Gm Tests Restructure Plan Via Saturn

By: Lauren Woods

The world's largest automaker is offering a peek of the future through its Saturn brand. The General Motors Corp., as evidenced by its turnaround plan and lineups, is trying to shift to a more rewarding manufacturing auto segment that includes leaner, smaller and faster cars.

According to analysts, those who wanted to see the future of GM's turnaround plan could just look at the Saturn brand. In 2006, when the auto giant's sales fell by 8.7 percent Saturn's increased by 6 percent. By fall, Saturn, also called "A Different Kind of Car Company" unveiled an almost entirely new lineup, with models older than twenty months. From the incidence, it can be ascertained that if Saturn fails, GM will likely fall.

GM started producing Saturn vehicles in 1990. The production is triggered by the growing importation of Japanese cars in the United States. The vehicles were catered to serve the auto demands in the US, Puerto Rico, and Canada.

Right now, Saturn is undergoing one significant transition. GM has given it plentiful of new products like Sky roadster, Astra hatchback, Aura sedan, and Outlook large crossover sport utility vehicle built off GM's Lambda platform. GM will reposition Saturn to the upper-end auto market to compete better. As such, Saturn is expected to face one of the hardest battles in achieving a premium standing. The company offers two sub-lines of vehicles - the "Red Line" and the "Green Line." The former are performance-oriented Saturns, while the latter is the more environmentally friendly cars. VUE and ION Red Line models, unveiled in 2004, will be joined by Green Line VUE and Aura and Red Line Aura and Sky this year. This lineup may not be using and flamboyant auto parts but its functionality is certified by the automaker.

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.

In 2006, GM's sales plummeted to approximately 4 million vehicles from roughly 4.5 million vehicles in 2005. Toyota Motor Corp., GM's closest rival, reported its best year ever in 2006, with sales increase amounting to 12.9 percent to about 2.5 million vehicles.

Two years ago, Saturn was the allegory for all of GM's problems. Its product line was aging and boxy. In fact, what was once a hot-selling brand turned into languished because of the sudden shift of GM to big-profit SUVs and huge trucks. Unfortunately, gas priced soared leaving GM with $10.6 billion loss in 2005 alone. In fact, there was already a talk then about possible bankruptcy.

All the while, GM is working hard to recuperate. As a fact, by the end of 2006, it had cut $9 billion in annual costs. The number is approximately $2,000 from every car it sold. Additionally, it is expected to profit in two years time.

Mark LaNeve, GM's vice president for sales, service and marketing, said GM's products should all be substantially new in another 12-18 months. Key is the redesigned Chevrolet Malibu due out later this year to take on Toyota's Camry. "But it will take a while longer for the company to get its message to consumers as it rolls out competitive entries in the small and mid-sized car markets," LaNeve said. "We're not going to have it solved in the next 12 to 18 months."

"GM's cost-cutting efforts have enabled it to put more money back into products and be more disciplined on prices," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. Cole thinks GM's positive results will accelerate as more new products hit showrooms. "I think we're going to see profitability that is going to surprise a lot of people," he added.

But David Koehler, a marketing professor at the University of Illinois at Chicago who has studied GM, said while its products have improved, it still has to overcome its old image of lacking fuel efficiency and quality. "The story remains to be told if they are able to reposition that image," he concluded.

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