Dismal sales of Saturn Corp.'s new mid-sized L-series sedans and wagons have prompted the company to slash production at its Wilmington, Del., plant.
Saturn estimates the plant will produce 167,000 L-series cars in 2000, down from the 200,000 it once said it would sell per year.
But Saturn suppliers, aware that monthly sales of the car have barely topped 5,000 - or 60,000 per year - believe that production will drop even lower.
Last week, Saturn stopped production lines at the Wilmington plant for two days. The plant also was idle for more than half of January when Saturn extended its holiday shutdown by two weeks to Jan. 18.
'We assume we'll continue this inventory adjustment for a while,' said Saturn spokesman Tom Wilkinson.
The entire Wilmington plant, which has annual capacity for at least 200,000, is dedicated to the L series.
At the end of January, Saturn had a 180-day supply of L-series cars, according to the Automotive News Data Center.
The slow sales are a bitter pill for Saturn. Last year, new Saturn Chairman Cynthia Trudell was optimistic that the L series would double Saturn's annual sales to 500,000 units in the coming years. Saturn sold 232,570 cars last year.
Saturn also encouraged dealers to add more stores to handle the growth.
A supplier who asked not to be named said Saturn has cut in half its original production schedule for the L series' first two model years. Originally, the supplier was told Saturn would build 160,000 cars in the first model year and up to 300,000 in the second.
Three other suppliers confirmed that Saturn has cut its production targets but declined to provide figures.
Wilkinson would not confirm the supplier's numbers, but he said the 300,000-unit estimate is unlikely because it would require a third shift at Wilmington. He said a third shift has never been considered as far as he knew.
Saturn officials and dealers say the company underestimated how tough it would be to enter a competitive new segment in which the Honda Accord and Toyota Camry are kings. It also underestimated how strongly customers associate Saturn with only small cars.
'We're breaking into a tough segment of the market, just as tough as it was 10 years ago,' Trudell told Automotive News last month. 'We're committed to staying there and being successful.'
Through January, Saturn had sold only 28,837 L-series sedans and station wagons since it introduced the vehicles last summer. Monthly sales during the last four months of 1999 hovered around 5,000, but then dipped to 4,381 in January.
Wilkinson said the January drop was partially the result of end-of-the-year sales by Saturn's competition. Knowing it could not compete against large incentives in the mid-sized market, Saturn concentrated all its December advertising on its smaller S-series cars. Saturn's long-standing strategy bans the use of incentives.
Last month, new Saturn L- series TV ads hit the airwaves. The ads focus on the car's size and its competitors. One ad even has a dealer showing up at a customer's home with an L series, Accord and Camry, so the customer can compare the three.
Wilkinson would not say whether Saturn is spending more on L-series advertising.
Saturn also is offering a national zero-down lease program that is more competitive with the lease programs for the Accord and Camry, he said.
Most Saturn dealers who talked to Automotive News remain loyal to Saturn and are confident about the car's chances. However, some would like to see Saturn 'relaunch' the vehicle.
'Our expectations were for a more robust launch than we experienced,' said Pete Pohlmann, a Saturn dealer and owner of the 16-franchise Lujack's Northpark Auto Plaza in Davenport, Iowa.
'We're convinced it's strictly a matter of exposure,' he said.
Another Saturn dealer said he likes the vehicle, but it needs to be more exciting. Saturn's famous no-hassle sales process can carry the vehicles only so far, he said.