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Nearly All Saturns Recalled Over Potential Engine Fires

August 11, 1993|DONALD W. NAUSS | TIMES STAFF WRITER

DETROIT — Saturn Corp. has put its high-quality reputation on the line, announcing Tuesday the recall of more than 350,000 cars--every car Saturn had built up to April 15--to correct a wiring defect that can cause engine fires.

The recall by the General Motors unit was prompted by reports of 34 vehicle fires, none of which caused injuries. Although the move could damage the division's image, some experts said Saturn's standing with customers actually could be enhanced by aggressive action to remedy the defect.

There are about 4,000 Saturns in Orange County. Most of them will have to come back for repairs, said the president of the four local dealerships.

"It's a very simple correction," President John Campbell said. "It takes about half an hour."

The dealerships are in Westminster, which has no service department; Santa Ana; Huntington Beach and San Juan Capistrano.

The strategy offers a stark contrast to GM's stubborn refusal to recall millions of full-size pickup trucks with side-saddle gas tanks that federal regulators say could burst into flames in side-impact collisions. GM insists that the 4.7 million trucks are safe.

Company officials said the Saturn problem involves a wiring harness that could experience an electrical overload in the event of a short circuit in the car's generator. Repairs will be made for free.

Tim Mendenhall, sales manager of Saturn of the Valley in North Hills, said his dealership is flexible on appointments.

Still, the scope of the Saturn recall--involving 352,767 sedans, coupes and station wagons built between 1991 and April 15--could sully the unit's reputation as it struggles to become profitable.

"This will tarnish its image and could hurt long-term sales," said Margarethe Wiersema, a professor of strategic management at UC Irvine and a former GM analyst.

But Wiersema and other analysts praised Saturn for confronting the problem head-on, a strategy they said could limit the damage and help sustain Saturn's standing with consumers. "It could turn into a positive if they show the customers they stand behind the product," said John Hammond, an analyst for J. D. Power & Associates.

By adopting sometimes unusual tactics--in the factory and on the showroom floor--Saturn has become GM's hottest-selling brand. It recently ranked third in J. D. Power's highly regarded customer satisfaction survey, behind two Japanese luxury brands.

Saturn has had to deal with minor defects before, including repairs to brake boosters in 1991 and the repurchase that year of 1,800 cars that had been filled with the wrong radiator coolant.

But the latest problem is far more extensive.

Cliff Friendlay, owner of Saturn of West Sahara in Las Vegas, has dispatched three technicians to his used-car service center to deal exclusively with the wiring problem. "We are scheduling them just like a barber," he said. "Fifteen minutes and you're done."

To further ease the inconvenience, Friendlay is providing free transportation to a nearby casino, along with a ticket for a free buffet meal.

Saturn declined to say what the recall would cost, but analysts put the expense at anywhere from $8 million to $20 million.

Such sums would not have a big impact on Saturn's earnings. But neither Saturn nor GM has much margin for negatives.

GM, which has lost more than $12 billion in North America over the last two years, is hoping to return to profitability through cost-cutting. And Saturn, which cost $5 billion to create, has lost money the last two years. The division had its first profitable month in May and was optimistic about breaking even in 1993.

Demand for the cars has continued to outstrip supply. And that has required Saturn to run its Spring Hill, Tenn., plant at full capacity on three shifts, contributing to labor tensions.

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