Saturn strategists are looking for a few good car dealers
Troy, Mich. — Dealers form the front line for an auto company, and the service they provide can make or break a carmaker's reputation. So major changes in retailing are a key to Saturn Corporation's plans. One of the more significant changes planned by the General Motors Corporation subsidiary is a reduction in the number of dealers franchising its car.
Even though the dealer count will be down, however, Saturn may actually offer customers more dealerships.
``Instead of having 7 to 10 dealers in Boston, we may just have 4 or 5,'' explains John Martabano, a Saturn executive helping to develop the new retail strategy. But Mr. Martabano quickly notes that each of those individual dealers may operate four or more satellite dealerships, or individual out-lets.
Each of these will be tailored to the needs of a specific location. Though all will sell new cars and offer service and parts, a mall-based outlet might not carry used cars. And only one of a dealer's satellite facilities might offer a body shop.
``This will help avoid the costly duplication of fixed assets,'' Martabano adds.
When the first Saturn car goes on sale in late 1990, the GM division hopes to have dealerships operating in 123 cities. The first franchises will be awarded later this year, after a painstaking selection process that Martabano says is designed to select only those with ``the best customer satisfaction index.''
In return for granting franchisees a broader territory and the flexibility to customize their facilities, Saturn is making a number of demands. Among other things, dealers will have to submit their business plans to the corporation for its approval.
Saturn dealerships will also have to be patterned after a corporate-wide architectural master to promote uniformity.
Potential dealers will not only have to have a good record, but also a lot of cash, a minimum of about $1.3 million in assets, and the ability to raise the estimated $3.5 million to $20 million that Saturn officials estimate will be needed to operate the necessary network of satellite facilities. (The amount of money needed would depend on a dealer's location.)
Although Saturn expects to attract only the best dealers, the division is still taking steps to ensure it will be able to take action against those who don't live up to expectations.
Taking such steps at the outset is important, because with other manufacturers, longstanding franchise agreements limit the ability to discipline dealers who are unable or unwilling to deliver good service.
Chrysler Corporation, for example, was recently blocked in its effort to force some of its dealers to accept binding arbitration in certain disputes.
``Because of state franchise laws,'' explains a frustrated Ford Motor Company official who asked not to be identified, ``about the only way we can get rid of a bad dealer is if he commits a major felony.''
Chris Cedergren, an auto analyst with J.D. Power and Associates, a California-based auto market-research firm, says he is pleased with Saturn's approach to retailing.
``They're going to be rewriting the way [auto] retailing is done in this country,'' he says, adding that he expects Saturn dealers will be able to turn a high profit while being able to custom-tailor their retail plans to fit their own individual market.