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GM Takes Risk with Saturn Square-off

Date: Jul 9, 2007


Author: Flybrian

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Original Article:

GM's Risky Challenge

Source: The Detroit News

Author: Sharon Terlep

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GM's risky challenge
Carmaker bets on showroom face-off with Asian cars

Sharon Terlep | Link to Original Article @ The Detroit News

ANN ARBOR -- A look of disbelief crossed Karen Smith's face as a Saturn salesman handed her the keys to a shiny new Toyota Camry.

"Really, go ahead and drive it," he told Smith, who was car shopping for her teenage son. "Try the Honda, too."

Off she drove, rolling out of a Saturn dealer's lot in the hot-selling Toyota, her two sons and their grandmother in the car. For the next 15 minutes, the brood weighed the pros and cons of the Camry and the Saturn Aura, from the handling on a tight corner to the arrangement of the instrument panel.

The unlikely exercise is part of a new promotion from General Motors Corp.'s Saturn brand that pits the new Aura four-door against American car buyers' perennial favorites -- the Camry and Honda Accord -- in Saturn showrooms across the nation.

Not the type of risky tactic GM would likely have tried even a few years ago. The strategy could backfire if Saturn shoppers drive a Camry and Accord and like it better.

But after decades spent defending its dominance in the market, the auto giant is going on the attack against a bigger, healthier competitor -- Toyota Motor Corp. -- and trying to loosen Toyota's and Honda's grip on the sedan market.

"We want to make sure people understand we're unbelievably confident in our product," Saturn General Manager Jill Lajdziak said. "You've got to try different ways to cut through the clutter in a very crowded marketplace."

The Smiths make a perfect target for Saturn: a family of four living in the trendy Ann Arbor area, and Smith and her husband were once Ford Motor Co. loyalists. A run of malfunction-prone vehicles turned the couple toward the competition. In recent years, they have been happy owners of a Camry and a Honda Pilot SUV.

A desire to bolster Detroit's struggling auto industry has them tentatively considering buying American. Their 15-year-old, Kevin, will soon need a car, and they want something safe, practical and appealing. The family also is encouraged by signs that domestic automakers are closing the quality and reliability gaps with foreign companies.

"We're ready to try again," Smith said.

At first, the family compared the vehicles' exteriors. They all preferred the Aura's sloping front end to the flatter Camry.

Inside the Camry, Smith's sons complained they couldn't see the dash-mounted clock from the back seat. Having driven the Aura, they talked about the roominess and overall feel of both vehicles.

Kevin Smith, the soon-to-be driver, thought the Camry had "pep" and was impressed by its handling.

His grandmother, Beverly Good, was mostly pleased that the Saturn saved them the trouble of visiting a Toyota or Honda store.

When the drive was done, the foursome huddled. They mostly agreed on the Aura, though the Camry's cavernous trunk almost won Kevin over, since he needs space to haul hockey equipment to and from camp all summer. A final decision will come later, after Smith's husband gets a chance to weigh in.

"It's a good idea," Karen Smith said of the promotion. "If they're really confident in their product, they've got nothing to lose."

Strategy similar to Ford's

Buoyed by a slew of well-received products, GM desperately wants to convince consumers that it really can compete against foreign nameplates that have cannibalized sales of Detroit's Big Three. For the first time in 76 years, GM lost its claim as the world's largest automaker when Toyota outsold it worldwide in the first quarter.

"For years, people bought Japanese cars because they thought it was the smart choice," GM marketing chief Mark LaNeve said in a recent interview. "Our products are every bit as competitive."

As part of GM's assault, Saturn dealers nationwide bought or rented a Camry and Accord to have in showrooms for the "Side-by-Side-by-Side" national campaign that runs through July.

The automaker may try a similar promotion when the redesigned Malibu hits showrooms this fall.

GM's strategy is similar to Ford's, whose recent Fusion Challenge ads pitted the Fusion sedan against the Camry and Accord.

Battle to win back buyers

Winning back customers is going to be a battle for GM.

Among consumers who bought Honda Accords between November and January, only 1 percent had also seriously considered the Aura, according to data from J.D. Power and Associates' 2007 Initial Quality Study, which measures consumer satisfaction in the first 90 days of ownership. Among Camry buyers, none had considered the Aura.

Saturn's Lajdziak acknowledges the challenge of getting on some shoppers' lists.

Sales of the Aura, which won the North American Car of the Year award at the Detroit auto show in January, totaled 27,200 through June, compared to 212,500 Camrys and 180,000 Accords.

Mentioning the Aura along with the Accord and Camry will help consumers familiar with the Japanese models recognize the Aura as a midsize sedan, Lajdziak said.

Toyota, which saw sales jump 10 percent in June compared to GM's 21.3 percent drop, is taking the heat in stride. Having its vehicles shown in Saturn showrooms may even help draw customers who wouldn't normally buy an import, spokesman John McCandless said.

"We're being targeted as very good, high-quality products," he said. "I'm not so sure that's a bad thing."


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