Saturn Corp. has received three "infusions" in an attempt to overcome a somewhat disappointing 2000 model year and regain momentum for 2001.
The infusions are headed by a $1.5 billion cash investment from parentCorp., but also delve into the dealer area.
Fourteen Saturn dealerships owned by the Hendrick Automotive Group in four states have been sold to the automaker-owned Saturn Retail Enterprises (SRE), a consolidator based in Charlotte, N.C.
The third "infusion" is closely linked to the Hendrick purchase. That group's chief operating officer, James Musgrave, became president and COO of SRE.
The GM investment is to fund new-product development for Saturn, which has found itself struggling to build interest in the 2000-model debut of its first midsize car, the L-series sedan and station wagon.
"The L-series is in a tough segment," says Vincent Olsen, operations manager at Saturn of Troy, Troy, MI. "It's gaining sales each month as word-of-mouth gets around, but Camry and Accord are tough competitors."
Saturn CEO Cynthia Trudell says, "If a company is willing to invest $1.5 billion it's a pretty strong commitment and vote of confidence."
Saturn says $1 billion of the GM infusion will update the Spring Hill, TN, assembly plant for a new subcompact SUV and next-generation S-series subcompact, with $500 million going for a new four-cylinder engine to be built in Tennessee.
Saturn dealers anxiously await the SUV. They sold only 18,898 of the new L-series models in the first quarter of 2000, below a target of close to 100,000 units in its initial full year on the market. Ms. Trudell declines to confirm a 2001-model introduction for the SUV.
Hendrick's disposal of 14 Saturn stores was mildly related to the 10-year-old automaker's sales problems. The deal stemmed more from a desire by the privately owned consolidator to buy out its financial partner, New York-headquartered Warburg, Pincus & Co.
Mr. Musgrave, 51, oversaw the Saturn dealership growth at Hendrick and is a close associate in Charlotte of Donald W. Hudler, SRE chairman and CEO, who was Ms. Trudell's predecessor as Saturn chairman, president and CEO.
The Hendrick-SRE transfer brings to 49 the number of Saturn dealerships owned by the automaker subsidiary. The total has steadily risen as Saturn has refused to let major consolidators retain Saturn franchises that might be part of groups acquired by those consolidators.
Saturn's concern is that their brand would be hurt if their's was just another store in a consolidator's collection.
Mr. Hudler has delayed plans to offer SRE stock in view of the soft market for publicly owned auto retail collections.
Mr. Musgrave says, "Other plans exist for SRE if an IPO is not feasible." He declines to elaborate.
There are 431 Saturn stores in the U.S. The 14 bought from Hendrick include five in California, two in Colorado, six in North Carolina and one in South Carolina.