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Saturn Corp. is on a high note as it gets ready for its Homecoming bash.

Regaining momentum after running into rough spots last winter, the General Motors Corp. subsidiary reported its strongest sales month ever, selling 25,967 cars in May, up 14% from May 1993.

The small-car company should get a significant boost with all the attention that will be focused on its unusual Homecoming, a festival of entertainment and plant tours being staged June 24 and 25 for Saturn owners at its Spring Hill, Tenn., manufacturing facility.

To ensure a strong future, Saturn executives believe they must convince parent GM to expand to a second plant and invest in new products. Now, Saturn will be able to advance stronger arguments in its favor.

"Saturn has a lot of good things going for it, but if it doesn't get new product, then its line will look outdated in a few years," said Thomas O'Grady, president of Integrated Automotive Resources, a Newark, Del., consultancy.

However, Mr. O'Grady termed a new Saturn plant as "risky." He said if Saturn struggles to sell all the cars it can build, dealers may be pressured to abandon the company's no-dicker policy and to look for ways to save costs by trimming their vaunted customer-friendly service.

The huge Spring Hill plant can build 322,000 cars a year, and Saturn would like to increase the number to 500,000 with a second facility.

Saturn car sales faltered late last year when the company reduced ad spending, part of an effort to post a first-ever operating profit. Saturn executives denied the ad cuts were as deep as Advertising Age's Jan. 17 report saying 1993 spending was halved to $50 million before being restored to about $110 million to $120 million this year. But they did acknowledge advertising cuts were made, adversely affecting sales last year.

"We'd make a good case study that advertising works," said Steve Shannon, director of consumer marketing, referring to the recent upsurge in sales. "We are now firm believers."

Saturn's marketing strategy is taking on interactive dimensions, as the automaker last week went online with Prodigy. Subscribers get access to Saturn product information, the location of the nearest retailer and a Saturn Homecoming bulletin board-a forum for owners planning caravans to or meeting at the festival.

Saturn buyers tend to be young, college educated and computer literate, making Prodigy a good fit, Mr. Shannon said.

So far, about 16,000 owners have signed up to attend, and the registration pace has been picking up momentum, he said.

Saturn dealers are planning local activities to tie in with the Homecoming theme. Dealers in some areas will host receptions for Saturn owners who are driving in caravans to Spring Hill. In southern California, dealers are sponsoring their own reception at Knott's Berry Farm.

Saturn invited nearly 650,000 owners to Spring Hill through a direct marketing campaign handled by Hal Riney & Partners, San Francisco, and Carlson Marketing, Troy, Mich.

Riney also created two humorous 30-second TV spots that began airing in May, suggesting that major attractions like Mount Rushmore and Old Faithful might see a drop-off in tourists because of the Saturn bash. Mr. Shannon said follow-up commercials will feature festival footage.

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