GM Throws Lifeline to Flailing Saturn Brand

Automaker Works With Dealers to Avoid Costly Elimination of Marque

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DETROIT ( -- General Motors is working behind the scenes to save Saturn.

The brand seemed like a goner as recently as December, when the troubled automaker told Congress it would muster its resources behind only Chevrolet, Cadillac, Buick and GMC. At the time, GM said it was "accelerating discussions with Saturn retailers ... to explore alternatives for the Saturn brand." But eliminating a brand is expensive: GM spent well over $1 billion to pull the plug on Oldsmobile, partly to settle lawsuits filed by its own dealers protected by a patchwork of state franchise laws. And sale options are limited.

So the automaker is working with dealers to keep Saturn in the GM orbit. It hopes to have an action plan ready within 30 days, said Fernando Somoza and Todd Ingersoll, two dealers on the brand's Franchise Operating Team. Neither dealer gave any details of options that are on the table, although Mr. Somoza said one proposal being studied "will have global implications."

One consideration is finding a non-GM carmaker from abroad to distribute cars via Saturn's 400-plus dealers here, said an executive close to the matter.

A Saturn spokesman confirmed that GM expects to have an announcement about the brand's future in about four weeks, but he declined to comment on whether one plan would have Saturn dealers selling non-GM vehicles from overseas in the U.S.

The goal
GM is trying to find buyers for Saab and Hummer and plans to pare Pontiac's model lineup as part of its restructuring plan to qualify for federal loans. But now Saturn is getting "more of an internal review" as opposed to a sale, said Mark LaNeve, VP-marketing, sales and service in North America. Because of the way GM set up Saturn as a wholly owned subsidiary, the business "has more options" than the automaker's other vehicle brands, the spokesman said.

The goal, according to Mr. LaNeve, is to figure out "how to correct the profitability, or the lack of profitability," he said. "We don't have the luxury now of putting a 10-year plan in place. We've got to improve it right away."

One Saturn dealer who asked not to be named said, "When our customers [walk in] -- the very few who do walk in -- they tell us, 'We hear you're going out of business.'"

In spite of a broadened lineup of cooler, pricier products, including models shared with GM's European Opel brand, Saturn's U.S. vehicle sales slid nearly 22% in 2008 to 188,004 units vs. 240,091 in 2007.

Mr. Ingersoll, a Saturn dealer in Connecticut, said the brand could have sold 60,000 more new vehicles last year if GM had not eliminated the Ion affordable small car, especially when gas prices hit $4-plus per gallon. "GM is working at warp speed to be financially sound," he said.

Even Mr. LaNeve conceded that GM "didn't spend enough on marketing to introduce the new products."

GM backed Saturn with $198 million in measured U.S. media in the first nine months of 2008, according to TNS Media Intelligence. The brand shifted from national TV to more online marketing in 2008, including the creating its own ImSaturn social-networking site and the original, scripted, eight-episode "Novel Adventures" web series with CBS Interactive. Interpublic Group of Cos.' Deutsch, Los Angeles, handles Saturn's national and regional dealer creative.

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