Saturn Dealers Struggle To Keep Brand Alive

Saturn was once the great hope for General Motors. Now, its dealers are trying to see if they can save it.

As part of a radical restructuring announced this week, GM said it would stop producing Saturns after 2011. The company is considering spinning off Saturn's distribution arm. And dealers are trying to find a new manufacturer to build cars under the Saturn name.

Normally, companies create a product and try to find a way to distribute it. Saturn's 200 dealers are now trying to see if they can make that process work in reverse.

Todd Ingersoll owns two Saturn stores in Connecticut. He says Saturn's dealer network could be a great opportunity for a foreign company hoping to break into the U.S. market.

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"You've got a collective group of retailers in strategic points throughout the country that represent most major metro areas. You have a brand that over the last 20 years has built a phenomenal relationship both in its community and with its current customer base, and we don't think that this is the end of Saturn," Ingersoll says.

Looking For A Savior In Tough Times

Ingersoll says dealers are looking for a new manufacturer that could provide fuel-efficient and affordable vehicles that fit the Saturn brand. But in a deep recession, that won't be easy.

Demand for cars has plummeted in recent months. That's a big reason why GM is dropping Saturn in the first place. And corporate financing has dried up.

"I think that there's a great amount of risk out there for anybody to come into the marketplace at this time, given the state of the economy," says Bob Maguire, who owns two Saturn stores in New Jersey.

He says Chinese companies and the Indian firm Tata are interested in distributing cars in America. But he thinks they may not be developed enough yet to succeed in the U.S. Still, Maguire holds out hope that some foreign firm will keep the Saturn dealer network going.

"I would hate to see it go away," he says.

A Promising Start

When Saturn launched in 1990, it held great promise. GM called it a different kind of company.

Showrooms provided a friendly atmosphere with no-haggle pricing. When sales agents delivered vehicles to customers, they gave a big cheer.

Saturn even invited owners to a picnic at its factory in Tennessee. The company advertised it as a "homecoming" where Saturn owners "could see where their cars were built and meet the people who built them."

And, in the beginning, those cars did what GM had hoped. They matched Japanese cars in reliability and lured back some buyers.

Annette Bernard, a physician in Atlanta, was a classic target customer. She owned a Nissan Sentra but wanted to buy American. She bought her Saturn in 1998.

"I started out really liking the car, I thought it was sporty. And I thought it was very, very cute," Bernard says.

Quality Problems Emerge

But after six months, there were problems. When the transmission went out in 2002, she says, she "threw in the towel" and started to look for a new car. Bernard bought a Toyota Camry and it was "fantastic," she says.

Where did Saturn go wrong? Quality did decline, according to Consumer Reports. And, after investing heavily in the company, GM focused on other brands. Dealers say Saturn models grew stale and customer interest waned.

"You know, you sold the same small car for eight years," says Ingersoll, the Connecticut dealer.

Dealers sank a lot of money into their showrooms, and they don't want to lose it now. GM doesn't want them to, either. When GM shut down Oldsmobile, it had to pay dealers more than $1 billion in compensation.

GM and Saturn dealers will spend the next two months trying to come up with a viable plan and a new manufacturer — one they hope will protect dealers' investments and keep the Saturn name alive.

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