Saturn Blazed Ahead of Its Time, Then Faded Into Oblivion
May 04, 2009

By Dale Buss

Around mid-February when General Motors placed Saturn on the chopping block, number-crunchers at Edmunds.com were shocked to discover how badly the brand had eroded -- already more than a year ago.

Edmunds.com figures showed that way back in January 2008, Saturn customers were demonstrating the least loyalty of any in the entire U.S. auto industry: Fewer than 5 percent of those who traded in a Saturn purchased another one.

That paltry showing contrasted with a loyalty factor for all of 2008 of more than 51 percent for Subaru, nearly 49 percent for Hyundai, and more than 47 percent even for Saturn's sibling brand, Chevrolet.

"Saturn's numbers even back then were horrendous," said Jessica Caldwell, industry analyst for Santa Monica, California-based Edmunds. "They had lost their message along the way. Saturn wasn't sporty, wasn't utility-oriented, wasn't even necessarily value-oriented. It had just become a one-off of other GM products."

And, thus, Saturn appears destined for the ash bin -- or at least the bargain lot -- of automotive history. It may be too early to write the brand's obituary per se. GM has said it will kill or sell Saturn soon, as part of its corporate restructuring in the face of threats of a government-ordered bankruptcy. And this week it looks like Saturn is closer to a sale than a death.

GM released a statement first thing Monday morning saying it was "proceeding to the next step with respect to the sale of Saturn." The automaker said "a number of potential buyers have surfaced and expressed interest in the Saturn brand and retailer network."

Known to be among the interest parties is a group of investors that includes several Saturn dealers and an Oklahoma City-based private equity firm, Black Oak Partners. But GM CEO Fritz Henderson said at a recent press conference that Black Oak was not the only party interested in Saturn; he offered no more details than that.

GM said Monday it will be reviewing "expressions of interest" from the potential buyers and will look to secure an agreement with a specific buyer later this year. GM has retained S.J. Girsky & Co. as an advisor for this transaction.

What Might Have Been

But it's certainly not premature to offer a wistful appreciation of Saturn and a painful dissection of how it slid, in less than a quarter-century, from bright promise as the innovative face of GM's future to Saturn's current ignominy as part of "bad GM," the collection of diseased assets that executives are trying to amputate so the rest of company can survive.

"Saturn was one of the great brands in the sense of truly being a brand, not just another product," said Peter Arnell, Chrysler's acting chief innovation officer, a branding expert, and director of a new fledgling automotive brand, Peapod battery-powered cars.

Another branding guru, John Grace, noted with irony that Saturn's most recent advertising campaign has been built on the concept, "Rethink." Saturn "no longer stands for any concept," said the president of Stamford, Connecticut-based Brand Taxi, "that everyone else isn't 'rethinking' better."

Of course it wasn't supposed to be this way. Over the last few years, GM had attempted to re-create Saturn on the back of fresh new products based on vehicle platforms that the brand shared with other U.S. marketing divisions or with GM's Opel subsidiary in Europe. As of a year ago many company executives were confident that the plan was going to work.

"Saturn has been in transition for a long time," said David Cole, chairman of the Center for Automotive Research, an industry think tank based in Ann Arbor, Michigan. "But ultimately, [GM] didn't have a chance to execute their strategy in a reasonable financial environment. If there weren't the financial crisis that shorted the whole industry, we wouldn't be having this discussion about Saturn."

Roger the Revolutionary

Yet 24 years ago, Saturn was born into very difficult circumstances as well: as the all-new GM division that was supposed to build desirable, affordable small cars entirely in the United States of America and finally to beat back the invading hordes of reliable imports made by Toyota, Honda and other Japanese companies.

"Saturn is the key to GM's long-term competitiveness, survival and success," said then-CEO Roger Smith, with the stakes also including an affirmation "that American ingenuity, American technology and American productivity can once again be the model and the inspiration for the rest of the world."

Yet the gauntlet Smith threw down "was quite a challenge, because at the time GM had a $2,500-a-car cost disadvantage for small vehicles versus the Japanese," recalled Cole, whose father, Ed Cole, had been president of General Motors in the '60s. "That was like trying to run a race where your competitor has track shoes on and you're wearing galoshes -- and carrying a bowling ball."

Nevertheless, Saturn began its quixotic mission with every conceivable advantage that GM could give it. The brand was Smith's pet project, first at an intended funding level of about $5 billion and then, because of the early-'80s recession, only starting at about $2.5 billion.

As GM's putative savior, Saturn got millions of dollars worth of marketing hype in the news media. Governors from across the Midwest and mid-South openly competed to land the new Saturn plant, which eventually was built on a green-field site in central Tennessee's Spring Hill.

That was far from the nastiest influences of unionized labor. But savvy United Auto Workers leadership wanted the experiment to succeed and help revitalize a long-declining GM and, perhaps, the rest of the Big Three. Union leaders agreed, for example, that workers would receive only 80 percent of the UAW's master-contract wage, with the other 20 percent based on quality and productivity achievements.

Saturn also got brand-new products to go with the fresh nameplate as well as some nifty technology, such as polymer body panels that were supposed to make it quicker to develop new styling.

The Dealership Experience

And perhaps most significant of all, Saturn began life as the leading edge of a new vision for how GM would distribute all of its vehicles at some point in the future: through a streamlined, responsive and innovative group of only top-notch dealers.

Instead of a Rube Goldberg-esque network of cannibalistic, often ineffective, dealers in tiny precincts, Saturn franchises and their huge territories became highly coveted rewards that GM bestowed only on its best dealers. In exchange -- and, often, eagerly -- the dealers were to pioneer a whole new way of dealing with car buyers: There would be a "No Hassle, No Haggle" policy on price and lots of customer hand-holding.

"We learned more from Saturn than any other brand we have represented bout how to treat guests and customers, and how we treat each other, with respect, and caring, and even how we try to be good community citizens," said John Bergstrom, one of Saturn's original dealers and owner of many auto-brand franchises in eastern Wisconsin. Bergstrom recently closed the fourt smallest of his six Saturn dealerships, saying they could no longer sustain the business since sales had fallen at least a third since GM's announcement.

Given how negotiating over price has always been the most distasteful part of buying a vehicle, Saturn's no-haggle pricing engendered lots of customer loyalty all by itself. Bergstrom and other dealers also responded to GM's encouragement to add lots of other wrinkles, including chocolate chip cookies in the showroom, and gathering employees around the dealership exit to wave and applaud whenever a customer picked up a new car.

Saturn also made deliberate efforts to court female buyers who were comprising more and more of the small-car segment, who increasingly were import owners -- but who really wanted to buy American.

"The person who sold me my Vue was a woman, and that made the experience that much better," said Candace Talmadge, a Dallas-based writer who bought her second Saturn, a Vue utility vehicle, in 2003.

Early in its existence, such sentiments even produced tens of thousands of customers who attended giant "Saturn Homecoming" parties staged by the brand in Tennessee. Those people would certainly agree that Saturn was, as its tag line stated, "A Different Kind of Car. A Different Kind of Company."

Wrong Turns

Unfortunately, Saturn's ultimate fate already may have been foretold before the first vehicle rolled off the Spring Hill assembly line on July 30, 1990, with Smith in the driver seat and UAW President Owen Bieber sitting alongside him. Once envisioned as the very public culmination of GM's success in spawning Saturn, the ceremony turned private because the company's long decline in market share and financial position had accelerated. And Smith was being ridiculed in the popular new movie by Michael Moore, Roger & Me.

The seeds of Saturn's eventual demise already were planted even before the first cars went on sale in the fall of 1990. Quality was actually lacking; the innovative polymer doors didn't fit properly, for one thing. Cash-strapped GM refused to refresh Saturn's products, relying instead, by default, on the brand's much-vaunted customer-relations efforts.

By the mid-'90s, under its hard-line new president, Stephen Yokich, the UAW was beginning to unravel some of Saturn's novel labor practices. And when GM actually began building a new midsize Saturn model at its Wilmington, Delaware, plant instead of in Spring Hill, the change greatly demystified a brand whose pristine birthplace had been a big part of its mythology.

And all along, Saturn proved a hard sell inside GM. Executives and managers of other divisions resented the new kid on the block, reckoning that GM didn't need yet another brand, and tried to undercut Saturn instead of treating it as the corporate savior.

The market also turned massively against Saturn. It was in the mid-'90s that American consumers first became fascinated en masse with sport-utility vehicles and pickup trucks; the Big Three certainly were eager to sell them such high-profit models; and a long quiescence in oil prices made the economic equation work for everyone.

"So GM morphed Saturn into a full-line manufacturer," Cole recalled. "But taking customers who were used to small cars and trying to move them up to more expensive products was a very tough step."

Stale Saturns

Saturn sales peaked at nearly 300,000 units a year in the mid-'90s, and its customers put the brand at the top of the influential J.D. Power satisfaction survey.

But it was all downhill from there. GM folded Saturn into the rest of its small-car operations and didn't give the brand any new models until 1999. Workers in Spring Hill voted out their initial local leadership and opted to revert to the standard GM contract. "No-haggle" pricing became supplemented with the same sort of customer incentives that GM traditionally had used with all of its other divisions.

At times, Saturn showed signs of renewal. In 2001, for example, after four straight years of declining sales, the brand made a bit of a rebound after GM finally supplied it with a series of new vehicles, including the innovative Vue crossover.

But to a model, Saturn's new lineup was based on similar nameplates sold by other GM divisions. And the cars were built all over the United States, some now even in an Opel factory in Germany. Over the last many years, "I can't think of one vehicle that seemed to be a Saturn vehicle first and something else second," said Caldwell, of Edmunds. Saturn "pretty much got hand-me-downs of everything."

"We kept the same product lineup for a long time," complained Bergstrom, the Wisconsin Saturn dealer, "and this is still a product business. It wasn't fun for people to buy the third car that was exactly the same." And without large SUVs or trucks in its lineup when those segments were booming, Bergstrom added, Saturn was significantly handicapped.

In a new lawsuit against GM, Stuart Lasser, a Saturn dealer in Denville, New Jersey, makes the further claim: "Contrary to the customary approach to new product introductions, Saturn launched each of its new models [since 2003] with little fanfare, inadequate incentives, and limited advertising budgets."

Lasser, once one of the strongest supporters of the brand and a member of the retailers advisory council, saw sales dropping precipitously at his Saturn showrooms long before there was talk of eliminating or selling Saturn. He had sought to add another franchise in a separate facility on his Saturn property to offset falling Saturn sales. GM refused to allow it, prompting Lasser to sue the automaker late last year. 

Too Much, Too Late

At the same time, argued Grace, the branding expert, other auto brands caught up with the innovations that Saturn had introduced into the dealership experience. "They should have spent their time," he said, "on continually creating new elements of that relationship between salesperson and customer."

Give GM this much: It rallied Saturn late in the game. Its current lineup of products -- including the Aura sedan and the Outlook crossover -- have been well received and are worthy members of the GM platform families of which they are parts.

"But the pricing levels of these new products amounted to too much change for our customers for them to get immediate success with these new vehicles," Bergstrom said.

And in the end, Saturn didn't create enough customers like Hilda Mitrani. The 48-year-old president of a multilingual-marketing firm in North Miami Beach, Florida, ditched her Toyota Sienna minivan in 2006 to buy a Saturn Vue.

"I test-drove every SUV on the market between $20,000 and $30,000, and some regular four-door cars, and [Vue] was the best thing in that price range - hands-down," Mitrani said. And the dealer, Saturn of Pembroke Pines, Florida, "has treated me with respect, kindness and sensitivity."

With Saturn's new woes and an uncertain future as a brand, Mitrani is hoping her Vue -- already having logged about 46,000 miles -- lasts a lot longer.

"I'm disappointed about Saturn, having found a car that runs so well and whose representatives do business in such a great manner," Mitrani said. "They may not be around to sell me another few generations of their cars."

Photos

1 - Saturn, once "A Different Kind of Car Company," used different marketing tools, including a blimp.

2 - GM's Spring Hill, Tennessee, plant was built to exclusively assemble Saturns; today it builds Chevrolets.

3 - The owner of Saturn of Denville, New Jersey, is suing GM, for refusal to allow him to add another franchise to offset slumping Saturn sales. 

4 - Saturn Vue.

Posted by Michelle Krebs at 12:12 PM under Analysis , Featured , GM | Comments (4) | digg this | Seed Newsvine

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