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Why Saturn Fell to Earth


GM's 'Different Kind of Car Company' was a great marketing idea, but low margins and confused branding doomed the experiment

Nineteen years after emerging as a "Different Kind of Car Company," Saturn is headed for oblivion. A moment of silence, please, because Saturn once represented a new beginning for General Motors (GM), which hoped the brand would catch the ascendant Japanese. The experiment fizzled and instead became an object lesson in what happens when a company fails to back up bold thinking with bold execution.

Saturn was a stroke of marketing brilliance. Not only had GM created a standalone company with its own factory and dealer network, it had torn up the rules of auto retailing. Saturn's original S Series compact had one fixed price, a revelation for buyers who hated haggling with salespeople. The debut car sold for less than $11,000 and was a bona fide hit.

But the newborn Saturn had sibling rivals inside GM. In 1990, just a year before launching its first car, Saturn lost its patron when then-CEO Roger B. Smith retired. Soon it was battling for money and attention with GM's other brands, especially Oldsmobile. That partly explains why it took GM eight years to come up with a larger car, the doomed L-Series sedan, and almost a decade to replace the S-Series.

By the time GM started giving Saturn decent cars earlier this decade, the parent no longer knew who its offspring was. Pretty soon, Saturn began lurching from one brand message to the next. In 2001 it became a "forward-thinking company." Before long it was all about the customer again. When that didn't work, Saturn emphasized its cars—hawking new models with the slogan "Like Always, Like Never Before."

In 2007, GM nudged Saturn upscale and began selling the Aura family sedan, which boasted Lexus-level style and comfort. Suddenly, a brand that had started out selling affordable cars was charging up to $29,000 for a family sedan. That might have worked had GM spent several years reaching out to affluent buyers. But it didn't.

By then, GM's research was showing that the Saturn brand was badly damaged. When the automaker showed buyers the Aura with the nameplate removed, the car scored a respectable 3.4 out of four. With the Saturn badge affixed to the hood, the same car scored a measly 2.0. Saturn, in a way, tells a larger story about GM. The automaker is making better cars, but most of its brands are so diminished that few buyers believe it.

Welch is BusinessWeek's Detroit bureau chief.

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