High fuel costs, its affordability save Saturn Ion
August 11, 2006
BY KATIE MERX
FREE PRESS BUSINESS WRITER
Link to Original Article @ Detroit Free Press
High gasoline prices seem to have saved one small car from the chopping block -- at least temporarily.
General Motors Corp. had planned to stop production on the Saturn Ion in December. But the carmaker confirmed Thursday that it will continue making the car at its Spring Hill, Tenn., plant through the end of March to meet market demand.
"It gets good fuel economy and it's affordably priced," said Jim Hall, vice president of industry analysis at AutoPacific. "It would be foolish of them to get rid of it."
The Ion 2.2-liter sedan gets an EPA estimated 24 miles per gallon in the city and 32 on the highway. The base suggested retail price is $13,060.
Ion sales are up 2.5% this year. That's a big increase over last year during the same period, when sales were off 7%.
Many automakers are seeing small cars sell faster than expected because people want fuel-efficient vehicles as gas prices remain above $3 per gallon, analysts said. But for an automaker to see sales jump for a model that's in its last year of production is remarkable.
GM sold 60,969 of the 4-cylinder Ions this year, up from 59,505 in the first seven months of 2005.
Carl Galeana, president of Saturn of Warren and Saturn of Lakeside, said gas prices are only one factor in increased sales. The car's safety ratings, engine and low price are other reasons it's selling. And Saturn executives think the Ion is benefiting from buzz created by Saturn's new convertible, the Sky.
But a big reason GM decided to extend production is likely that the company won't have a replacement for the increasingly popular entry-level car until the end of 2007.
Allowing Saturn, commonly regarded to be an entry-level brand, to go without an entry-level car for nine months would have put dealers in a bind, said Joseph Langley, a market analyst at CSM Worldwide in Northville. Extending production should allow the automaker to make enough cars to meet demand until its replacement car, a rebranded Opel Astra, comes to the market.
In 2004 and 2005, GM built about 110,000 Ions, Langley said. This year, the company is on track to build at least 120,000.
"The decision to extend production is great news," Galeana said.