Saturn Adapts Its Sales Strategy To Japanese Market

When General Motors Corp. conceived the idea for Saturn a decade ago, it was envisioned as a "Japan fighter." The new division would challenge the imports that were rapidly gaining US market share. Today, American motorists are buying everything Saturn's factory can build. But to Keith Wicks, who runs the division's Japanese operations, the real test is whether Saturn can take on the Japanese on their home turf.

It won't be easy.

"Japanese motorists don't think American cars are that strong," says businessman Hiro Tanaka.

He has come to see for himself at the Osaka Import Auto Show. Dozens of European, American, and even a couple of Australian-made products fill the five halls.

Foreign-made cars are slowly gaining a toehold in the Japanese market. At the beginning of the decade, they accounted for barely 2 percent of the market. Today, that's approaching 10 percent. But European brands like Volkswagen, BMW, and Mercedes-Benz dominate the import niche.

GM's Chevrolet Cavalier is an example of how US products have fallen short of expectations. In Japan it is sold under an agreement with Toyota. The Toyota Cavalier is likely to close the year at about 15,000 units sold, well short of the 20,000 target.

Targeting the market

To improve its prospects, Saturn has carefully studied the Japanese market. It has developed right-hand-drive models to suit Japanese roads. To make it easier to fit in tight spots, Japanese models get electrically operated mirrors that fold in. And the pedals have been extended, making them easier for shorter Japanese drivers to reach. Saturn will emphasize its station wagon model, recognizing the shift away from sedans to what the Japanese call "recreational vehicles." These include wagons, as well as minivans and sport-utility vehicles.

"More than half our volume will be wagons, compared to less than 10 percent in the States," forecasts George Doijami, Saturn of Japan's marketing manager.

But if Saturn is to succeed in Japan, it will have to do battle on its own terms, industry experts caution. As good as its products may be, they will face off with some of the world's highest quality vehicles. So, much as in the US, Saturn will put the emphasis on its unique style of selling and servicing its products.

"Much of our basic approach should work in Japan," Mr. Wicks insists, quoting studies that show buyers in both countries share concerns about quality and service.

The Saturn strategy

Saturn will start by assigning 24 "dealer principals," giving them broad territorial rights in which they'll be able to build multiple showrooms. Some may handle everything from sales to service, others nothing but repairs. In all, Saturn expects to operate 65 showrooms across Japan.

By comparison, Toyota operates more than 100 dealerships in Tokyo alone. And a significant share of its cars is sold door-to-door. The longstanding strategy allows salespeople to create giri - an obligation to buy. But times are changing. Home sales are a costly way to do business, and considering the high cost of land and utilities, many Japanese manufacturers are rethinking the need to have so many dealers.

If Saturn is right, it should sell as many as 500 vehicles a year through each showroom, compared with 300 for the typical Japanese-brand dealership, even after including home sales.

In the US, Saturn's trump card is its customer-friendly sales-and-service approach. The result: Saturn consistently sits at the top of the customer satisfaction charts, according to market-research firm J.D. Power & Associates.

Saturn's one-price strategy could prove the most difficult concept to translate. It has strong appeal to American motorists tired of battling for the best price. But the Japanese new-car market has been stagnant for most of the decade.

"Just walk into a Toyota showroom and they will offer to cut the price 300,000 yen [about $2,700]," says Takeo Arakawa, director of service operations for Saturn of Japan, and one of many senior executives hired away from Saturn's Japanese competitors. "So the first year could be difficult. Consumers are used to getting discounts. If they see we don't cut our prices, many will go somewhere else."

"We realize we won't be an instant success," acknowledges Saturn Corp. president Donald Hudler. "We must earn our way."