Because its hugely expensive to kill a brand, like $1 billion + (roughly what it cost to kill Oldsmobile, it’d probably cost more today). I’ve not heard anything about GM killing Saturn, but I have heard talk about Pontiac, Saab, and Hummer getting the ax. So, that’s at least $3-4 billion, and then who knows how much money will be lost because of ill-will generated towards GM when folks find out that they’re favorite brand is gone. I doubt if many Pontiac or Saturn owners will want to move to Chevy or Buick when it comes time to buy a new car.
Which is true, but beside the point. Their sales have dropped so fast that production (compared to demand, anyway) is off the charts. They’re backing up huge volumes, which probably can’t be sold ever, or will have to be sold at huge (-er) discounts.
So you’re right. It’s not just sales… it’s sales and the entire corporate incompetence.
But anyway, they won’t sell/kill/spin-off the brands unless someone forces them to. I don’t know why, but nothing GM does makes much sense to me anymore.
You sure about that? Saturn is a more successful brand than Buick and is one of the few American brands with genuine fan bases.
Saab, Hummer and Pontiac all could be gone, but cutting Saturn makes little sense. Saab could be sold back to a European maker and remain viable and Hummer could be sold and managed as a smaller niche brand by an independent, non-union firm.
Pontiac and Buick both could remain as nameplates and their few successful makes retained but probably not as independent brands but rather as simply alternate trim levels to Chevy models.
I am not a Saturn owner, and I don’t know a whole lot about that particular aspect of their business, but I understand the upper management some extremely boneheaded moves some years back, and the Saturn car company is Not Doing Well. They still have a following, but were driving away customers. Not sure sure whether that’s still going on. I never got the whole story, so this may be off.
I work for a tier three company that supplys GM , Chrysler and we are now starting on a ford program.
We are bringing back 40 people next week that were on layoff.
Declan
You claimed GM has talked about cutting Saturn. Where did you read or hear that? It doesn’t seem to be logical from an outsider view.
It isn’t, but they are.
http://www.chicagotribune.com/business/autocorner/chi-thu-saturn-mateja-0219-feb19,0,6035281.column
Basically, it’s cheapest to kill, their biggest defender is gone, and GM is perfectly willing to throw things overboard.
I think that article may have been the problem. Gm has this weird obsession with filling everything. Saturn used to have several good models. It doesn’t need a top-to-bottom lineup. It’s not going to benefit from that. You can’t just push these things out - they have to be what the customer wants them to be, and too many brands and too many niches are just going to grind the gears to dust.
I know it sounds odd, given their advanced robotics plants and all, but GM in some ways never left the 50’s. They seem to think you can just push cars out to the dealer showroom and push Push PUSH sales along. And it doesn’t work. It didn’t work in the 50’s, but that was in a day when communication and B2B trust were virtually nonexistent, so you had to do this to get anybody at all what they wanted.
A useful counter-example is Coke. Coke introduces new products now and then. Some of these they keep - their overall sales and profitability go up. SOme they cut, because while they might get a few more sales, it’s just cannibalizing their base more than it gains them anything.
Or Honda. Honda deliberately does not expand outside its niche. It’s good in that niche. Expanding would stretch the brand name too far. Or Toyota - they did expand outside their original niche, but they created special labels (Scion, Lexus) to do it, and the lineup is very narrowly tailored to a specific market segment. GM just doesn’t do that.
And I’m no expert in this field. I mean, this is literally Marketing 101 stuff. It does not take a genius to see the flaws here. There are arguments for having a full product line, and some businesses do that. I don’t know of any who carry multiple full product lines all competing against each other.
GM’s management is just nuts. I can think of a few who do carry full product lines. Mostly in the food and detergent aisle.
I told you they were all Proctor and Gamble people.
Communist Sweden has decided its not their job to manufacture cars and have decided NOT to loan money to help SAAB.
So basically its sink or swim time for SAAB.
In all likelyhood this means that SAAB will have to do the Swedish equivalent of a Chapter 11.
Dunno if this makes it harder for GM.
You haven’t been paying attention. Since the time of the very first loan to GM and Chrysler in December, GM has been making it clear that part of their recovery plan is to sell or close Saturn. This week, they emphasized it. If the Saturn division is not sold by 2011, GM will close it.
As a Saturn franchise dealer employee, I can tell you that we are very excited about the recent developments. We are anticipating getting back to our roots and core values as a company that we seem to have lost when we were absorbed by GM. The brand is to valuable to let die, and if I know Saturn dealers, they won’t let it even if it means buying the brand themselves. (Which could be an option.)
http://www.saturnfans.com/ - 2nd story on the page
They need to drop 80% of their models, focus on fuel efficient vehicles, and stop copying each other. Build a brand and stick with it. Just because Apple has an iPhone, doesn’t mean Google has to do the same. Just because Google owns the internet, doesn’t mean that Microsoft has to do the same. Focus on a couple really good vehicles and build those. I just visited the GM site. There are 8 brands that I could find. Only 8, not too bad right? When I went to view the vehicles by brand, the result came back with 94 vehicles. 94 vehicles? WTF??? That is just DUMB.
GM has completely missed the mark on efficiency as a business model, much less efficiency in their products. They have failed big time. And that issue of the UAW? Even if they could fix that issue, they need to seriously cut the fat in their product line.
And that’s just GM, lol!
Depends on the definition of “U.S. Auto Industry” I suppose.
Include the US operations of Toyota, Nissan, Honda etc. then the only long-term difficulty with the US market seems to be overcapacity and excessive discounting, which could presumably be solved by getting rid of some factories.
Defined to be the global operations of the big three US-owned automakers then Ford/GM have very solid operations in Europe, China and elsewhere with good prospects and which I believe generate decent profits. Chrysler? All I can say is Daimler must be glad they came to their senses and scraped that off before it was too late.
Defined to be the US operations of the US-owned automakers, I’m not sure I agree with you.
Selling is fantastically easy. Selling at a profit is the challenge.
Out of interest, do you happen to know what the net profit/loss is for the US operations of the Big 3 over the last thirty years or so? I don’t pay a massive amount of attention to this, but they seem to book decent profits of several billion a year for a good few years, then lose tens of billions for a couple of years, then repeat. However I’ve never seen any long-term trending, the news always tends to focus on ‘hooray! profits!’ or doom/gloom/despondency stories of the kind that are circulating at the moment. It would be great to have some proper numbers.
What would be really interesting would be to compare the numbers for US and foreign carmakes in the US over the last few decades, and similar data for European, Japanese and US carmakers in Europe. But getting the numbers for that might be a challenge.
The big nail in Saturn’s coffin came last year. In 2007, the Saturn Aura won Car of the Year and its sales remained flat. In 2008, the Chevy Malibu won and its sales shot through the roof. That convinced GM that Saturn had peaked as a brand.
Add that to the problem that in exchange for agreeing to the “no haggle” policy Saturn Dealerships were given huge exclusive sales areas put alot of distance between Saturn dealerships and limited thier abilty to compete in markets. you can go to the Chevy dealer 5 miles away and if they don’t have what you want you can check the other Chevy dealer 5 miles the other direction. If the Saturn dealer 10 miles away does not have what you want the next dealer might be 30, 40 , 50, 100 miles away. Where I am at work, there is a Saturn dealer 6 miles away. The next closet dealer is 86 miles away. Compare that to Chevy which has 3 dealers within 7 miles of me here and 25 dealerships with 100 miles of me. Which nameplate do you think I am most likely to shop at? And that does not even count the Pontiac options which sell basically the same vehicles.
That’s the only measure that really has any meaning in these discussions. Limiting it to US sales doesn’t really have any meaning when talking about the viability of the companies. It’s clear that the US market is where they are the weakest, but taken out of context it’s not giving us any answers. A big reason why they are doing so well overseas is because the can operate there under more lax standards and with non-union factories having minimal legacy costs.
Yeah, that would be interesting, but only so long as those numbers are in context and broken down to see where the costs and losses are.
:dubious: I’m not aware of any European auto factory being non-union, and while some of Europe’s safety regulations aren’t as strict as those in the US, their emission standards have been more stringent than US regulations for more than a few years now.
How can Saturn dealers buy the franchise if most of the parts are shared with other GM products?
For an anecdote, I really, really, really liked my '99 Saturn SL2. But when it was time to get rid of it last year, guess what…they don’t make the SL line anymore and whatever the replacement was, was dog ugly and I didn’t like the interior at all. So off I went to Honda.
There are Honda parts in GM cars. There are GM parts in Toyotas. Sharing has occured across brands and across manufacturers for years. The other manufacturers don’t want GM or Ford to fail because they are major parts suppliers for the entire industry. It won’t be an issue.