GM's Saturn Could be Treasure for Foreign Automaker

General Motors is on the verge of junking its Saturn brand, and that raises the possibility that a foreign automaker, particularly a Chinese or Indian manufacturer, could see Saturn as found treasure that offers easy entry to the U.S. market.

Struggling GM intends to sell of spin off Saturn — price TBD — and a buyer would get a well recognized brand name and a national dealer network of 400 stores with a strong reputation for customer service. That would give any newcomer a substantial head start on companies that try to build a brand and dealer body from scratch in the U.S.

GM has tried to unload Hummer without success, but Hummer is saddled with an out-of-fashion image for gas-guzzling, monster-truck SUVs. Saturn is about economical cars, sensible SUVs and commendable customer service — all attractive traits for potential suitors.

No one has publicly said it desires Saturn, but independent auto analyst Erich Merkle wouldn’t be surprised if at least one foreign manufacturer steps forward to claim what he thinks would be a bargain, even when U.S. vehicle sales are bumping along at their slowest pace in 27 years.

Sales are low, but that puts buyers in a very powerful bargaining position. You buy low for the opportunity to sell high,” Merkle, of Grand Rapids, Mich., told me in a telephone interview. Merkle sees Chinese and Indian manufacturers as likely suitors and the ones most in need of an established U.S. brand name.

“Are people really going to buy a Tata or Chery car in this country?” he said, referring to Indian and Chinese companies, respectively, that have expressed interest in the U.S. “Saturn is certainly better than any brand name they have.”

Though there is healthy skepticism that any foreign automaker will court Saturn, the dismal state of the auto industry in general, and GM in particular, make this an opportune time for ambitious buyers to find salvageable parts among the wreckage.

Ironically, that’s how GM acquired remnants of Korean manufacturer Daewoo, which went bankrupt in 2001 and liquidated assets the following year. GM acquired some Daewoo manufacturing plants and its engineering operations in Korea on the cheap, and now they serve as GM’s global center for small car development.

And if not the Chinese or Indians, maybe Fiat would be interested if its proposed alliance with Chrysler falls through. Merkle thinks Fiat and Saturn models could coexist in the same showroom until GM stops building Saturn vehicles by 2012. By then, Fiat would be able to offer a full line of its own products, perhaps retaining the Saturn name.

“Fiat is well positioned with small cars, and that market is going to grow in the next decade,” Merkle said. “Fiat could really appeal to the Echo Boomers looking for smaller cars.”