Saturn's Second Liftoff?

The GM unit has had a well-deserved reputation for bland and boring cars. A slate of new offerings may change that

If any auto brand has made consumers feel like the naive customer who keeps going back to the neighborhood bar that promises "free beer tomorrow," it's Saturn. For years, General Motors has been promising that it would finally have some good cars to sell and for years people have been disappointed.

This time, the company swears, it will be different. And this time it could be right.

That's because at the annual New York Auto Show, which opens at the Jacob K. Javits Convention Center in New York City to the media on Apr. 12 and to the public on Apr. 14, General Motors (GM) is planning to unveil some cars that could finally generate some real buzz -- and sales.


  Those are two things that GM could really use about now. The company plans to roll out the sharply styled Aura family sedan, along with the spacious Outlook crossover sport utility vehicle, and the tight-handling Sky Redline performance roadster. It also will show a concept model a smaller SUV, one that could replace the current Saturn Vue in a few years.

One of the reasons why these new models could work is that GM's Vice-Chairman Robert A. "Bob" Lutz has splashed a heavy dose of European design on the new Saturns in a play to give them the kind of sporty look that European cars like Audis, Saabs and, more appropriately, GM's Opel division cars wear.

The new models were conceived in GM's design studio under former Hummer stylist Clay Dean, who is now GM's design director for small and midsize cars. Dean says he had some designers from GM's German Adam Opel AG subsidiary fly to the states to help give the cars the technical look and feel of German engineering.


  There is something for boy racers, too. The Sky roadster, which is going on sale this week, is built on the same frame as the sporty Pontiac Solstice two-seater. Saturn also will offer Redline editions of most of its models—jazzing up the ride and handling a bit and amping horsepower. The Sky Redline's turbo-charged 2-liter engine boasts 260 hp, vs. 177 hp for the base model Sky. GM Chairman and Chief Executive Officer G. Richard Wagoner Jr. says, "They have a powerhouse lineup coming out."

For Saturn, this is one gigantic do-over. Even when Saturn was successful, its image was the car for people who hate cars. Its big selling point was no-haggle pricing at the dealerships that made buyers, especially women, more comfortable.

When Saturn launched in the early 1990s, the S-series compact had fresh styling and was built in a new factory in Spring Hill, Tenn., that had progressive work rules. GM promised that quality would be better. The whole project was seen as distinctly un-Detroit at a time when the Big Three were reeling from quality problems.


  For a time, it worked. But GM let Saturn go almost 10 years without a new model. Internal politics channeled new-car cash into Oldsmobile, which is now defunct. Meanwhile, Saturn was dying on the vine. Says Dean: "People loved the dealer experience, they just didn't have much positive to say about the cars."

GM tried to restart it with the L-series family car in 1999 and the Ion compact after that. But neither worked. During at least one year over the past five, Saturn lost $1 billion on its own, largely due to the fact that L-series bombed so badly that GM had to kill it. That left a car plant in Wilmington, Del., badly underused and it oozed red ink.

Now Saturn is headed upscale. The Outlook is bigger than anything that GM's former entry-level brand has ever offered. When it goes on sale in spring, 2007, it will become Saturn's people hauler. The Relay minivan eventually, and thankfully, goes away. The Aura is bigger, too, and beats the Toyota Camry for interior space.


  Eventually, Dean says, Saturn and Opel will be joined at the hip. They will jointly develop products, giving GM a North American outlook for its Opel cars. In the past couple of years, Opel has shown signs of life with hits like the Astra compact and Zafira minivan.

Even Saturn critics like the styling and the fact that the new cars have real character. "Saturn has the best chance to capture non-GM buyers," says John Wolkonowicz, analyst with Boston-based Global insight. "The product line is the right thing to do, and all three cars are very nice."

The good thing about Saturn is that it doesn't have the baggage of other GM brands that remain in the O.R. Where Pontiac is seen as cheap or gaudy and Buick stodgy, Saturn has an image for offering good value and an honest experience in the dealer showroom. Says Wagoner: "It's a fairly blank canvas to paint on."


  Marketing may be the tough part. Saturn has to build a new image and raise a hue and cry that its cars are not only new, but faster, sportier, larger and more stylish than they have ever been. They also won't be just for entry-level shoppers.

And the brand will have to do it while spending a lot less on advertising than big Japanese brands like Honda and Toyota. "GM is going to have to spend more," says Peter DeLorenzo, publisher of Autoextremist.com, a Web site that tracks the industry. "Toyota will spend $170 million to market the new Camry. Saturn won't get anywhere near that for the Aura."

Saturn does get a new advertising slogan. The brand will dump "People First" in favor of "Like Always, Like Never Before." That could mean a bigger ad budget, but it will still be tough to break through the marketing noise created by the Japanese and European car buyers Saturn is targeting.

But the new cars give the brand a good chance of coming back. With Saturn's trifecta coming out this year and next, Lutz may finally have given the brand what it needs.

Welch is BusinessWeek's Detroit bureau chief

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