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GM Car Units, Including Saturn, Are Reorganized : Management: Company calls the move evolutionary and downplays its effect on Saturn's autonomy.


WARREN, Mich. — General Motors Corp. unveiled a reorganization of its car-making units Tuesday, a move that is likely to erode the independence of its highly touted Saturn division.

The shuffling will place Saturn under the same operating group as the rest of GM's small-car operations. The company's mid-size cars will be aligned with its large luxury car segment.

G. Richard Wagoner, president of GM's North American operations, said the changes are evolutionary and designed to help the recovering auto maker lower costs further and develop new vehicles more quickly.

For Saturn, the restructuring means future models may evolve from other GM divisions and that those vehicles could use many of the same parts and components used in GM's other small cars.

Company officials downplayed the potential effect on Saturn's autonomy, noting that Saturn will continue as a separate subsidiary with its own labor contract, management structure and marketing approach.

"We are not going to take Saturn apart," Wagoner said at a news conference at GM's technical center here.

Saturn President Richard LeFauve, who takes on the additional post of vice president of the new small-car group, said the change merely reflects the relationships already evolving between Saturn and GM's other small-car units.

"Both organizations remain intact, and nothing jeopardizes their individual mission, products, philosophies or marketing plans," he said.

But analysts said the reorganization shortens the leash on Saturn, which in the past five years has made significant inroads against Japanese imports with its emphasis on flexible work rules, no-haggle sales, quality and customer service.

The move comes as a debate on Saturn's future has simmered within GM for nearly a year. Saturn's vehicle lineup is aging, and it needs new models and more factory space to produce them.

LeFauve has been seeking approval to expand the division's plant in Spring Hill, Tenn., so it can increase annual production from 300,000 vehicles to 500,000.

The problem is that Saturn, despite its success with consumers--sales are up 17% this year--has yet to make a profit. That is likely to change this year. But GM has invested more than $5 billion in Saturn, and its cost-conscious management is now reluctant to spend more on a division not pulling its own weight.

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