The Saturn Saga

It seems I just can’t stay away from the auto industry…

On the front page of the business section in today’s Plain Dealer (Cleveland) are two articles about Saturn. One, with the tag line “General manager tells all…in automotive terms” is an interview with Jill Lajdziak, Saturn General Manager. The other, “Division’s models failed to live up to high concept” is an article by Christopher Jensen.

Today, more than 20 years after GM launched Saturn, I find the whole situation amusing. I can’t believe we’re wasting print on Saturn. I can’t believe GM is still wasting a dime on the brand. The whole thing is just mind boggling to me.

Saturn was established to be a company within a company, shedding all of the emotional and political baggage (and overhead) of GM to compete with Japanese imports. The whole point was to be low cost, good quality and practical. In the auto industry, this translates to low complexity: few models with even fewer refreshes.

From my point of view the Strategy was flawed from the start. First of all, it’s virtually impossible for the whole company within a company concept to work...especially with an organization with as much complexity and baggage as GM. And, secondly, the American auto industry thrives on variety. Yes, the Japanese got by with fewer models, but there’s been a huge amount of aftermarket customization of those models…rarely do you see a tricked out Saturn.

The Structure, like most old-school American manufacturing companies, was never appropriate. But, the Execution which was even worse. There was one bright spot in the Execution: customer service. Saturn is one example of a wildly successful relationship between the OEM and the dealer network and consumers. Sadly, that is the only success we can point to with Saturn.

When they didn’t sell as many cars as they’d planned, they violated the Strategy by adding more models (complexity). Additionally, from the start Saturn was riddled with quality problems. Now it seems they’ve decided to botch Execution even more by adding more models and shed the whole concept by sharing marketing, engineering and production resources with the rest of GM. This eliminates any semblance of low cost footprint that they had before – even though they are using Opal plants in Europe for most of the production and design.

All I can guess is that GM believes that the value of the consumer ‘quality’ brand and the access that it gives them to consumers who might otherwise buy imports is enough to salvage the division. I’m not convinced. Saturn consumers don’t typically ‘graduate’ to more expensive GM nameplates, although they may purchase another Saturn. While consumers liked the no-hassle dealer approach (which was groundbreaking at the time), competition abounds in that arena today.

GM has too many brands. Customer service is the only thing of value in the Saturn brand, and that is 100% in the hands of the dealerships. If this is how they plan to save GM, now might be a good time to short the stock.

(It should be noted that I also used information obtained from a December 13, 2004 article in Fortune, “GM’s Saturn Problem”.)