10 June 2007

Is Saturn Really a Success Story?

When GM sends out their press release each month with the prior month’s sales results, they (like other automakers) try to spin the positive and downplay the negative (“our sales were down 12%, but we’re working toward reducing fleet sales,” etc.). For example, here’s the most recent one:
The product renaissance at Saturn continued to accelerate with total sales increasing almost 69 [tee hee] percent compared with a year ago, highlighting the tremendous public acceptance of the new lineup of Saturn vehicles including SKY, AURA and AURA Hybrid, OUTLOOK, VUE and VUE Hybrid. Saturn's ION small car is soon to be replaced with the popular ASTRA. Saturn is the fastest growing brand in the industry this year.
According to Automotive News, Saturn’s sales are up 75.3% in May 2007 compared to May 2006 (must be a different way of counting, versus the press release). Year to date through the first five months of 2007, sales are up 30.5%. Sounds good, right?

Well, before we declare victory too early, let’s look at what makes up those numbers. The lineup in May 2006 was:

  • Ion
  • Sky
  • Relay
  • Vue

The lineup in May 2007 is:

  • Aura
  • Ion
  • Sky
  • Relay
  • Vue
  • Outlook

Granted, the Relay is on its way out the door (don’t let it hit you in the ass on your way out), but its insignificant sales in May 2007 (235 units) is not far from its slightly less-insignificant sales in May 2006 (460 units) as the model is phased out and replaced by the Outlook. Also, Saturn’s website still promotes the Relay, so I consider it a legitimate member of the May 2007 lineup.

So, the number of vehicles in the lineup went from four to six – or an increase of (ahem) 67%, or about the same percentage that Saturn’s sales went up in May 2007. When you look at each model’s individual sales, however, it shows that most of the sales increase is coming from the newly launched models and not from the old stalwarts.

Ion and Relay sales are down (but those two models are on the way out later this year) and Sky sales are way up YTD – but the Sky was barely available in the early part of 2006 as its production ramped up. For the Sky, we’re comparing an established model to its launch period.

The Aura was not sold in May 2006, nor was the Outlook, but after Aura sales began in August 2006, sales (excluding the first two months) have been about 4,500 sales per month, give or take a few hundred. There’s no sign that the Aura will suddenly sell at Camry, or even Malibu volumes.

Vue sales look great YTD and for May, but May was the first month of wide availability of the new model…as of April, the figures told a different story, when Vue sales were down for the month and YTD.

Basically, we’re in the absolute sweetest part of Saturn’s lineup life cycle (the upcoming Astra will only sell about 30,000 units per year maximum, less than the Ion’s worst year, because GM can only afford to lose enough money on the Astra to sell that many with their plan to import cars from Europe in the current weak dollar environment). It won’t get any better from here, folks, without increasing incentive spending, increasing the marketing budget, and continually improving the models they have now. They’re not going to go from six to ten models in May 2008 (in fact, next year at this time, the Ion will be mostly a bad memory and the Relay will have been forgotten by all except for the poor souls who bought them and those of us who use them for punchlines), so the lineup will be five models. The Vue, Outlook, Aura, and Sky will be a year older, and the Aura’s sales have already leveled off months ago. We won’t be seeing near triple-digit sales increases; in fact, I predict that Saturn’s sales will be nearly flat in May 2008, especially as internal competition from the new 2008 Chevy Malibu starts eating Aura sales for breakfast. Outlook sales may continue to improve, but the Astra won’t reach Ion sales volumes.

Still, launching new models and increasing sales is the name of the game, right? Well, Saturn has sold almost 104,000 vehicles through 5/12ths of 2007, in spite of a 75% sales increase this year, but those seven models combined don’t make as many sales as the following individual model cars: Chevy Impala, Honda Accord, Nissan Altima, Toyota Camry, and Toyota Corolla. Even Kia outsold them (with a similar truck-free lineup, though Kia is more focused on higher volume smaller cars)!

So, while Saturn is doing what it should in expanding its lineup, sales increases through lineup expansion can only go so far. Next comes the hard part of building those models’ sales figures without adding more products. It is possible – Saturn’s competitors do it all the time. For now, though, being outsold by the Impala or Kia does not make what I’d call a successful brand, nor the savior of GM. They need to keep plugging away if they want to beat Kia and start throwing victory parties, but otherwise, keep their mouths shut, heads down, and keep working.


Mags said...

I've personally pointed this out before- but have been shouted down as someone who can't let Saturn have their moment in the sun. Unfortunately, the moment in the sun they're having is because a few cloud dissipated.

69Firebird400 said...

The sad thing is that even with the low-ish sales numbers that Saturn has, they're still selling more vehicles per dealer than any other GM division except for Chevy (which has the benefit of a full truck lineup). As you've said before, Mags, Saturn is too much of a niche brand. Why go to all the effort of SEVEN models just to sell 100,000 cars?