TOKYO - General Motors will pull the plug on its Saturn brand in Japan by the end of this year, focusing on Chevrolet models in an effort to boost its presence in that country.
The move marks the second high-profile retreat by GM from its attempt to sell American-made cars in Japan. Last year Toyota Motor Corp. stopped selling GM-built Cavaliers, rebadged as Toyotas, after five years of sales that fell far short of projections.
Saturn sales also have struggled. The brand was launched there in 1997 with heavy advertising - but just as the Japanese economy was sliding back into recession. Saturn sales peaked at 1,375 in 1998, and the 2000 total was 1,002.
Saturn's retailing methods led in directions that other car marketers in Japan, including Toyota, since have followed. But the brand failed to overcome a limited lineup that was too similar to rivals' offerings.
GM's retreat after just five years is likely to reinforce the view in Japan that American carmakers are not committed to the Japanese market.
Saturn's retreat 'is such a typical case,' said an executive at a European import company in Japan.
'An American company expects a short-term return, but they have to see (the market) in the long term.'
GM raised expectations that Saturn would not repeat the short-term efforts of previous American forays into Japan. 'The Japanese market is important to Saturn, and we intend to become a long-term competitor here,' Keith Wickes, then the director of Saturn operations in Japan, said when the brand was launched there in 1997.
Saturn spokeswoman Sue Mallino said last week that Saturns will be sold in Japan through the end of this year.
After that the vehicles will be serviced by GM's new AutoWorld network, which will include retailers who were Saturn dealers.
'Longer term, our strategy is to phase out of Japan and focus on North America, since GM is going to approach Japan through GM AutoWorld,' Mallino said.
She pointed out that Saturn had been the GM banner carrier in the 1990s when the automaker wanted to export U.S. vehicles to Japan. But GM's new 'alliance strategy' - which puts Subaru, Isuzu, Fiat and even Honda product resources at GM's disposal for worldwide sales - will govern GM's approach to the Japanese market.
Goal is 10%
GM aims to boost its share of the Japanese market to 10 percent, which includes sales from its Japanese affiliates, by the end of 2004, from the current 1 percent, based only on GM's import models. GM's affiliates in Japan are Isuzu Motors Ltd., Suzuki Motor Corp. and Subaru-builder Fuji Heavy Industries Ltd.
GM launched the GM AutoWorld sales network in Japan last October. That chain has been joined by an increasing number of Saturn retailers. While GM AutoWorld sells other GM brands as well, Chevrolet takes center stage. 'We won't have the next (Saturn) model' for 2002, said Masaaki Gotsubo, a spokesman at GM Japan. 'We'll strengthen our Chevrolet brand in Japan and Asia.' GM sold 4,901 Chevrolets in 2000, according to the Japan Automobile Importers Association.
Several key Saturn Japan personnel already have been transferred to other GM operations in Japan or to posts in other countries.
Big dealer dumps Saturn
One of the largest Japanese Saturn dealers recently ended its relationship with GM.
Last December, Osaka-based Hanaten, a used-car specialist, dropped the Saturn brand and decided not to shift to Chevrolet.
'It was tough to sell Saturn because of the small number of models,' said a Hanaten official, who declined to be named. He added that Hanaten's Saturn dealerships have never been profitable.
Hanaten was one of the original Saturn retailers when the GM brand began selling in Japan in April 1997. It accounted for approximately 20 percent of Saturn's sales in Japan from 1997 through 2000.
'In short, Saturn didn't have any brand appeal,' said Tsuyoshi Mochimaru, an analyst at Dresdner Kleinwort Benson (Asia) Ltd. in Tokyo. 'American brands are hard to sell in Japan because some people still have a low-quality image of them.'
As part of the Chevrolet sales push, Suzuki, in which GM has a 20 percent stake, will start production of a car developed jointly with GM at its Kosai plant near Tokyo in September. Suzuki will sell the compact car, now code-named YGM-1, with a Chevrolet badge in Japan.
Staff Reporters James B. Treece in Toyko and Lindsay Chappell in Nashville, Tenn., contributed to this report