GM Needs a Lift From Aura

Struggling Giant Hopes for Momentum From New Saturn Sedan

If the Saturn Aura makes a splash at the New York auto show, GM could reclaim a slice of the sedan market. (General Motors)

Can a new line of Saturn models help pull General Motors Corp. out of the ditch, or is GM doomed to marketplace irrelevance?

GM is putting the question to the test as it unveils the Saturn Aura at the New York International Auto Show, which opens to the press tomorrow. The new mid-size sedan will go up against the Toyota Camry and the Honda Accord. And while a single model line can hardly save the world's largest automaker, GM is hoping that momentum at its Saturn division will at least suggest it is capable of moving in a new direction.

The Aura is getting high marks for more distinctive exterior styling and much classier interior design than GM has executed in the past, and the company says a hybrid version is planned for later this year. Earlier this year, Saturn began selling the Sky two-seat convertible, which dealers say is sold out. In New York, Saturn is also showing two new sport-utility vehicles: a hybrid version of the Vue and a larger SUV called the Outlook.

The New York auto show is heavily attended by investors, bond raters and industry analysts, who have been pressuring the auto giant to solve its many financial problems.

GM, which lost $10.6 billion last year, badly needs to show it has a few winners on the horizon. Chief executive Rick Wagoner has been slashing the automaker's bloated cost structure for the past six months. The company is axing 30,000 manufacturing jobs by 2008; closing several major assembly plants; and cutting back salaries, bonuses, and health-care and retirement plans of remaining workers. Ford Motor Co. is undergoing a similarly bruising overhaul. But all the deep cuts haven't stopped talk that Detroit has another serious problem: its inferior product line.

The waning confidence reached new lows in January when President Bush said out loud what a lot of other people were thinking. In squelching the idea of an industry bailout, Bush said GM and Ford needed to build a "a product that's relevant."

Product hits are essential for any automaker attempting a turnaround. A few years ago, Chrysler was still mired in a slump following its 1998 merger with DaimlerBenz. The automaker brought out the brassy 300C sedan, lifting Chrysler's fortunes and boosting morale inside the company. As an automaker far larger than Chrysler, GM needs lots of 300Cs to reverse course, said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, the consumer research firm.

"A company the size of GM needs several hot products," Schuster said. "The 300 was significant enough to carry the entire [Chrysler] group. But for GM -- because of the number of models and brands -- their successful products have to span more than one brand."

Early signs are promising. Earlier this year, GM started shipping the redesigned Chevrolet Tahoe and models from its family of large SUVs. The word from dealers suggests that the vehicles are strong sellers, although SUVs remain under constant threat from rising gas prices. Schuster said he expects GM to begin investing more heavily in improving other areas of its lineup, including smoother-riding, less-gas-thirsty crossover SUVs.

"You need to have a balance -- not only between cars and trucks, but in the whole body style array," he said. "You can't be caught without a vehicle that addresses all consumer needs and lifestyles."

While strong in trucks, GM has a weak track record in passenger cars. High-profile "rebirths" at Pontiac and Buick produced lackluster car models, which include the Pontiac GTO and the Buick LaCrosse. Schuster and other analysts think the Saturn Aura should be more competitive than previous models because of the improved interior and fresh design. "It's a stretch from where we've seen GM and Saturn sedans," he said.

As a car brand Saturn has a storied history. Saturn was envisioned in the mid-1980s as a way for U.S. automakers to revolutionize small-car production. At the time, Japanese automakers were making deep inroads into the U.S. market with inexpensive, high-quality models. GM formed Saturn as a independent subsidiary to keep it safe from GM brass. Saturn got its own labor agreement and more computerized plant machinery. For years, it relied on folksy marketing and "no-haggle" pricing at dealerships.

But small cars drifted out of fashion. Over time, standard passenger cars grew bigger. Luxury brands gained a stronger footing. Then the SUV craze took off. Saturn eventually was swept back inside GM, and today it operates just like every other GM brand division. GM wanted Saturn to share common designs and parts with the other divisions to keep costs low. Saturn sold 214,000 vehicles last year, down 25 percent from its sales peak of 286,000 in 1994.

Saturn, through the years, was able to hold on to the reputation of friendly customer service built up by dealers. John Lister, chairman of Lister Butler, a New York-based consulting firm, said of all GM brands, Saturn has the clearest definition and best opportunity for growth. Unlike other GM brands, he said, Saturn hasn't been tainted with confusion about its place in the market or saddled with a bunch of gas-guzzling SUVs in its lineup.

As for President Bush, Saturn General Manager Jill Lajdziak wants him to reconsider.

"Our president ought to look at the Saturn brand," she said. "We are bringing out products that are absolutely relevant to America."