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Saturn: GM's Biggest Mistake

Brand was an unsustainable distraction from the start

By Nick McMaster,  Newser Staff

Posted Oct 2, 2009 5:39 PM CDT
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(Newser) – As General Motors’ Saturn experiment ends with a whimper, it’s important to understand that the brand was a failure from the start. Some obituaries blame GM for not providing a fuller roster of vehicles to build customer loyalty—but if anything, the automaker gave Saturn too much, writes Mark Ritson. Saturn was created in the mid-'80s to compete with cheap Japanese imports. But in order to compete, Saturns had to be cheap, too, making the brand unprofitable from the start.

"An even bigger cost for GM was the time it lost building a brand it believed could fight off its Japanese rivals," Ritson argues. The firm should’ve spent the past 24 years making the strategic shifts it has only recently been forced into, he writes for the Harvard Business Review. "The notion that another brand, rather than fewer brands, was the way forward turned out to be a colossal distraction."

A torn Saturn flag is shown at a Saturn dealership in San Jose, Calif., Thursday, Oct. 1, 2009.
A torn Saturn flag is shown at a Saturn dealership in San Jose, Calif., Thursday, Oct. 1, 2009.   (AP Photo/Paul Sakuma)
A Saturn dealership sign is seen in Whittier, Calif., Wednesday, Sept. 30, 2009.
A Saturn dealership sign is seen in Whittier, Calif., Wednesday, Sept. 30, 2009.   (AP Photo/Jae C. Hong)
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Its initial setup costs of $5 billion were soon extended as Saturn's sub-compact prices failed to cover the huge costs of a dedicated plant with massive operating costs. By 2000, Saturn was losing $3,000 on every car it sold.
- Mark Ritson

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COMMENTS
Showing 3 of 16 comments
Doctor-Zaius
Oct 6, 2009 9:51 AM CDT
He's not very smart Shona....
Doctor-Zaius
Oct 6, 2009 9:49 AM CDT
GM has layer upon layer of executives, most of them useless, all of them overpaid. The example of the disparity between the Toyota CEO and the GM CEO just illustrates where the scale is out of whack. Sad that I had to spell it out for you, try to keep up Junior.
JoeQ
Oct 3, 2009 12:55 PM CDT
As soon as any company in the USA is publicly traded, its management gets taken over by the MBA types from the major schools. The original principals have cashed ou. The top management have been basically outsourced, and, like mercenarys they always go for the quickest buck possible, which has a lot to do with quarterly statements.

 
Toyota • General Motors • Detroit • Saturn • Hyundai • auto industry • Big Three

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