Are The Planets Lining Up At Last For Saturn?

As workers finish laying the carpet at Saturn of Bay Ridge in Brooklyn, N. Y., Sales Manager Chris Lucas looks forward to his opening on Apr. 4--almost four months late. "We've had enough delays," he says. "It's time to get rolling."

Five months after its official Oct. 25 launch, Saturn Corp. may finally achieve lift-off. Various production problems severely limited output of General Motors Corp.'s heavily hyped import-fighter, leaving dealers with only a handful of cars. The recession, the gulf war, and an early recall didn't help. Until now, it has been "Murphy's Law," says Chattanooga dealer Nelson Bowers II. "I don't know of anything that's worked in our favor, but it seems like now we can see the light at the end of the tunnel."

Until now, Saturn's foreign rivals haven't had to worry about the small car's small sales. They aren't taking Saturn lightly, though. In early December, the board of Japan's Toyota Motor Corp. received a two-hour briefing on Saturn's operations from Toyota's U. S. managers, and they test-drove Saturn cars. Soon, Toyota will learn from the marketplace how strong a competitor Saturn is. A test drive shows it can hold its own on the road. The base Saturn sedan rivals Toyota's Corolla in size and performance but is priced $1,150 lower.

Saturn dealerships are beginning to stock a full mix of base- and higher-priced cars. More are on the way, as Saturn's Spring Hill (Tenn.) plant prepares to add a second shift. And as Saturn plans to open 33 new dealerships in 18 states in April, a delayed wave of advertising could spur sales further.

LOST WEEKS. If Saturn does take off, it will be leaving behind woes that began almost as soon as production did last July at its sprawling assembly site in Spring Hill. Determined to ensure high quality standards, Saturn workers and engineers found lots of nits to pick, especially in the $7,995 base SL sedan. When engineers had to change engine-mount specifications to cure a vibration problem in SLs with automatic transmissions, output of that model was delayed five months. Then, the assembly line lost three weeks of manual-transmission SL production when the carmaker had to switch suppliers of a shifter mechanism. Those delays pushed back to December the start of production of the $11,775 sporty coupe model, expected to account for one-third of all Saturn sales in the crucial California market.

Those weren't the only troubles. Saturn's all-new plant ran into a series of minor production snafus and parts-quality troubles. The company's just-in-time inventory approach worked according to plan: It identified problems and halted all production until they were fixed. That kept quality high but held down the factory's output. Despite months of earlier training, Saturn's workers also took longer than expected to learn to inspect their own work--for example, examining each door panel for blemishes. Says Saturn President Richard G. "Skip" LeFauvre of the hail of woes: "I've been in manufacturing all my life, and what I'm experiencing is not uncommon in starting up a complex operation."But if the foul-ups were expected, the dismal scenes in Saturn's first 30 showrooms last year were not. At its Oct. 25 opening, Saturn of Nashville had over 400 customers--and nine cars. Saturn of Santa Ana (Calif.), with only 12 cars, drew crowds of 200 to 300 visitors a day for several weekends after the launch. In its first 30 days, the dealership took 150 deposits of $500 toward cars it didn't have. To keep customers happy, many dealers, on their own or with Saturn subsidies, provided rental cars for customers waiting for a car to arrive.

PAMPERED OWNERS. The supply of cars remained a trickle. By Dec. 31, Saturn had sold only 1,881 cars. By comparison, in the Dec. 21-31 period alone, Nissan Motor Corp. sold 4,264 Tennessee-built cars. Dealers who had invested in costly new showrooms were bleeding. Herbert F. Boeckmann, owner of Saturn of the Valley in Southern California, says the car shortage meant "hundreds of thousands of dollars lost." Saturn delayed opening 25 dealerships from December and February until April and May and agreed to refund fees of $50,000 to $100,000 to already-opened dealerships.

LeFauvre defends the slow production. "We wish we'd had more cars, no question about that," he says. "But this is the hard part about building a quality reputation--you absolutely have to bite the bullet on quality." And his dealers support him. Says A. Edward Appleby, general manager of Saturn of North Broward in south Florida: "I'd rather be slim on cars than have cars that aren't up to what the customer expects."

Saturn's emphasis on quality apparently hasn't been hurt by a Feb. 13 recall to fix front seatbacks that could slip backward without warning. The recall covered 1,210 cars, about 30% of those Saturn had sold. Their owners were pampered by repair crews who had little else to do. Chattanooga dealer Bowers sent potted plants to his two customers affected by the recall.

RECORD SALES. Gradually, the flow of cars has increased. Spring Hill now is building about 300 a week and is preparing for a second shift to start turning out cars in late April or early May. Both shifts' workers are already on the line. The A crew works on Monday, the B crew on Friday, and both crews side-by-side Tuesday through Thursday, to make sure that everyone follows the same quality procedures.

Although some dealers still have order backlogs of 70 cars, those are usually for specific models with particular options. Inventories are building. Witness record Saturn sales in the Mar. 11-20 period: 1,208 cars. Dealers are still short of the coupe, but not desperately so.

The earlier shortages would have been even worse had Saturn been launched nationally last October. Instead, the company planned a phased rollout, with only West Coast and Southeast dealerships opening on Oct. 25. To date, Saturn has dealerships in only 41% of the U. S. car market. That will jump to 81% with the openings in April and May, mostly in the Northeast. At Saturn of Bay Ridge, Lucas expects to have 20 cars in stock for his opening.

Advertising to support those new dealerships is starting to air, including ads timed to coincide with the New York Automobile Show. Meanwhile, existing dealers are asking for more ad dollars in their markets. Now that they have the cars, "a relaunch in the form of another advertising blitz would get the interest rolling again," says Glenn S. Ritchey, owner of Saturn of Daytona Beach.

Saturn officials hint that April could bring the car's first nationwide network-television ads. But Bowers worries that a new blitz might be premature: "I hope that this doesn't heat sales up so that we're in a car-shortage situation again." Bowers knows that without cars on the lot, hot sales can turn cold in a hurry.


Eight years after launching the concept of a new Saturn division to fight imports, GM puts Saturns on sale in selected markets


Assembly-line glitches hold production for the year to 4,245, well below expectations. GM either waives or gives back some dealership fees


Saturn recalls roughly 30% of its cars on the road so it can fix a seatback that can slip backward without warning

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE