Saturn Makes Its Debut At Gm

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The last time a new name plate appeared at General Motors was 1926, when the company introduced the Pontiac. Last week another one was added. Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac suddenly got a baby brother. In GM's boldest plan yet to counter Japanese imports, Chairman Roger Smith announced that it would set up an entirely new company, called Saturn Corp., to produce its long-planned line of subcompact cars. Smith called Saturn "the key to GM's long-term competitiveness, survival and success as a domestic producer."

GM describes its new offspring as a "clean sheet" operation. While wholly owned by GM, the company will have its own network of dealers, its own labor contract with the United Auto Workers, its own factory, engineering and design staffs, and even its own president. He is Joseph J. Sanchez, 54, a former Oldsmobile division boss and head of GM Latin American subsidiaries. Sanchez will operate much like the chief executive of a totally new and independent company. Said Smith: "We are not going to handicap him with a lot of preordained rules." Freed from the heavy, established GM structure, Saturn's managers are supposed to move swiftly on several fronts to make cars that are, in both quality and cost, competitive with Japanese models. Currently, for example, Japanese automakers can turn out a vehicle for about $1,500 less than GM, Ford or Chrysler. At the same time, though Detroit's products are rapidly improving, the Japanese reputation for quality, as surveyed in publications like Consumer Reports, is generally higher among buyers.

Saturn Corp. will begin life with about $150 million in capital, but it is expected to spend $5 billion during the next three to five years. About $3.5 billion of that, said Smith, will go toward building a vast factory of & approximately 4 million sq. ft. at a site not yet determined by GM's planners. The plant could be built in a little more than two years, with cars rolling off the assembly line and into showrooms by the fall of 1987. Says an impatient Smith: "I don't like to wait long for anything." The effort could create as many as 20,000 jobs and turn out 400,000 to 500,000 cars annually. That would make it bigger than AMC, the fourth largest domestic producer. Says Sanchez: "I would like to be Chrysler's size as soon as possible." The car will initially come in two models, a four-door sedan and two-door coupe. Other models will come later. The first Saturns may cost about $8,000.

Saturn is part of the complex GM strategy for competing in the small-car market. While American automakers are fairly efficient in building large models, they are less successful in turning out small cars, where the profits are not great. Many auto-industry executives believe that because of higher costs and a foreign-exchange rate that favors Japanese exports to the U.S., it is now almost impossible for an American auto company to build a car in the U.S., sell it for less than $7,000 and make a decent profit. GM imports some subcompact models for sale in the U.S. from Japan's Suzuki and Isuzu, and it has plans to bring in more from its South Korean partner, Daewoo. GM is also manufacturing small cars in a venture with Toyota in Fremont, Calif.