Production problems slow Saturn success story

January 19, 1992|By David J. Morrow | David J. Morrow,Knight-Ridder News Service

General Motors shareholders should hope that Rick Hewitt becomes a trendsetter. The Union Lake sign painter recently bought a Saturn instead of another Honda.

"The Saturn costs a lot less than my Honda," Mr. Hewitt said. "And I like it about the same."

After a shaky start-up, GM's Saturn subsidiary appears to be finding its place in the small-car market. Sales will outpace the Nissan Sentra by 1,000 cars, and may surpass the popular Toyota Camry.

Saturn's fate also will answer one of the most pressing business questions of the 1990s: Can U.S. automakers compete with those from Japan?

The answer appears to be "yes." Or at least "almost."

"The market has reacted very well to the Saturn," said Stephen Girsky, an auto analyst with PaineWebber. "But it's still too early to predict any long-term success."

GM unleashed Saturn to give U.S. buyers a home-grown choice in the small-car segment. Instead of buying Japanese, these loyal patriots would now buy Saturn, starting at around $10,300. That's the strategy, and the buyer profiles so far seem to match up.

According to J. D. Power & Associates, the principle Saturn driver is 39, male and loaded. His annual household income tops $50,000. Joe Civic, meanwhile, is 37, and watches his pennies more closely. His household income is a modest $42,000.

"A lot of affluent families are buying Saturns as their second car," said John Hammond, a senior partner with J. D. Power. "Saturn has been more successful than what we expected. We'd thought they'd cannibalize off the other domestic makes. They haven't."

Still, not everyone loves Saturn. It turned up a disappointing 16th of 34 car brands on J. D. Power's initial quality survey. And Consumer Reports just gave it a lukewarm rating, saying it "has the potential to become a good little car."

Plenty of problems lie in Saturn's path. The car's quality is decent, but not among the world's leaders. Production at Saturn's plant in Spring Hill, Tenn., is seldom steady, and forces some dealers to wait weeks for back-order deliveries.

More than pride rests on Saturn's survival. To launch its venture, GM invested eight years and $3.5 billion, a whopping sum to shareholders. The check GM wrote to jump-start Saturn would more than cover the automaker's $2.2 billion in 1991 losses.

Saturn is going all out on service after the sale. "When I went into the Saturn dealership, they made me feel very welcome as a female buyer," said Stephanie Stewart, an art director with the Detroit Pistons. "It's their idea of how to service the client that sold me."

Unlike its GM siblings, Saturn offers no rebates or incentives. Instead, buyers get a sweetened warranty that includes a

24-hour roadside assistance program and a money-back guarantee for dissatisfied customers.

The trick for GM is to turn Saturn into a mass-market car without sacrificing the quality. Saturn President Richard "Skip" LaFauve acknowledges that the changeover won't be easy. "We're focusing on getting good quality from the plant," he said. "Boosting production won't change that."

Saturn's plant has been prone to assembly line snafus. Delays were constant the first year, causing Saturn to slow its production. The plant's annual capacity is 240,000 cars, but Saturn has only made around 70,000.

GM is losing a bundle on Spring Hill's slow pace. Dealers can't get the cars fast enough. "Our original projections were to sell about 85 Saturns a month," said John Scicluna, general sales manager for Saturn of Plymouth, Mich. "Now, we're averaging about 150 a month. I still have about 70 cars on back order that I can't get."

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