Lessons from Saturn's failure

By Simon St. Laurent
February 18, 2009 | Comments: 3

In 1996, I bought my first car, my only new car. Of course, it was a Saturn.

That probably tells you a few things, in particular that I'm not a "car guy". I was looking for basic transportation with good mileage, not the fastest, largest, or most exciting vehicle available. I was also looking to avoid the usual car dealer experience, preferring fixed prices to the usual haggling. Beyond that, I liked the story Saturn told of a new company, a new factory, a new way of doing business.

The car worked out well, making it to 190,000 miles before I finally had to junk it last year. The Saturn story, however, had a much harder life, and yesterday we learned of its end:

[Wagoner] cited the economic downturn as the reason G.M. was phasing out Saturn. "Frankly, the opportunity for any brand, and for our volume as a whole, just looks radically different," he said. "It is unfortunate and it seems like a cruel twist of fate at a time when Saturn is loaded up with a fantastic product portfolio."

When Saturn was started in 1990, as a "different kind of car, a different kind of car company" aimed at owners of small Hondas and Toyotas, its small cars were immediate hits. But G.M. executives decided in the mid-1990s that they needed to support G.M.'s other brands over Saturn, which by then had cost $5 billion.

G.M. did not add any new vehicles to the Saturn lineup for five years, despite pleas from dealers for bigger vehicles. Earlier this decade, G.M. decided to start selling vehicles from its Opel division, with some design changes, as Saturns in the United States.

Buying my Saturn was interesting. Living in New York City, I hadn't needed a car, but I was moving. A friend of mine - and Saturn owner - took me out to look at cars. By the end of visiting a few dealers, she'd sold me on Saturn. I knew the company story, I knew that Consumer Reports didn't hate their cars, but her enthusiasm and that of a few other friends was enough to make me confidently buy an SL2.

My experience wasn't perfect, as I nearly lemon-lawed my car for weird electrical problems that the dealer (spending a full day on the line with the factory, apparently) tracked down to a short in the defrost switch. A few weeks later, though, I parked next to a purple Saturn, whose driver asked me about my car. She turned out to work for Saturn and had all kinds of questions for me. An unexpected coincidence, yes, but one that certainly improved my opinion of the company again.

I never got to Spring Hill for the 'reunion,' but knew people who did. Its demise was a bad sign. Sure, it was a marketing ploy, but it certainly emphasized the community angle Saturn had pushed from the outset. Customers and workers talking to each other? More collegial relations between management and labor were part of the story too, though it seemed like the rest of GM management and the UAW were far from excited about that aspect of community.

The lesson from Saturn probably isn't about how to build a community around a product, though. They got further than most automakers had, even before the web made it easier, but not that far. The lesson - an uglier lesson - is about how difficult it is to sustain a company around that community, especially when you're part of a larger organization that doesn't share the same values.

GM made an expensive gamble in launching Saturn, but wasn't willing - for lots of reasons - to keep investing in the operation. They built a flexible production system but didn't take advantage of the flexibility, leaving the same cars in production for years. They built a community of customers, but then wandered away from the storyline that had united them in the first place. Enthusiasm waned, at least in my experience.

When I lived in places with Saturn dealers, I always took my car back to the dealer for service. It was interesting talking with other people there, even people who were just looking at the cars. Eventually I moved far away from the nearest dealer, and only went back every few years. Visiting occasionally became strangely painful, as it was clear that GM wasn't doing much innovative with Saturn - there weren't any EV1s in this part of the country. The cars they added to the lineup were just GM cars, made in other plants with other stories, and the marketing line faded to blandness. (Okay, eventually blandness with a touch of green, though Saturn mileage got worse year after year the same way every other brand's mileage got worse.)

I hadn't considered Saturn in the light of web community until last night, but the story makes me realize why so much of the successful energy around online community comes from startups. The mismatch that GM had with the Saturn strategy isn't an artifact of Detroit's dinosaur ways. It's a natural complication of trying to weld a very different business model on to an existing juggernaut.

"A different kind of _____ company" is a hard story to tell when you're still running "a traditional kind of ______ company" at the same time. The experience of running the older model, especially of running the older model successfully, makes it hard to evaluate the new model. The return on investment may come very differently, even in ways you're not set up to capture and build upon. It may not even come in cash, which is certainly a difficulty in business.

Maybe they'll spin Saturn off so it can finally find its own destiny. In the current environment, I'm not counting on that working, especially after a decade of neglect.

In the meantime, if you're bubbling with ideas for "a different kind of _____ company", give some careful thought to where your support comes from, especially if you're starting out inside a "traditional" company. In particular, there's still a long ways to go before we figure out how to evaluate the value of online community, or how to capture value from them.

Don't give up - just remember that setting and maintaining those "different" expectations is a key part of making all of this work.


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3 Comments

As of this writing (June 5, 2009) news came out that Roger Penske of the Penske Racing Team purchased Saturn from GM.

I've owned 2 Saturn SL1's. I think they're one of the better cars on the road and take this latest news like a B-12 shot - full of energy and enthusiasm.

I know what my next new car will be - a Saturn.

Larry

I was excited in 1991 about the Saturn, and its vision for a new company making a well-designed car. I had driven a very trusty '81 Mercury Zephyr for 10 years and was looking for that next-era American car company to challenge the powerful Japanese models. Yet I was part of a poor family of five, and could only keep the Zephyr running till the time we could afford an evolving Saturn that had a bit more room than an SL 1 -- a U.S.-made improvement of a Toyota wagon or minivan? I was hopeful.

It never happened. Through the nineties, Detroit continued to skunk us with empty shells of Accord-wannabes. In 1996 we bought a used Previa and I stopped dreaming about Detroit ever wanting to do more than work itself into bankruptcy.

For the sake of American industry, I give my support to Mr. Penske's effort at reviving Saturn's full list of auto options and visions.

Describe the evaluative process followed by the consumers and do outcome that Mrs.K. went through.

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