GM Could Drop Saab and Maybe Saturn, to Win Bailout

GM hung the dreaded “strategic review” tag on the Saab brand, signaling Saab will likely be sold or closed; announced it is “exploring alternatives” for the Saturn brand; and apparently demoted the Pontiac brand in size and importance, as part of the business plan it submitted to Congress on Dec. 2.

GM is asking Congressional committees this week to approve loans of up to $12 billion to boost GM’s liquidity through the end of 2009. GM wants the first $4 billion as soon as this month.

In addition to the loans, the company is requesting an additional $6 billion line of credit, as a backup in case the severe market downturn persists. GM says it intends to start repaying the loans as soon as 2011.

Cutting Saab loose comes as no great surprise, after almost 20 years of putting resources into a brand that never fit in with the rest of the lineup. Saab never caught on with U.S. customers, at least not in big enough volumes to justify the expense. Nor did the Saab relationship provide a leg up for expanding Cadillac in Europe, which was GM’s strategy for a while.

Potentially dropping Saturn is more of a surprise, especially since Saturn and Chevrolet emerged just last year from the next-to-last GM brand restructuring, as the only standalone brands that were not forced into a combination with other GM brands, like the Buick-Pontiac-GMC channel, or the would-be premium channel, consisting of Cadillac-Hummer-Saab.

Those plans more than ever are clearly out the window, with Hummer and now Saab for sale, and Saturn’s future now in doubt.  In addition, GM said Pontiac will now be a lower-volume “specialty brand” within Buick-Pontiac-GMC.

GM’s penultimate restructuring seemed to show GM had bigger plans for Saturn, supported by the fact that Saturn had renewed its entire lineup within the last few years. GM repositioned the brand away from its roots, offering inexpensive cars with plastic body panels, to a broader, more upscale lineup that included cars from GM’s Opel subsidiary in Germany.

Recent TV commercials show a customer doing a double-take at the new lineup, convinced he’s walked into the wrong store. “Happens a lot,” the Saturn salespeople say in the ad. Saturn’s kid-glove customer handling, no-haggle pricing and exclusive dealerships were was the only constants dating back to Saturn’s earliest days in the late 1980s.

It’s unclear what exactly GM means by “alternatives” for Saturn. The company says it will “accelerate discussions”  with Saturn dealers. Saturn’s history has been as a standalone brand, with exclusive dealerships. Maybe GM will ask Saturn dealers to offer other GM brands, or vice versa. With so many other changes taking place, GM could potentially drop the brand, but it would likely be forced to buy out its dealers.