Why Saturn Owners Will Lose Out on Warranty Repairs: Analysis

• Saturn
• General Motors
• GM
• auto repair
• auto industry crisis

As the new GM has begun to re-establish its four core brands, Chevrolet, Cadillac, Buick and GMC, in the marketplace post-recession, there was a glimmer of hope for some of the assets the corporation had cast aside. Yes Pontiac, one of GM's most storied brands is truly gone. But Saab has been purchased by Swedish supercar maker Koenigsegg, Hummer was bought by China's Sichuan Tengzhong Heavy Industrial Machinery Company and up until recently, Saturn was to be marketed by Roger Penske.

But as the news broke last week that Penske pulled out of talks with GM on the eve of inking the deal, the Saturn brand—GM's bold experiment from the 1980s—folded. Penske had been in talks with Renault-Nissan to supply vehicles for the Saturn Channel. But he was unable to cut that deal. Without a commitment from someone, anyone, to supply cars for Saturn after GM winds down production of the vehicles at the end of the product cycle in a couple of years, there could be no future for Saturn. Right now, there are no Saturn-branded vehicles coming down the line, and GM has about a four-month supply. GM has given Saturn dealers a year to close down, or at least remove the Saturn signage from the stores. They'll be paid an undetermined amount of money to close the doors.

So, a good number of the 350 or so remaining Saturn dealers are either going entirely out of business or converting the facility to sell something else. Kia is targeting Saturn dealers with sweet franchise deals. There are plenty of used cars to hawk nowadays, too. Business is business.

But what's going to happen to the millions of Saturn cars out there? Who's going to fix them? Specifically, who's going to fix all of the new Saturns, many still unsold, that are still under warranty? GM CEO Fritz Henderson has told Saturn (and Pontiac) owners that they can take their car to any GM dealership for repair. Call me a skeptic, but I don't believe the transition will be particularly smooth.

"Penske's takeover of Saturn only fell through within the last few days, and we have just begun to work out how we'll handle the new circumstances," says GM spokesman for service and parts operation John McDonald. "Right now, the only warranty repair option for Saturn owners whose local retailer has closed or is going to close is to take their car to another Saturn retailer." Even if the nearest Saturn store is hundreds of miles away, he says, that's really the only viable option.

So what will happen when all the Saturn dealers close? "Our plan is to identify other GM dealers, set them up with the tooling, infrastructure and train their mechanics to work on Saturn product. About 70 percent of the parts on Saturns are unique, so those parts will have to be available at these selected dealers."

Okay, so maybe in a few months they'll sort out the paperwork and train the mechanics, but there's still another problem. Warranty work and the sales of warranty parts are far less profitable for the dealer than retail parts and service. Odds are, few dealers will want to take on such a losing proposition. McDonald couldn't provide any timeline for when warranty service will be available at other GM dealerships, nor information on how many dealers will be empowered to care for the customers of nearly 500 defunct Saturn service departments.

Even if GM's Henderson mandates that dealers will have to work on lame-duck Saturns, he probably can't make it stick, due to the franchise agreements the dealers have in effect. Those franchise laws are different in all 50 states, making for a passel of lawsuits that wouldn't be resolved for years.

Bottom line: If you want a new Saturn, and can't resist fire-sale prices, remember that your retailer—and every other Saturn retailer—will be gone within a year, probably sooner. GM is promising to keep your car running, but your options will be limited, and the dealership you take your vehicle to may not exactly be in a hurry to do the repairs and will probably have only a few parts on hand. Caveat emptor.

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