Detroit's auto troubles test brand loyalty
General Motors will drop four of its eight nameplates. What about service and warranties?
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Saturn owners in particular feel at sea, considering they bought into the brand because it was marketed as "a different kind of car company" when it was launched in 1985. The promise meant haggle-free prices and less pressure to buy on the showroom floor – factors designed to generate long-term loyalty and repeat business.Skip to next paragraph
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But he adds: "If it gave out tomorrow, I don't think I would buy a Saturn." His biggest concern: that it would be discontinued. As for resale value, he says the writing is on the wall: "I don't expect to get anything."
The used vehicle market will feel the sting.
"An orphan brand is likely to see less demand once those cars go into the used car market. You're going to wind up seeing that used car residual values are going to drop," said Paul Eisenstein, bureau chief of Thedetroitbureau.com, a website covering the automotive industry.
If resale values are eroding, more consumers are expected to hold onto their vehicles as long as they can or find creative ways to deal with their diminished value.
"I buy cars and drive them into the ground, so [the resale value] is not as big a concern for me," says Denison Hatch of Wilmington, Del., reached by phone. Although he was happy with his 1999 Saab – "a BMW without the nameplate" – he decided to hand it off to his son who is heading off to college, rather than trade it in for a replacement.
Dealers offer incentives and service
While dealerships are faced with the burden of stocking inventory, the public is wary of purchasing. They are waiting to see how the next chapter in this drama unfolds before doing anything differently on the showroom floor. So far, GM has promised it would help by offering buyer incentive programs and a pledge to abide by all remaining warranty and service agreements.
"I try to look at it from a positive perspective. Hopefully, this doesn't spell the end but is really a new beginning," says Charlie Merki, general manager of three Saturn dealerships in northwest suburban Chicago.
One option GM is considering for Saturn is selling it to a foreign company from China or India interested in getting into the North American market and spinning off its distribution network. That would enable Saturn dealerships in the US to move forward as independent retailers, meaning they could sell non-GM brands that have similar price points and cachet with consumers that the Saturn brand does.
"There are 400-some of us [across the US], with buildings and rooftops and parking lots and computer systems that are all there," says Mr. Merki. "My feeling is that it has some value."
But, he adds, "It's just who has got the money at this juncture to play?"