GM uses Saturn to test its turnaround plans

updated 5:40 p.m. ET Feb. 8, 2007

CHICAGO - To peek into the future of the General Motors Corp. turnaround plan, just look at Saturn.

Last year, when GM’s sales skidded 8.7 percent, Saturn’s rose by 6 percent. By fall, the small brand that used to call itself “A Different Kind of Car Company” will have a lineup that’s almost completely new, with no models older than 20 months.

Simply put, if Saturn falls from orbit with all its new vehicles, GM likely will follow.

“It’s a no-excuses product lineup,” GM Vice Chairman for Global Product Development Bob Lutz said in an interview with The Associated Press at the Chicago Auto Show. “I told the sales and marketing guys if this lineup doesn’t work, I’m out of ideas.”

Saturn, started in 1990 as GM’s small-car answer to the Japanese automakers, is the canary in the mine for the company’s desperate effort to make itself smaller, leaner and faster to better compete with the enemy, mainly Toyota Motor Corp.

Last year, GM’s U.S. sales dropped to slightly more than 4 million vehicles from roughly 4.5 million vehicles in 2005. Toyota, which seemingly can do nothing wrong in the U.S., reported its best year ever in 2006, with sales up 12.9 percent to about 2.5 million vehicles.

Just two years ago, Saturn was the metaphor for all of GM’s ills. It’s products were old and tired, and what once was a hot brand had been allowed to languish as the company ignored cars and focused on big-profit trucks and sport utility vehicles.

At the same time, gas prices rose and GM didn’t have many desirable cars while Toyota did. GM lost market share and buckets of money, $10.6 billion in 2005 alone. There was talk of bankruptcy.

All the while, GM was trying to fix itself. It started cutting costs, inducing upward of 34,000 expensive hourly workers to leave through buyouts or early retirement offers. By the end of last year, it had cut $9 billion in annual costs, about $2,000 from every car it sold. It has promised a profit in the fourth quarter, the first one in two years.

Roughly, 18 months ago GM also began to replenish Saturn.

Saturn got the Sky roadster, a sleek two-seat sports car. Later came the Vue small sport utility vehicle with a hybrid gas-electric version, and the Aura mid-sized sedan. The Astra, an Opel-based small car to replace the aging Ion, was unveiled Wednesday in Chicago.

Lutz said the new models will put pressure on Saturn managers to beat last year’s 6 percent gain in 2007, even though the overall U.S. market may be flat or down.

“There is now not a weak sister in the batch,” he said of Saturn’s products. “Everything is top-notch from a design and execution standpoint,” he said.

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