Saturn owners are less likely to default on their new-car loans, says Don Hudler, former Saturn Corp. president and current Saturn dealer, in rebutting a claim in a business magazine article.
The story headlined “Car Loans: Another Headache for Detroit” in the August 20 issue of Business Week, alleges “Saturn buyers are 22 times more likely to default on their loans than Toyota buyers are.”
Hudler, who owns six Saturn stores in the Dallas and Houston markets, says the charge of Saturn loan delinquencies run amok was based on “a sample that would shock most researchers,” with data emanating from a forthcoming book, “Household Credit Usage.”
Hudler asserts that research for the new book on credit came “reportedly from a single bank” and “consisted of 7,000 loans,” but that Business Week did not clarify the source of its original data.
Moreover “over 80% of Saturn owners are financed mostly with GMAC or a single bank that each Saturn retailer elects to use, with subprime contracts going to various other lenders,” Hudler says.
In other words, “the major lenders had already turned down most of the research samples,” which accounts for their high default rate, he says.
Saturn reported 433 U.S. dealers as of January 1, a decline of five compared with 2006. Its sales in the January-July period of this year grew 15.9% to 145,989 new cars and trucks, as General Motors Corp. bolstered the lineup with new products.
Saturn General Manager Jill Lajdziak, responds to the credit flap by reaffirming her forecast of about 260,000 new-car sales this year, up 5% from 247,408 in 2006, but approximately 26,000 units below the brand's all-time peak in 1994.
A Saturn “lifer,” Lajdziak says Saturn dealer online traffic has jumped to 50% this year, from 2006, to about 1.5 million visitors a month.
Saturn dealer, Bill Marsh, Jr., based in Traverse City, MI, says the Saturn loan default rate is about the same, or even less, than his other franchises — Buick-Pontiac-GMC, Chrysler-Jeep-Dodge and Hyundai.
“In fact,” says Marsh, “Saturn's brand loyalty in northern Michigan often runs higher because its new models, like Aura, Outlook and the Vue hybrid, are well-received and its new ad agency (Deutsche/LA) is coming up with some terrific ads.”