GM’s Strategic ADD Continues

 

There have been so few bright spots at General Motors that it really irritates enthusiasts when the corporation does its best to undermine any positive momentum.  One such blunder is to once again resort to huge manufacturer incentives…something the company claimed it had abandoned. 

 

In the same commercial touting the Saturn Aura’s win of the North American Car of the Year, it is announced that you and yours can buy one at your local Saturn dealer with 0.0 percent financing AND $1,000 cash back.  Just about 16 months ago, GM brass said they would no longer resort to financing and cash back deals, citing the practice had hurt profits and trained customers to delay purchases until incentives hit.

 

Furthermore, incentives indicated the models that were failing to sell.  This inherently led the market to believe that the models were seen as not as good as other competition.

 

How has the Aura sold?  In 2007 7,898 Auras were sold to dealers.  That’s not great at all, but it’s a good start when one considers that it will take time to train consumers to visit a Saturn dealer when they are in the market for a good midsize sedan.  It’s even better considering the Aura outsold the Buick LaCrosse, all Cadillac models, and even all Saab models combined.

 

Saturn is the great surprise.  It went from neglected red-headed stepchild to the brand with the second best sports car (Sky, second only to Corvette) and the best midsize sedan value in all of GM.   The Sky still isn’t a Miata, and the Aura is no Accord…but neither are that far behind, and both are extremely good alternative choices.

 

While receiving the North American Car of the Year helps establish Saturn’s reputation for producing high-quality, high-value cars (instead of cheap, but reliable transport) GM’s need for instant gratification will most certainly undermine this. 

 

GM’s actions remind of the death of Oldsmobile.  Set to be the “import killer” division, the brand got new competitive models like the Intrigue and Aurora.  Journalists swooned, awards were granted, but before second-gen cars could be designed to really set the division up for success, GM brass got cold feet.  Sales weren’t what they had “hoped for” and the division was axed (which itself cost of over a billion dollars!)

 

Sales take time.  Getting to Accord or Camry numbers will take a minimum of four or five years — and that’s assuming Saturn continues to make many year-to-year improvements to the Aura to smooth rough edges and get ahead in terms of features, performance and value. Even then, they have to be better than the upcoming new-generation Accord. 

 

One thing is for certain – putting the fire-sale image to one of the best domestic vehicles won’t help Saturn or GM.

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One Response to GM’s Strategic ADD Continues

  1. Mike Barer says:

    Excellent article, corporate America is much too conservative to roll the dice and put it’s eggs in one basket.

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