GM plans to slash its dealerships

The e-mail video that General Motors Corp. sent to its Saturn dealers last night was an odd mix of apology and pep rally.

The automaker had just told Congress it would do away with Saturn as part of a drastic restructuring plan to qualify GM for billions more in emergency taxpayer loans.

For 209 Saturn franchises across the country - a dozen of which are in the Philadelphia area - the news was potentially devastating.

"I know you've been dealing with the emotion of it, the frustration of it, maybe even the anger of it," Jill Lajdziak, general manager of Saturn, said as dealers Tom Zimbrick and Todd Ingersoll sat by her side in the video.

But the company did not want dealers to panic. Rather, Lajdziak explained, officials were scurrying to sell the name and dealership network that had once been GM's great hope for winning back market share from the foreign competition.

They asked dealers to hold on for at least two more months. The company, and a task force of dealer-advisers, was exploring what could be done to get Saturn sold.

The news intensified anxiety among dealers already in turmoil as GM, Ford Motor Co., and Chrysler L.L.C. have been pushing to reduce the number of showrooms overall to cope with a sharp decline in sales in this recession.

In announcing yesterday that it would need up to $30 billion in federal aid, GM said it planned to eliminate 1,650 dealerships by 2014.

GM may sell the Saturn subsidiary it created two decades ago to private investors that could include a consortium of Saturn dealers themselves.

It also might sell Saturn to foreign automakers who would love a ready-made network of U.S. showrooms in which to introduce their cars to U.S. consumers.

The idea is to find a way for GM to spin off Saturn so that it lives beyond 2012, when the automaker said it would cease producing the brand.

All options remained in early stages today, said Saturn spokesman Steve Janisse.

"We're at the point where we're starting to put the package together and meeting with different types of folks that might be interested in investing," Janisse said.

He said that Japanese and European carmakers were among those that had expressed interest and that the company had not ruled out that Chinese or Indian manufacturers might join discussions in the coming weeks.

Dealers, meanwhile, who had invested millions to launch retail sites for GM's Saturn line, remained on edge.

"I think they're circling the wagons to see what options they have," said Kevin Mazzucola, executive director of the Automobile Dealers Association of Greater Philadelphia.

"The only thing we're sure that's going to happen is that GM is not going to manufacture Saturn vehicles three years from now," said Harrisburg lawyer Stephen A. Moore, an automotive law expert. "And that has not made any of the dealers happy."

Moore said the owners of Saturn dealerships in the region - including eight in Southeastern Pennsylvania and three in South Jersey - were on pins and needles. They invested millions of their own dollars to buy land, build dealerships, and train employees to help GM launch Saturn.

"Just the land and facilities, you're talking $2 [million] to $3 million or more," said Moore. "In Southeastern Pennsylvania, it's probably significantly more than that."

Fortunately, he said, because Saturn was established as a wholly owned subsidiary of GM, it can be sold in a "nice, neat package."

"Right now there's a number of Chinese manufacturers trying to break into the United States," Moore said. The same is true of Indian automakers. They might view Saturn as a way to saturate the market with their cars.

A foreign buyer could acquire Saturn and then work out a separate deal with GM, for example, to use its U.S. factories to produce the cars. Those cars might be sold as Saturns or they might be sold under a foreign moniker.

But with businesses finding it hard to secure the loans needed to make large acquisitions, finding a buyer might be harder than it looks. Plus, all automakers are in a tough spot these days, and they are the most likely buyers.

"Give us 60 days to work through this," said Zimbrick, one of the dealers on the video, who is serving on a task force to spin off the company.

"We've got to move fast," Lajdziak said.