Ken’s Take: Talk about blowing a great franchise. In the 1990s, Saturn had growing cult-like following, often being praised as a brand in the league of Harley-Davidson. GM squandered a valuable asset.
My bet: there’s enough residual brand equity for Saturn to rise from the ashes. In fact, if I were running GM, Saturn would be the nameplate I’d slap on all hybrid electrics.
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Excerpted from WSJ, ” Era Ends as GM Snubs Saturn”, Feb 19, 2009
For years, analysts have urged GM to pare its brands. But GM executives insisted it would be too expensive after spending an estimated $2 billion to wind down Oldsmobile earlier this decade. Yet cutting brands shaves operating costs because each brand requires a certain amount of spending on product development advertising, dealer support and other expenses.
Now, GM is turning its back on Saturn, Pontiac, Saab and Hummer, General Motors Corp. is abandoning a decades-old product strategy that once helped ensure its dominance.
Saturn, Hummer, Saab and Pontiac have all struggled to attract customers. That prompted GM to sell large numbers of them to car-rental concerns, corporate fleet buyers and GM’s own employees. Of the 504,000 vehicles sold under the four brands in 2008, 40% went to fleets and employees. Such sales generally are less profitable than those to consumer buyers.
Of the four brands being cut off, Saturn once held the most promise. GM created the line in 1985 as a completely separate company offering small cars that aimed to compete head-on with Toyota and Honda Motor Co.
Saturns featured dent-resistant plastic bodies, its dealers promised friendly, no-haggling sales and customers were invited to an annual “homecoming” cookout at the Saturn plant in Spring Hill, Tenn. For some customers, buying a Saturn was like joining a club.
But in the 1990s, GM starved Saturn for new products as it tried to revive Oldsmobile. After GM killed Olds, it turned to neglected Saturn. It spent billions to produce a range of new vehicles, many of them derivations of its Opel models from Europe. Some were hits; the Aura sedan was praised by many car reviewers.
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Some Saturn dealers now hope that instead of closing the brand, GM will spin it off as a separate company. A team of Saturn dealers is spending 60 days working with GM to evaluate the possibility. These dealers would sell vehicles under the Saturn brand made by other manufacturers, possibly from overseas.
“This is going to be somebody’s low-cost entry to the world’s largest car market.”
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Full article:
http://online.wsj.com/article/SB123500373416017943.html?mod=article-outset-box
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