Saturn says the miracle isn't over - prospect for Saturn Corp

As if the lingering small-car sales slump wasn't enough, the incentives war that started early this year has made it even harder on Saturn Corp.'s dealers and marketers.

With its no-haggle shopping promise, Saturn can't use incentives to stimulate sales that have remained flat for the last two years.

On top of that, for the first time its history, labor relations have soured at Saturn.

But company executives expect to emerge stronger than ever within the new General Motors Corp.

Saturn hopes a retail and marketing plan hatched earlier this year will increase showroom traffic. The scheme includes exp-anding Saturn dealerships and further educating its salespeople. Moreover, Thomas E. Dennig, Saturn vice president-manufacturing, predicts the company by 2003 will have three new vehicles.

Is the shakeup an effort to rekindle Saturn's magical sales of the mid-1990s?

"I would suggest the magic is still there. We're proud of our accomplishments as a relatively young car company and we are optimistic about our future," says Saturn President Donald W. Hudler. "However, there's no doubt we're in one of the most competitive small car markets in recent memory."

Saturn has responded to market conditions by taking into account its competitors' incentives and dealer discounts while setting the suggested retail prices for its '99 models. "We peg our prices on that basis, to be tucked just underneath where Toyota and Honda are on a net transaction basis," says Joseph J. Kennedy, Saturn vice president-sales, service and marketing.

A training program was launched to refresh dealers on sales processes and competitive knowledge. Saturn also says it is expanding flexibility and convenience. A new television advertisement pitching Saturn's website equates the electronic shopping experience to the simplicity of ordering a pizza.

And the number of "actual" dealerships is being increased and updated.

Says Mr. Kennedy, "We're going through a huge process of increasing the number of stores. We're moving from roughly 380 stores. Eighteen months from now we'll have over 500 stores. And we're also redoing the interior design of our stores to make them warmer and more friendly."

Eventually inside those overhauled showrooms will be new products. The L-Series midsize sedan will debut next summer and Mr. Hudler says Saturn is "considering a sport/utility vehicle (SUV), along with other potential future products, all of which may or may not make it to market. We're in the preliminary stages of putting these plans together."

GM chief John F. Smith Jr. says Saturn will move pretty fast on its SUV project, but adds that Saturn has yet to submit its plan for the program to GM's executive committee yet. But if tile past is indication, such a proposal likely would be greeted enthusiastically.

"GM's leadership fully recognizes the strong value of the Saturn brand and has never turned down a request when we have put forth a sound business plan," says Mr. Hudler.

Mr. Smith says no plant has yet been designated to build the Saturn SUV.

The L-Series and SUV should quiet critics who claim GM has been ignoring Saturn. In fact, the recent marketing changes at GM carry a distinct Saturn flavor, says Mr. Dennig. "They're going to a market area approach. Dealerships will have one point of contact, not representatives from each division. GM still views Saturn favorably and wants to grow the Saturn brand."

Other Saturn customs may also become GM protocol, adds Mr. Dennig. "GM still wants to capture the best practices from Saturn and spread them through the company."

Brian Corbett is associate editor and Jeff Green is senior associate editor for Ward's Automotive Reports.

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