Saturn alerts customers it is considering a spinoff

Saturn has begun alerting customers that it may be spun off by General Motors as an independent marketing and distribution company.

In a letter sent to about 1.5 million Saturn owners Wednesday night, Saturn said it would have to line up products to sell--either from other manufacturers or from GM in the role of a vendor--after GM's current commitment to build Saturn products ends after the 2012 model year.

"The Saturn Distribution Corporation already exists as an indirect subsidiary of GM," wrote Jill Lajdziak, general manager of Saturn, in the letter. "It's the entity with which our retailers have their franchise agreement.

"An independent Saturn would still have its great retailers, and it would continue to source current products from GM through 2011. If successful, SDC at that point would source products from other manufacturers."

A Saturn spokesman confirmed the letter and its contents. The purpose of the letter is to reassure current and potential Saturn owners that Saturn is a viable brand and that GM will back its warranties and product quality, says spokesman Steve Janisse.

The goal of a spinoff would be to find future vehicles "that match the Saturn Brand: fuel-efficient, safe, reliable and affordable," Lajdziak said. "From a retailing perspective, we would build on our core strength of unmatched customer service."

Meanwhile, Saturn dealers say Saturn asked them on Wednesday to make no decisions about what to do with their stores for at least 60 days. That's because Saturn has formed a study group consisting of Saturn retailers, GM employees and independent consultants to do the "hard-core due diligence" work on what it would take to spin off Saturn, said Janisse.

The subcommittee will study possible sources of future product, either from GM or another manufacturer, which might take over Saturn, Janisse said. Another possibility is for an independent investment company to take over a spun-off Saturn and give it the money to buy product.

"That's what that subcommittee is studying, and they're working day and night on this," Janisse said.

"The goal is within 60 days to have a solid understanding of if the current spinoff option is valid," Janisse said.

But he said a decision might be delayed if the process isn't complete.

In its viability plan submitted to the U.S. Treasury Department on Tuesday, GM said Saturn will remain in operation through the end of the planned lifecycle for all Saturn products. In the interim, GM said it would be open to the possibility of Saturn retailers as a group or other investors present a plan that would allow a spinoff or sale of SDC. If that didn't occur, GM said it planned to phase out the brand.

From our very beginning, Saturn has always sought a better way. We pioneered no-hassle, no-haggle shopping, built dent-resistant cars, set a new benchmark for customer service and forged a unique relationship with our retailers, workers and customers. From the beginning, Saturn was launched as a "Different Kind of Car Company."

Well, here we go again.

You may have read that General Motors delivered a plan to the U.S. government that outlined the corporation's plan for long-term viability. In that plan, GM stated that Saturn would work with its retailer s to investigate options for the future of the Saturn Brand. We said that all ideas were on the table and we meant it.

Today, we confirmed that Saturn and GM would further investigate one of those options: a spin-off of an independent Saturn Distribution Corporation.

The Saturn Distribution Corporation already exists as an indirect subsidiary of GM. It's the entity with which our retailers currently have their franchise agreement. An independent Saturn would still have its great retailers, and it would continue to source current products from GM through 2011. If successful, SDC at that point would source products from other manufacturers.

The goal--from a product perspective--would be to find future vehicles that match the Saturn Brand: fuel-efficient, safe, reliable and affordable. From a retailing perspective, we would build on our core strength of unmatched customer service. The same hassle-free experience that is a hallmark of the brand could be taken to even higher levels.

While this process proceeds, we will continue to do what we have always done best: sell great vehicles and take care of our customers. We have a fresh portfolio of award-winning, fuel-efficient vehicles and a network of retailers that is second to none. And our new vehicles are still backed by a 100,000-mile/5-year (whichever comes first) Transferable Powertrain Limited Warranty. When you add Roadside Assistance and Courtesy Transportation programs, we believe it is the 20industry's best overall coverage. It is coverage that GM and Saturn will continue to firmly stand behind, and GM will support the continued availability of Saturn parts and service as needed.

This is an exciting time at the Saturn Brand, and I have to confess, it feels a bit like it did back in the 1980s when the original Saturn project was being developed. As loyal Saturn owners and enthusiasts, I know you support this brand, and you can believe we are working toward a vibrant future. Difficult times sometimes yield the most innovative solutions, and those who are willing to take on the challenge will emerge victorious. Stay tuned.

Sincerely,

Jill Lajdziak

General Manager, Saturn

By Jamie LaReau- Automotive News