NASHVILLE, Tenn. - Saturn Corp.'s price cutting is showing results.
Lower lease prices introduced in late February have brought a flurry of leasing business to retailers, helping Saturn in its effort to reverse its sales slump.
Leases have traditionally accounted for 10 to 12 percent of Saturn's volume. Since the new program began two months ago, leasing has represented about 35 percent.
'We're feeling a little better about our situation,' says Saturn spokesman Greg Martin in Spring Hill, Tenn.
For the first three months of this year, Saturn sales were off 15 percent from 1997. In response, the Spring Hill factory cut its first-half production schedule by 21,000 cars.
Saturn surprised the industry last Oct. 10 by cutting some prices retroactive to the beginning of the 1998 model year. With that move - an effort to better position the car line against the Toyota Corolla and Honda Civic - the company sent millions of dollars in checks to Saturn buyers overnight.
The February lease plan resulted in a $129-a-month, 36-month lease for Saturn's base SL sedan equipped with air conditioning and manual transmission. The SL had leased for $177 a month. The plan requires an $800 down payment, a $495 acquisition fee and no security deposit.
The more expensive SL1 sedan received a $169-a-month lease, and the SL2 sedan a $183-a-month lease. Leases on those models previously were $180 to $200 a month.
Martin says the reductions were made possible by having Saturn's national finance partner, Chase Manhattan Auto Finance Corp., recalculate the cars' residuals.
Under the new program, Saturn is pushing more of the car's cost into the post-lease purchase price or residual value. In other words, buyers are leasing a smaller portion of the cost of the car, which reduces their payments.