Remember when General Motors introduced Saturn by proclaiming it was “A different kind of company. A different kind of car”?
With Saturn, G.M. Failed a Makeover
General Motors has promised Congress that it can recreate itself as a different kind of car company — smaller, with a more cooperative relationship with its union, and a lineup of fuel-efficient cars to compete with the best of the foreign brands.
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Today's Business with Jeff Sommer and Micheline Maynard on G.M.'s plans for its Saturn division. At least G.M. knows how difficult the challenge will be.
A quarter-century ago, G.M. started Project Saturn with the same goals. And it worked, for a time. Saturn owners, including many who traded in their Hondas and Toyotas to own the first models in 1990, became cheerleaders for the division’s customer-friendly approach, while the United Automobile Workers union gave up many of its traditional restrictions to help Saturn succeed.
The brand became a media darling, and was featured on the cover of Time. “Can America still compete?” said the headline. “With its new Saturn, G.M. bets the answer is yes.”
But Saturn quickly started losing its shine. G.M. executives cut spending, and shoppers flocked to S.U.V.’s. Eventually, many workers resisted the new management style. Now the brand that was once a symbol of G.M.’s future will have a bit part, at most.
G.M. said Tuesday that it was “exploring alternatives” for Saturn, which come down to selling it or relegating it to a smaller role in G.M.’s lineup.
G.M. once hoped it would sell 500,000 Saturns a year. But sales peaked at 286,000 in 1994, according to Motorintelligence.com. Unless Saturn sales rise sharply in December, this year the division will sell fewer than 200,000 vehicles, for the first time since 1992.
Despite the steady decline, Saturn executives can point to bright spots.
Saturn ranks No. 13 in resale value, measured over the last five years, among all automotive brands tracked by Kelley Blue Book — the second best showing among G.M. brands behind Pontiac at No. 11.
And the small Saturn Aura, part of a refreshed lineup based on vehicles from G.M.’s European division, “might be the best undiscovered car in America,” said Jack R. Nerad, the executive editorial director at Kelley. Aura sales are up 2.8 percent this year, while Saturn’s sales over all are down 21 percent compared with 2007.
Saturns no longer roll off the assembly line at the plant in Spring Hill, Tenn., that was originally built just for Saturn and was featured in the company’s quirky ads. That factory is now used to build the Chevrolet Traverse, a crossover vehicle.
To some buyers, Saturn’s marketing message still resonates.
Joseph Salzburg, a graphic artist from Richmond, Ill., said he purchased a 2007 Saturn Sky sports car last year because he wanted to support the division.
“I bought it because of the reputation of the company and because I only buy American cars now,” Mr. Salzburg said.
True believers in Saturn insist the concept behind the division, which stressed respect, teamwork and communication from the factory floor to the auto showroom, could have kept G.M. from losing nearly half the market share it held when the first Saturns went on sale 18 years ago.
“I’m absolutely convinced that the Saturn way could have worked,” said Michael Bennett, the original U.A.W. leader at Saturn. “But what we had was never embraced or adopted.”
Mr. Bennett, like many others, can point fingers to explain why Saturn fell short of its promise.
Mr. Bennett blamed a lack of interest by G.M. executives who succeeded Roger Smith, who as chief executive in the 1980s committed $5 billion to begin Saturn.
But those who followed him — including John F. Smith Jr., who became chief executive in 1992, and G.M.’s current chief executive, Rick Wagoner, who ran its North American operations in the 1990s — had bigger worries.
They had to lead the company through the financial turbulence at G.M. in the early 1990s. And with managers at G.M.’s other, older brands begging for investment, G.M. executives declared Saturn would have to prove it deserved more support, even though its small cars were accomplishing their main goal of winning buyers from imports.
Despite G.M.’s pledge that Saturn would be run as a separate company, with its own car development and purchasing operations, it was folded into G.M.’s small-car operations in 1994, and its lineup did not receive any new models for the next five years.
While executives were souring on the concept, U.A.W. officials questioned the consensus approach at the Spring Hill plant, where G.M. set up a consulting arm that taught other companies how to adopt Saturn principles with their employees.
Fearful that the division might not survive, Mr. Bennett devised a proposal to spin off Saturn as a separate business, but was told G.M.’s board would not consider the plan.
In 1998, Mr. Bennett was voted out of office at the U.A.W., and workers eventually chose to abandon their separate contract.
Since then, Saturn’s lineup has shifted from small import fighters to a more conventional G.M. division, with cars from G.M.’s Opel division, crossovers and the Vue, a small sport utility.
But the Vue, one of the few vehicles that G.M. sells in a hybrid-electric version, and other models have not stemmed Saturn’s decline in sales.
The idea that Saturn may disappear is “hard news to absorb,” said Haywood B. Hyman Jr., a founding Saturn dealer.
Mr. Hyman, who put up $1 million for his original Saturn franchise, built a series of showrooms in southern Virginia just for Saturns. He now operates in only two locations, after closing one of his Saturn dealerships last month.
“I would hate to see it go,” he said. “I hope it can survive.”
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