Saturn Revitalization Working, Defiant Brand Chief Insists; Dealerships Get New Look

DANBURY, CT – Defiant in the face of continuing news reports General Motors Corp. is contemplating dropping her division, Saturn General Manager Jill Lajdziak insists her plan for revitalizing the brand is working.

Saturn achieved a 20% improvement in market share in 2007, she says, and this year’s sales of new products, including the Aura, Vue and Outlook, have climbed 3.4% through July 31.

However, because the entry-level Astra is not selling as well as the cast-off predecessor Ion, overall deliveries are down 17.9%, while retail sales are off 18.5%.

Still, sales of the Astra, which boasts a fuel-economy rating of 32 mpg (7 L/100 km), have been climbing steadily, with an average transaction price of $18,200 compared with $15,100 for the Ion. The 5-door model accounts for 70% of Astra sales, which also is available as a 2-door.

At a press conference to unveil the new look of Saturn dealerships, the Saturn of Danbury franchise here is one of only seven revitalized stores out of 440 Saturn dealerships nationwide. Lajdziak declines to say what the average investment will be for dealers who revitalize their operations.

Chris Bower, Saturn’s manager of retail strategies, says the brand built its reputation on customer treatment, but the industry has caught up. “Customers have enhanced expectations now,” he says. “They are shopping differently.”

He also says Saturn dealers requested new retailing innovations from the brand.

June best sales month yet for Saturn Vue.

Bower led a team of Saturn shoppers in February and March on visits to retail establishments in San Francisco and Detroit. Only three automotive brands were shopped: Mini, Scion and Hyundai. The rest of the stores included cosmetics, camping-equipment, electronics, food and upscale clothing outlets.

Bower says the best retail experience featured strong brand consistency, customer interaction that reinforced brand message and non-traditional sources of inspiration for the experience. When all these elements aligned, customer shopping behavior was altered and in many cases revealed buyers would pay more for a product.

Lajdziak says Saturn rapidly is transforming itself from a value brand. “Style is driving Saturn’s revitalization,” she says. But the scheme also is designed to improve Saturn’s customer-friendly approach to retailing cars that has featured no-haggle pricing since it was introduced in 1985.

Marketing surveys reveal customers cite exterior styling as the top reason for buying four of Saturn’s models. At the same time, Sky roadster and Outlook customers report median family incomes of $101,000 and $105,000, respectively.

Lajdziak boasts Saturn’s product portfolio is the freshest in the industry, with average transaction prices jumping 43% over the last two years, from $17,100 in 2005 to $24,400 in 2007.

Saturn residual values soared 8% from third-quarter 2004 to third-quarter 2007, she says, noting the industry increased a mere 1% in the period. Today, the Saturn Outlook residual matches that of the Honda Pilot and Toyota Highlander.

Meanwhile, some models were racking up their best months ever.

The Vue midsize CUV, for example, recorded its best retail month of the year in June.

The Aura and Vue both are available as mild hybrids, but sales of the “green” models have been stalled by a shortage of batteries. Hybrids accounted for only 7% of Vue and 3% of Aura sales in July.

The hybrid powertrain is a $4,120 option on the Vue and $3,495 on the Aura. Some of the added price includes equipment that is standard on hybrids, but not included on conventional vehicles.

Although sales of the Outlook trail those of the Buick Enclave and the GMC Acadia, which are built on the same architecture, GM is encouraged with the performance of Saturn’s large CUV.

Mark LaNeve, GM’s vice president-vehicle sales, service and marketing, says the pace of Outlook sales is satisfactory. “The 2,000 Outlooks Saturn sells monthly are really profitable.”

GM’s long-term goal for Saturn is to reflect the Opel lineup in Europe that’s designed to challenge Volkswagen, he notes. “We compete with the Japanese, of course, but over time we’re going to move Saturn’s prices up.”

Lajdziak declines to say whether Saturn is expected to operate in the black this year, but LaNeve admits GM has to find a way to not only make Saturn innovative but profitable, too.