Tag: Saturn

Penske-Saturn New Direction for Auto Industry

The announced sale of GM’s Saturn brand to businessman and racing team owner Roger Penske could mark the beginning of a new direction for the global automobile industry. A key component of Penske’s plan for Saturn is outsourcing the production function. Plans call for finding global sources that could make Saturn vehicles to specification. Penske’s logic is that in some cases significant cost savings could be realized if production occurs in locales like China or India. Moreover, the ability to shop around for producers will result in shortening the cycle time from a car’s design to its appearance on the showroom floor.

The Penske plan essentially transforms the marketing function for an automobile company and becoming more like the apparel industry. Saturn becomes a marketing organization, involved with the design, distribution, and promotion of its brands. Manufacturing will be handled by sources outside the company. The same model has spread to the personal computer business effectively.

What would be the limitation for Saturn’s implementation? Quality perceptions. A clothing marketer can contract with various manufacturers to produce products, and if a supplier has a problem maintaining the brand’s quality standards that supplier may not be hired in the future. Sources for manufacturing autos are not as plentiful, and the reputation of the manufacturer is an element of an auto brand’s identity. Saturn will have lean on its already established reputation initially. Once cars are produced by external sources the marketplace will decide if their quality is consistent with Saturn’s reputation. Ultimately, consumer evaluation of Saturn will determine if it succeeds, not cost savings on manufacturing.

USA Today – “Penske-Saturn Deal Could Change How Cars Are Sold”

Saturn: The End of a Great Brand Experiment

I was disheartened to hear General Motors plans to phase out the Saturn brand as part of its fight for survival. Saturn, along with Saab and Hummer, will be phased out in 2009. These brands have been on the chopping block since GM’s financial troubles came to a head last year. In addition, the Pontiac brand will be phased out in 2010 as well as major reductions in employee headcount and dealerships.

Of all the announcements made by GM President and CEO Fritz Henderson today, elimination of Saturn is particularly sad from a marketing standpoint. Saturn was launched in the early 1990s with the promise of a new era within GM. Even the ad slogan supported the notion: “A different kind of car, a different kind of company.” Consumer response to Saturn was very strong in the early years. Then, consumer preferences shifted toward larger vehicles and SUVs. Saturn was ill positioned to meet that trend with its focus on economy cars.

Saturn also suffered from a lack of resource support within GM as well as bad managerial decision making. One role for Saturn was supposed to be to serve as an experimental brand. For example, the EV1 electric car that Saturn tested in the mid 1990s would have put GM ahead of competitors in the race to offer alternative fuel vehicles. The EV1 was tested in California, and the company eventually destroyed all of the vehicles once their leases expired rather than move forward with production.

I own two Saturns and have followed the brand closely for more than 10 years while researching it for a case study I prepared and subsequently updated for marketing textbooks. From a brand building standpoint, GM did many things right to get Saturn off the ground. GM’s Henderson made an interesting statement at the press conference announcing the changes saying “brands are good for offense.” The problem is GM is in defensive mode. The company is resizing itself to reflect the reality of a smaller U.S. auto market. Saturn will be missed… at least by this owner.

Saturn’s Demise Squarely on Shoulders of GM

As General Motors fights for its life, one scenario for a slimmed down GM calls for deletion of some of its brands. Among the brands on the deletion list are Hummer, Saab, Pontiac, and Saturn. While Saab and Hummer may be candidates for sale, Pontiac and Saturn would more than likely be eliminated like its late sister brand, Oldsmobile.

As an owner of two Saturns, the possible elimination of Saturn is disappointing. As one reviews the twenty year history of the brand from its conception to its precarious state today, there are many missteps that can be identified. Saturn hit a home run early on with its no haggle pricing, folksy image, and dependable, fuel efficient cars. Then, in the mid 1990s the SUV craze hit the market. Saturn continued on selling its fuel efficient cars. By the time the VUE SUV was introduced in 2001, GM had missed an opportunity to take advantage of the SUV market.

GM has been all over the board with Saturn, trying a mid-size sedan that failed (the L Series), and now selling a minivan (Relay), crossover (Outlook), roadster (Sky), and European styled sedan (Aura). These models were pushed at the expense of Saturn’s core product, the economy car. As GM has tried to expand Saturn’s product mix (and raise price points), the market has come back to lower priced, high gas mileage vehicles. Also, GM missed a golden opportunity to use the Saturn brand as a development brand for hybrid or electric vehicles. An experiment with an electric vehicle in the early 1990s, the EV1, was a modest success. GM decided not to pursue the EV1 further and destroyed all of them once their leases expired.

Perhaps the destruction of the promising EV1 more than a decade ago was a foreshadowing of what would ultimately happen to the Saturn brand. I hope I am wrong.

Link: Business Week – “GM, Ford Prepare for Congress”