WASHINGTON - As part of its effort to make a dent in the competitive mid-sized car segment, Saturn Corp. has given the new L-series cars a dealer discount slimmer than the discount on current models.
The dealer discount for Saturn's L series is 11 percent, compared with 13 percent now in effect for the smaller S series, Chairman Cynthia Trudell said during a visit to the National Press Club.
The dealer discount, or margin, is the difference between the manufacturer's suggested retail price and the dealer invoice price, expressed as a percent of the manufacturer's suggested retail price.
Trudell said the discount was set after consulting with dealers and said they understand some sacrifices are needed be competitive.
Trudell said she does not expect dealers to like the lower discount.
'Do they like it? Well, of course not. They would like more. They wouldn't be human (if they didn't),' she said.
Some dealers agree the lower discount rate is necessary to keep the price competitive. 'There is a tremendous upside in getting a larger car,' said Geoff Pohanka, president of the Pohanka Automotive Group in Marlow Heights, Md. 'The market is potentially larger. You need volume and profitability to make a good return on the investment.'
But some retailers aren't happy. 'Saturn didn't ask me about it,' said Bert Boeckmann, president of Galpin Motors in North Hills, Calif., one of the highest-volume Saturn dealers in the nation. 'I just hate to see erosion in the profit in a business where our cost is going up.'
Trudell conceded Saturn is entering a tough part of the market, the highly competitive 24 percent that mid-sized cars represent. 'It's never too late to enter a market if you have the right product,' she said.
Trudell said she expects Saturn to benefit from what she calls a resurgence of consumer interest in wagons. About 10 percent of S-series cars sold are wagons, but the company expects 20 to 30 percent of the L series to be wagons.
Staff Reporter Harry Stoffer contributed to this report