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Saturn’s sudden death marks end of GM dream

GM's Saturn division started out with high hopes a quarter-century ago, but nothing worked out quite as planned. The brand is being eliminated after a deal to sell it fell through.
Image: File photo of Harrison preparing to drive a Saturn Aura from the assembly line to its final inspection at the General Motors Fairfax Assembly Plant in Kansas City
A worker prepares to drive a Saturn Aura from the assembly line to its final inspection at a facility in Kansas City, Kan., this year. GM is eliminating the Saturn brand after a deal to sell it collapsed.DAVE KAUP / Reuters
/ Source: contributor

It’s been nearly a quarter-century since General Motors Chairman Roger Smith stunned the automotive world by announcing that GM would create an all-new car division, called Saturn.

But 25 years later, Saturn's once high-tech factory, and Saturn itself, are closing down, testimonies to the failures of Smith, and the CEOs who followed him, to fix GM’s problems.

GM announced late Wednesday it would close down the division, at the cost of some 13,000 jobs, after a deal to sell the brand to Penske Automotive Group fell through.

Saturn was going to be far more than just another brand, but effectively an autonomous company-within-a-company, charged with taking on the increasingly powerful Asian imports. It was one of the grandest schemes to emerge from the 14th floor at GM's old Detroit headquarters, where the squeaky-voiced Smith was giddily investing tens of billions of dollars in a bid to rebuild the increasingly troubled GM.

The announcement set off a flurry of hope and expectations, and even triggered a bidding war among the dozens of states which hoped to land the Saturn plant — and the jobs promised to go with it. Tennessee eventually won the competition, and a plant was built in Spring Hill.

“People expected the car to lift off its wheels and fly,” recalled the late Skip LeFauve, who ran the Saturn operation from shortly after its heavily hyped announcement.

Like just about everything connected with Saturn, nothing quite worked out the way it was originally planned. Initially, Smith and company promised to build a high-tech, low-cost small car that would push the Japanese back into the sea. But what they brought to market was a relatively middle-of-the-pack line of subcompacts that offered only one truly notable feature, their use of plastic body panels.

Saturn officials promised they’d use that technology to permit frequent redesigns of the early Saturn products but, like almost everything else connected to the program, they failed to deliver. In reality, Saturn was slow to update its product line-up, one reason why early fans steadily migrated to the brand’s competition.

It didn’t help that the officials in charge of GM’s other brands linked arms and fought hard to prevent the upstart division — billed as “a new kind of car company” — from getting the resources it needed to expand its product mix and attract more buyers.

“We didn’t quite strangle the baby,” GM Vice Chairman Bob Lutz said, in an interview early this year, “but we told it to go out, get a job and pay its own way.”

By the time Lutz joined GM as its “car czar” in 2000 and began shifting resources toward Saturn, it was already a dead division walking, so to speak. Over the past few years, Saturn has vastly expanded its line-up, with products like the compact Astra and Vue crossover winning generally rave reviews. But even the brand’s more loyal customers had already largely moved on. By 2008, sales had plunged to an anemic 188,000 units, less than the original Saturn subcompacts alone had averaged. The decline only worsened this year as word spread that GM would abandon the brand.

Ironically Saturn did achieve one truly remarkable breakthrough: It taught the industry that you could win buyers by doing away with the traditionally hostile automotive buying process. Saturn stuck to a hard and fast to its no-haggle sales policy and it went out of its way on the service side, as well.

Early on, when a supplier provided a corrosive batch of antifreeze, Saturn didn’t just repair the affected cars, it replaced them. That philosophy informed the way it handled consumers at every level. And it helped Saturn routinely place at the top of the charts, notably the influential J.D. Power Customer Satisfaction Index. No wonder that customer-friendly sales and service strategy has today been adopted by virtually every major auto manufacturer.

For a while, it looked like Saturn might become the only true legacy of Smith, GM's former chairman, who died last year still insisting he had positioned GM for the fight ahead. In fact, the company has had to unwind virtually all his efforts. It replaced or completely rebuilt his factories. It replaced his products. And it sold off acquisitions like EDS and Hughes to help pay off its debts.

Saturn fell victim to the company’s financial collapse, the Obama administration’s overseers insisting that GM halve the number of divisions it operated in North America before it would support a government-funded bailout. There had been hope that legendary Detroit entrepreneur Roger Penske might pull off a miracle, taking over Saturn and finding a source other than GM for future products.

But a proposed deal with Nissan/Renault collapsed and Penske was forced to walk away from Saturn. Now, says GM CEO Fritz Henderson, the once-maverick brand will be shut down.

The remaining assembly line in Spring Hill also is being shuttered, though GM says it could be restarted eventually. But if that happens, it will produce vehicles for one of the company’s surviving brands: Chevrolet, Buick, Cadillac or GMC.