiar with the auto business, adding Saturn wouldn't mind having an agency back in Detroit since Saturn, on a short leash, "is now much more Motor City than Motor City West."

Riney executives declined to comment. Jill Lajdziak, Saturn's VP-sales, service and marketing, was unavailable for comment.

One executive close to the matter but who asked not to be named said new management at GM wants to get new ideas and to push Riney's capabilities.

When asked the role of Chris "CJ" Fraleigh, GM exec director of corporate advertising and marketing, a spokesman said: "Saturn and CJ are definitely communicating on this issue. It's in Saturn's hands."

Mr. Fraleigh, a former executive with PepsiCo's Pepsi-Cola Co., joined the automaker last January, taking the place of veteran ad executive Phil Guarascio.

"When I was there [at Saturn] we told Phil what we were going to do," said Don Hudler, the former chairman-CEO of Saturn who is now trying to buy six Saturn stores in Texas. He said he cautioned Saturn leaders about the review's ill-timing in the midst of a new-product blitz. "If someone else gets the business ... it takes time for any transition and you run the risk of something running astray."

Saturn was developed in the late 1980s to woo buyers turned off by domestic cars and to prove Americans could triumph over Japanese imports. Nasty haggling with salesmen was replaced with no-haggle prices.

"Back in the early days, we tried not to tie Saturn to the GM brand. We avoided that," said Tom Shaver, Saturn's first director of consumer marketing, who left in 1992 and is now a senior partner at consultancy J.D. Power & Associates. Much of Saturn's success can be attributed to Riney, he said.

Saturn's unique positioning, however, was soon copied. And the Japan-fighting image became less of a differentiator as Japanese companies invested in-and promoted-American factories.

WRONG APPROACH

Saturn set an industry record in 1995 in J.D. Power's annual customer sales' satisfaction survey and stayed on top through 1998. But it fell to sixth place in Power's 1999 study. Dave Power, chairman of the consultancy, told Saturn dealers that fall: "We are seeing more of a GM approach to decision-making within Saturn that is affecting its original corporate culture." Saturn retook the top spot for the past two years.

GM, with other brands to feed, starved Saturn for new product. Until 1999, Saturn offered only its S-Series small-car line. Loyal owners who wanted a move-up vehicle left the brand. Saturn finally introduced a second model in summer 1999, the L-Series midsize line, which Mr. Sanfilippo described as "very conservative and plain."

The marketer's first sport-utility vehicle, the Vue, is trickling into showrooms now, with ads from Riney arriving in January. A freshened L-Series comes next summer.

Ion rolls out next fall as successor to the S-Series, which accounted for more than 60% of unit sales through October.

Mr. Sanfilippo said Saturn is a viable brand than Oldsmobile because it has a clear identity. "Saturn is known for decent product and extraordinary customer service," he said.

When asked if Saturn could remain "a different kind of company," Mr. Sanfilippo responded: "They can't be if they fire Hal Riney."

Contributing: Bill Britt and Alice Z. Cuneo

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