Saturn: GM's orphan fights for life

The 'different' car brand is exploring several novel survival options after being dropped by General Motors.

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By Peter Valdes-Dapena, CNNMoney.com senior writer

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An all-new lineup of flashy cars like the Sky hasn't lifted Saturn sales.
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NEW YORK (CNNMoney.com) -- Abandoned and facing death as General Motors cuts brands in its own fight for survival, Saturn, the "different kind of car company," could soon become a very, very different kind of car company just to survive.

GM has said it will stop producing Saturn vehicles in about two years. Rather than accept that it's over, Saturn executives and the brand's leading dealers are looking at new ways - some that have never been tried before - to keep Saturn alive.

"When times are tough, that's when the biggest breakthroughs come," said Jill Ladziak, Saturn's General Manager.

Ladziak is among a group of about 10 people, including a few GM executives, a few Saturn retailers and prominent industry consultant Stephen Girsky, who are considering some daring approaches.

Re-inventing the Saturn brand

Among the options being seriously considered: selling electric cars, turning Saturn into a chain of boutique stores offering vehicles by various manufacturers or simply finding one company - perhaps one based in China or India - to make a new lineup of cars.

All are variations on the same thing. The new Saturn will be a retail channel only. It will not be a car company.

"We're not going to be in the manufacturing business," said Girsky, "We're going to leave that to the experts."

0:00 /2:58The sportiest Rolls-Royce

Saturn's unique standing within GM opens up possibilities like these. Unlike Hummer or Cadillac, for instance, Saturn isn't simply a name and a badge. Saturn Distribution Corporation is a subsidiary of General Motors. Legally and financially, it is a distinct, separate company.

Girsky and Ladziak also tout the brand's other advantages. For one thing, it simply sells more cars than other brands that GM is unloading.

In 2007, Saturn sold 240,000 cars in the United States. That's about 54,000 more than Buick, a brand GM is retaining. It's also 150,000 more than combined sales at Hummer and Saab, the two other brands GM is letting go.

A strong backbone

Probably Saturn's strongest asset, though, is its dealer network, said Girsky.

"You've got a lean channel, you've got a young channel," he said.

There are about 400 Saturn dealers and they are all independent, standalone businesses. When the company was started in the 1980's, dealers were selected from among those with the best ratings for customer service. In return for agreeing to abide by Saturn's no-haggle policy, dealers were given stores in widely separated locations, giving each a broad territory to itself.

Also, Girsky pointed out, since Saturn is only 20 years old, even the dealers' buildings are relatively new.

Girsky said there are plenty of folks out there, "Maybe it's a [carmaker] that doesn't have the volume to support a network, like these electric car manufacturing startups."

Saturn needs to be careful when selecting the right kinds of products to stock these stores, though, said Girsky.

"I don't think the idea is that we're going to slap any model that wants to into this," he said.

Saturn's brand image rests in small and midsized cars, said general manager Jill Ladziak. But Saturn is also known for innovation and buyers who are willing to try something new, she said.

Things are still in the earliest stages of discussion, Girsky pointed out repeatedly during a telephone interview.

Last month, GM asked dealers to hold off for about two months on doing anything with their Saturn dealerships - such as closing or bringing in additional car brands to sell - until a final decision on strategy was made. That decision is expected around the middle of April.

In the meantime, Girsky said, he's looking for input from every quarter.

"I want to hear from people why this can't work," he said.

One reason could simply be time. "The clock is ticking fairly quickly right now for Saturn," said Paul Melville, a consultant with Grant Thornton.

GM has said it will stop making Saturn vehicles in about two years. In the automotive world, that's practically next week. Even if a foreign manufacturer had cars it was selling in its home market and it wanted to bring those to the U.S., just re-engineering the cars to meet U.S. standards could take longer than that.

Girsky said he's aware that there may not be enough time, under the current schedule, to fill these showrooms.

"You're going to need help from certain constituents to make this happen," said Girsky.

In other words, he said, a little forbearance form GM might be helpful. One thing GM could do is continue on as a paid product supplier for a period of time even after Saturn splits off from the corporation, Saturn spokesman Mike Morrissey said.

Of course, death remains an option. The committee of GM executives and dealers could still decide that the end must finally come.

A successful spinoff would put Saturn back at the top of the "different" list, though. "If they can pull it off, people will look back and say 'That was a terrific move," said Melville. To top of page

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