GM's Saturn Spin-Off Could Be Opening for Chinese, Indian Automakers
By Michelle Krebs February 19, 2009By Michelle Krebs
DETROIT -- General Motors is moving toward a spin-off of its Saturn brand and is open to
selling vehicles from other automakers through the Saturn dealer network, according to a letter sent to Saturn owners.
Such a move would be a perfect door into the U.S. market for Chinese and Indian automakers.
If an alliance with Chrysler fails to materialize, Fiat -- long chomping at the bit to return to the U.S. with its Alfa Romeo models and launch its popular Fiat 500 here -- would be another possibility.
All options are on the tables but among those being seriously considered by GM and Saturn dealers is the spin-off of Saturn into the Saturn Distribution Corp., an independent GM subsidiary. If the spin-off occurs, Saturn dealers would source vehicles from other automakers, Jill Lajdziak, general manager of Saturn, wrote in the memo.
As part of its restructuring required from the government loan package, GM put Saturn up for review. GM CEO Rick Wagoner pretty much advertised Saturn's availability during a press conference Tuesday detailing the automaker's progress report submitted to the U.S. government. He said GM was open to talking to anyone interested.
Saturn's letter to owners said that the goal would be to find future vehicles that match the Saturn brand for fuel-efficiency, safety, reliablity and affordablility. "From a retailing perspective, we would build on our core strength of unmatched customer service," Lajdziak said in her letter to owners.
Indeed, the opening of the Saturn channel could be a boon for foreign automakers. Saturn dealers every year rank at the top of customer satisfaction ratings. When GM created Saturn, it received thousands of dealer applications for the franchise but carefully selected those dealers with a history of strong customer service.
In addition, company executives, instead of blanketing every street corner with a Saturn showroom, limited the number of Saturn dealers. Saturn carved out a large territory for dealers so they could boost the number of vehicles they sold per dealer and thus enhance dealer profits.
Further, Saturn had the advantage of locating dealers at the right addresses, whereas older franchises like Chevrolet were stuck in areas that weren't necessarily the hot spots for retailing.
Shanghai Automotive, GM's partner in China, would be a candidate for selling vehicles through Saturn dealers. So, too, would some of the smaller Chinese companies, like battery and automaker BYD, Geely, Chery, all of which have ambitious global aspirations. From India, Tata Motors, which last year introduced what it billed would be the world's cheapest car, the Tata Nano, would be a likely possibility as would highly profitable Maruti or Mahindra, which already has plans to come to the U.S. later this year.
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