Saturn: Why one of Detroit's brightest hopes failed

Jovial employees who sang to new buyers as they walked away with the keys. Good, smaller American-made cars. Dealer satisfaction ratings through the roof. A cult following among buyers who, in the early years, made an annual pilgrimage to the company’s plant in Spring Hill, Tenn.

General Motors's Saturn brand – touted as “a different kind of car company” – had high aspirations, borrowing the Japanese manufacturing model of team production, among other things.

But the Saturn experiment fell to earth with a final thud Thursday as a "goal-line" deal to keep the brand alive fell apart. Saturn’s latest slogan – “We’re still here” – suddenly seemed like a cruel joke as 350 dealerships are likely to close and 13,000 people face potential layoffs.

True, Saturn made money in only one of its 20 years of car production. But in the end, it was internal resistance to the funky start-up and its pioneer attitude that felled it.

In other words, the very qualities that Cornell labor expert Harry Katz, in his book “Shifting Gears," predicted could transform Detroit’s ingrained big-car culture, doomed one of its brightest prospects, say experts.

“It’s criminal negligence. They got attacked internally, constantly, until today they were finally destroyed,” says 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?”

The decision Thursday by the Penske Automotive Group to back out of a deal to keep Saturn going will cost GM as much as $500 million in unexpected costs. “It’s a pretty good bump in the road for the new GM company. It’s not fatal, but this sort of thing has to end," he says.

The Saturn story

Saturn was supposed to be different, and it was.

Created in 1985, the Saturn brand – launched with iconic commercials showing hordes of buyers in the Tennessee hills – represented a rare piece of forward thinking in traditional Detroit. But The Wall Street Journal chided the project for being too ambitious, requiring not just a new car, but a new plant, new dealers, and a new workforce.

Still, it worked ... for a while. In its first five years, 70 percent of Saturn customers turned in an import car in order to buy an American machine. Its original S-series proved a hit.

But Saturn faced outright hostility from other GM brands such as Pontiac and Chevrolet, which lost customers to the new unit. Even the United Auto Workers had gripes with the Southern-based plant.

Saturn languished with only one model for nine years. The L-series wagon in 1999 beefed up the selection, but also became emblematic of internal tensions and mistakes that dogged the project. After touting its wagon in a $300 million advertising campaign which included ads during the Super Bowl, dealers had no cars to show intrigued would-be buyers for five months.

Former GM CEO Rick Wagoner’s support led to the introduction of the Vue and Outlook SUVs in the mid-2000s, though promises of a family van never materialized.

Saturn had begun to make a comeback with the new models in 2007, but was hit hard by the recession. At its high point, the company sold 300,000 cars in a year, more than current US auto market players like Subaru and Mitsubishi.

Why the Penske deal failed

Bloomfield Hills, Mich.-based Penske, the second-largest dealer in America, couldn’t live up to a bargain struck in June after Renault, which would have manufactured the cars, pulled out of the deal Thursday.

"It was a stunning turn of events," said GM spokesman Tom Pyden, according to the Associated Press.

Skeptics of the deal had argued that although Saturn had high customer-satisfaction ratings, the brand did not sell well because the the cars themselves weren't all that great. But for devotees, the end of Saturn’s “no-haggle” guarantee could have a final upside, according to the PriceWheels Blog.

“As word spreads that Saturn will be closing, the company’s cars and SUVs should be available with a hefty discount,” according to the blog.

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