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What Killed Saturn?

Gina-Marie Cheeseman
| Wednesday October 7th, 2009 | 2 Comments

Saturn_logoWhen GM launched Saturn in 1985 as its first new brand in 70 years, it seemed to have much promise. Marketed as a “different kind of car company,” Saturn would produce small cars that could compete with imports as a stand-alone company with its own network. Salespeople were paid a salary instead of a commission, so customers were not hounded as they looked at cars. Saturn dealerships were also haggle-free as customers paid the sticker price. Anytime a customer brought their car in for service, they received a free wash.

GM Chairman Roger B. Smith said Saturn would “affirm that American ingenuity, American technology, and American productivity can once again be the model and the inspiration for the rest of the world.” Months after Smith uttered those stirring words, a Memorandum of Understanding between GM and the UAW stated, “We believe that all people want to be involved in decisions that affect them, care about their jobs . . . and want to share in the success of their efforts.”

GM put over $3 billion into launching Saturn. In its first five years, 70 percent of Saturn customers turned in a foreign car. However, Saturn only made money in one of its 20 years of car production. For nine years Saturn only had one model. After GM nearly went bankrupt in 1992, Saturn did not receive money to update its cars. As a result, sales fell considerably.

Saturn workers were called technicians and received only 80 percent of the standard United Auto Workers (UAW) wages, but would earn more if Saturn succeeded. In 2003, Saturn workers voted to do away with the agreement and return to UAW’s standard contract with GM.

“Saturn will stand out as a spectacular marketing success,” said Ashwin Joshi, an associate professor of marketing at the Schulich School of Business in Toronto. “It was a solid example of an integrated marketing concept; externally marketed and internally absorbed. But its failure shows it still needed more than sales staff clapping for you as you drove your car off the lot.”

“They got the front end right. What they didn’t get right was the technology,” said Joshi. “They should have owned fuel efficiency, they should have owned green technology, they should have owned the minivan market.”

“Saturn speaks to the core of what GM did wrong,” said used-car guru, Phil Edmonston.

“It’s criminal negligence. They got attacked internally, constantly, until today they were finally destroyed,” said Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Mich. “How do you take something that was such a good idea and wreck it deliberately?”


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  • Jeff

    The last paragraph reminds me of how Harley Davidson killed their Buell line of motorcycles.