General Motors Co.'s Chevrolet division is in the best position of any brand to capture customers abandoned by Saturn's pending exit from the market.
Of all Saturn-brand shoppers who were in the market in August, 38% considered one or more Chevrolet models, according to the latest data from Compete Inc., a Boston-based consultancy.
“The bad news is there's a bunch of brands right behind Chevy,” warns Lincoln Merrihew, Compete's managing director-autos.
Saturn is expected to disappear from the retail landscape by year's end on the heels of Penske Automotive Group Inc.'s decision to scuttle a planned acquisition. Speculation about the resulting market impact is rife.
“It eliminates a (brand) from a market that will become increasingly (competitive) in years to come,” says Aaron Bragman, an analyst with IHS Global Insight in Troy, MI. “In the end, it will probably benefit GM and it will benefit the entire industry.”
Based on current market conditions, however, Saturn's wind-down may be no more than a hiccup. According to Ward's data, the brand's demise would remove slightly more than 85,000 sales from the 10 million-unit U.S. market.
That's less than 1% this year's volume and roughly 4% of GM's sales. The brand also has struggled mightily through the industry's downturn, with sales off 60.2% through September, according to Ward's.
On the production front, Saturn's elimination pulls an estimated 319,630 units from a Ward's forecast looking out two years. Of the 21.8 million vehicles the industry is expected to produce over that time period, Saturn's builds account for less than 1.5%.
But in a tight market, any opportunity is welcome. And the odds that Saturn customers will remain in the GM fold are “slightly in GM's favor,” Merrihew tells Ward's.
Several key Saturn products share platforms with popular Chevy vehicles, such as the Aura and Malibu sedans, respectively, and the Vue and Equinox cross/utility vehicles.
“Looking for a given car with given equipment at a given price, (choosing Chevy) makes sense,” he says, adding “the bad news” is no other GM brand ranks among the top 10 marques also considered by Saturn shoppers.
Of those consumers who pondered Saturn vehicles in August, 34% looked at Toyota models and 32% contemplated Ford products.
Honda and Mazda were fourth and fifth, respectively, with 30% and 21%, according to Compete.
Bragman thinks Buick makes most sense for Saturn owners, given how GM is trying to reposition the 106-year-old marque.
“Saturn was always aimed at import-intenders,” he says. “GM is shifting Buick, giving it more of an import feel. And the stuff coming from Buick would have ended up in Saturn showrooms anyway.”
Penske's plan was to secure product from another auto maker because a supply agreement with GM ended with the '12 model year. Penske says a deal was reached with another unidentified manufacturer, but was rejected by the auto maker's board of directors at the 11th hour.
Reports out of France identified that auto maker as Renault Samsung Motors Inc., adding the products in question were the SM3 sedan, QM5 CUV, and the coming SM5 and SM7 sedans.
Ultimately, the failed arrangement portends a positive outcome for GM, observers says.
“GM has been trying to get rid of Saturn for years,” says Erich Merkle, president of Autoconomy in Grand Rapids, MI. “Now they can finally expel it.”
A Saturn-Penske tie-up likely would have benefited from the starpower generated by Roger Penske, founder of the dealer group that bears his name.
“There is a lot of (public relations) potential that could come from him, specifically, vs. some mysterious investor group from Mongolia, or somewhere,” Merrihew says.
GM expects to complete the brand's phase-out by the end of the year. But for the auto maker to take advantage of the situation, it must woo former Saturn customers elsewhere into the auto maker's portfolio, which next year will consist of four core brands — Chevrolet, Cadillac, Buick and GMC.
In addition to Saturn, GM will wind down Pontiac and has tentative deals to sell its Hummer luxury SUV division to Tengzhong Heavy Industrial Machinery Co. Ltd. and Saab Automobile AB to Koenigsegg Automotive AB.
“We're going to do what we will do with all of our brands, which is reach out to our customers and help them find new GM dealers, and reach out to them with purchase offers when it is time for them to re-enter the market,” says GM spokesman John McDonald.
Those purchase offers could be in the form of cash or financing incentives, while nearer-term GM could solicit Saturn owners with service or warranty offers.
“It could be any number of things, we're putting the offers together right now,” McDonald adds.
Says Merkle: “I was skeptical (of the Saturn acquisition) from the start. Penske may have been opening Pandora's Box.”
The wind-down also impacts thousands of Saturn employees. It is estimated the brand's 350 U.S. dealers employ roughly 13,000 people.