Falling Back to Earth (Part Five)

Saturn spirals out of orbit.

(Almost) an Opel: 2006 Saturn Aura. Image: driving.ca

Following the 2005 launch of the well-received Outlook full-sized crossover SUV, next up for replacement was the once popular but now fading L Series mid-size saloon. The replacement was introduced in 2006 and called the Aura. This was based on the GM Epsilon platform shared with the Opel/Vauxhall Vectra C and Signum, Saab 9-3, Chevrolet Malibu, Pontiac G6 and Fiat Croma. It was powered by either a 2.4-litre version of the GM Ecotec engine or 3.5 and 3.6-litre V6 units, installed transversely with FWD.

The L Series estate was not replaced, and the Aura was offered only in four-door saloon form. Stylistically, the Aura dispensed with the Saturn family look, closely resembling the Vectra, both inside and out. It also dispensed with the thermoplastic external body panels, another Saturn hallmark, in favour of a wholly conventional construction. Just two trim levels were offered, XE and XR. A mild hybrid version of the former was introduced in 2007, called Green Line. The Aura was manufactured at GM’s Kansas City plant.

Motor Trend magazine tested the Aura in top spec 3.6-litre XR form in October 2006. The reviewer explained that it was now positioned upmarket of its Chevrolet and Pontiac siblings and targeted against top spec versions of the Toyota Camry, Honda Accord and Nissan Altima, for which it was “virtually a match [in terms of] power, smoothness and refinement.” It was “much more stiffly suspended than a Camry and thus more fun to drive.” The Aura was “firm over bumpy roads, but not excessively so.” The power steering was “ideally weighted, providing good feedback and precision.”

The interior was “an improvement over past Saturns, equal to those of the Japanese competition” and featured “vastly improved GM corporate switchgear.”  The exterior looked best in side and rear three-quarter views with “a rakish roofline that could almost be that of a four-door coupe” although it looked “stodgier from dead-on front and rear views.”

The reviewer concluded that “most Aura buyers will be drawn to its upper-middle-class elegance and conservative, yet modern style…it won’t set the midsize world on fire [but is] a good step in the right direction.” This was certainly a much more positive reception than the one that greeted the Ion, but Saturn was clearly losing its distinctive identity. If the Aura was ‘elegant and conservative’ and now positioned upmarket of its Chevrolet and Pontiac siblings, was that not encroaching on Buick territory? In any event, its US sales in 2007, its first full year on the market, were an unremarkable 59,964(1) units. This fell well short of its L Series predecessor’s first full year sales of 94,034 units in 2000.

Saturn’s earnestly sensible model range was given an injection of personality and fun in 2006 with the launch of the Sky, a two-seater sports convertible. The Sky was based on GM’s Kappa RWD platform which was shared with the Pontiac Solstice and Opel GT Roadster. The Sky and GT Roadster were identical apart from their badging and all three cars were built alongside each other at GM’s Wilmington, Delaware plant.

An Opel: 2006 Saturn Sky. Image: mecum.com

The Sky was powered by GM’s ubiquitous 2.4-litre Ecotec engine producing maximum power of 177bhp (132kW) or a new 2.0-litre turbocharged unit producing 260bhp (194kW) and coupled with a five-speed manual or automatic transmission. The turbocharged engine was reserved for the Red Line model which came with a limited-slip differential, automatic stability control, sports suspension and a number of cosmetic enhancements over the base model. The claimed 0 to 60mph (97km/h) time and top speed were 5.2 seconds and 141mph (227km/h).

The Sky was a nice halo model for Saturn’s range but was only a minor contributor to the company’s sales. Saturn’s total US sales in 2007 were 240,091(1) units, broken down as follows:

Saturn US Sales 2007
Model: Units:
Ion (compact saloon) 47,873
Aura (mid-size saloon) 59,964
Vue (compact crossover) 84,767
Outlook (large crossover) 34,748
Relay (minivan) 1,474
Sky (two-seater sports) 11,263
L-Series (discontinued) 2
Total: 240,091

This was a rebound from the low of 212,017 units seen in 2004, but still short of the historic high of 286,003 achieved right back in 1994 with just a single model, the S Series. This was a very disappointing outcome, especially after the heavy investment in new model lines, and GM began turning the investment tap off.

The Ion was replaced in 2007 by the Astra, a federalised version of the 2004 Opel Astra H, manufactured in Antwerp, Belgium. In similar vein, the second-generation Vue was a federalised version of the Opel Antara, manufactured in Ramos Arizpe, Mexico. Production at Saturn’s Spring Hill, Tennessee plant, the only one operated by the company, was halted after the Ion was discontinued. The plant remained idle for a year from March 2007 while it was retooled(2) to produce the 2009 Chevrolet Traverse. The plant would produce no more Saturn models and became just another GM manufacturing facility.

Another Opel: 2007 Saturn Astra. Image: autoevolution.com

In the spring of 2008, the US sub-prime mortgage market collapsed. This was to lead to what became known as the Global Financial Crisis, the greatest shock to the economic system since the 1929 Wall Street Crash(3).

General Motors was a substantial player in the huge sub-prime mortgage market, which had proved a valuable source of additional revenue for the company, propping up GM’s vehicle manufacturing core business over a number of years. Suddenly, it was posting alarming losses and forecasting much worse to come from GM’s enormous exposure to the mortgage market. The rapidly developing crisis was threatening to bankrupt the company.

Fuel prices also rose sharply, almost doubling at their peak, and automotive sales went into freefall as consumer confidence collapsed. In the circumstances, Saturn’s sales for 2008, down 22% to 188,004 units, were respectable, and rather better than GM as a whole, which suffered a 28% fall.

GM was running out of working capital and the banks, also engulfed in the crisis, were unwilling to lend. The company limped on into the spring of 2009, when the incoming Obama administration negotiated a rescue plan for GM. The company would be recapitalised, but the deal involved the sacrifice of GM’s underperforming brands: Pontiac, Hummer, Saab and Saturn would all have to be sold off or closed down.

In June 2009 GM announced that it had agreed the sale of Saturn to the Penske Automotive Group. This sale was solely for the rights to the marque name and marketing. GM would continue to build the Saturn Aura, Outlook and Vue for two years while Penske negotiated new manufacturing contracts with other automakers. Penske held discussions with Renault Samsung in South Korea but Renault’s partner, Nissan, vetoed the proposal.

And another: 2007 Saturn Vue. Image: mycarspecs.com

Penske failed to find any automaker willing to take on manufacturing and the deal with GM collapsed in September 2009. GM then announced that Saturn would be closed down the following year. Dealerships would cease trading either when supplies of new vehicles were exhausted, or by the end of October. Despite the uncertainty, Saturn still managed to sell 72,660 vehicles in 2009, but the collapse of the Penske deal reduced sales in 2010 to a trickle, just 6,698 units.

The immediate cause of Saturn’s demise was certainly the impact on GM of the Global Financial Crisis, but the company’s future never looked really secure at any point in its evolution. Despite developing a loyal, if small, customer base, it never managed to expand sales to a level that made the company profitable or sustainable. Moreover, because Saturn’s early models were designed exclusively for that marque and shared almost nothing with other GM vehicles, they could never achieve the economies of scale that made the Japanese models against which they were pitched so competitive.

By 2000, Saturn was estimated to be losing $3,000(4) on every car it sold. By the end of 2004, GM was estimated to have sunk $15 billion into Saturn and was preparing to spend another $3 billion to reinvent it. As a result of that reinvention, Saturn lost its distinctive identity and became just another GM brand, and a superfluous one too, selling a rather nondescript collection of (Outlook apart) rebadged or lightly revised Opel models.

Ultimately, the reason for Saturn’s failure was pretty simple: its own unique vehicles were of variable quality (The Ion, for example, was particularly poor.) and none was ever good enough to beat the Japanese at their own game, so sales never took off in the way GM had hoped. The game was up when, in response to the curtailment of its development budgets, Saturn was forced into ‘badge engineering’ other divisions’ products in the worst GM tradition, thereby losing its USP. The captive imports may have been better vehicles than Saturn’s own designs, but the market had lost interest by that point.

Some of the innovations in organisation and manufacturing that were introduced at Spring Hill were adopted more widely across GM, but the price paid for that, something in the region of $15 billion to $20 billion, and more than twenty years’ lost time when it should instead have been revitalising its core marques, was just extraordinary and unconscionable. This was truly a dismal episode in GM’s long and eventful history

(1) All sales data from www.carsalesbase.com.

(2) The state of Tennessee paid GM substantial grants not to close down the plant.

(3) A more detailed account of the impact of the Global Financial Crisis on GM may be found here.

(4) GM has never released figures for the losses incurred by Saturn. The figures quoted in this series have been gathered from a number of expert observers including the Harvard Business Review and Fortune magazine

 

Author: Daniel O'Callaghan

Shut-line obsessive...Hates rudeness, loves biscuits.

32 thoughts on “Falling Back to Earth (Part Five)”

  1. Daniel, that’s been a really good series, a comprehensive history for those like myself for whom Saturn was far distant, geographically and in immediate relevance. In Europe at the time, we were overcome with grief that the Saab story had ended. The end of days Saturn range looks more convincing and coherent than the motley line-up Saab were offering at the time. Saturn even had mild-hybrid Vues and Auras in 2007!

    That Aura looks as if it could have made a decent large Opel / Vauxhall to sit above the Vectra, if there was demand for such a thing, which there probably wasn’t. Instead Europe got the rather odd Signum to languish on the forecourts.

  2. As I understand it, the initial primary goal of Saturn was to re-invent the US auto industry as they knew it. What they really wanted to achieve or rather acquire was the know-how of Toyotas just in time-lean production method. Because they understood they would be screwed in the long time, seeing how Toyota could churn out millions of Corollas to a higher quality standard and to a lower price GM could only dream of. They tried it out with the Nummi JV but they learned nothing of that endeavour. And because of not invented here syndrome they tried to re-invent the wheel by themselves and what they came up with was the Saturn. They understood the customer satisfaction and dealership issues, but what they consistently never got was how to make their own Corolla. The Saturn as an entity of its own within GM died because the first generation was never really replaced, they let it die an abandonded orphan and tried to mask the siblings as an ersatz replacement. And after that, what they had was just another Oldsmobile. They could have morphed the company into Oldsmobile in the mid-90’s and none would have been any wiser.

    1. Ingvar, you are exactly right. Saturn’s real failure is that GM learned nothing about building cars profitably.
      GM’s only profitable product line was and is the Silverado/Sierra (and derived products like body-on-frame SUVs). They lose money on all cars, even the Corvette. They lost money in Europe, they lost money in Australia, their Chinese business is fully independent and doesn’t really belong to them any more. Their whole car/crossover product line has no financial reason to exist, it’s only there to keep their dealers slightly happier.
      One thing that non-Americans do not fully appreciate is that absolutely nobody buys a GM car or crossover because that’s what they wanted. They buy them because they can’t afford anything better. GM cars have to be given-away in order to sell, through extremely generous financing and huge rebates.
      Ford and Chrysler have a few non-pickup mass-market products that customers actually want: Charger, Mustang, Explorer, Cherokee. GM does not, and has not for more than forty years.
      Ultimately, it’s overly simplistic to say that Saturn was closed because it lost money. Every single non-pickup product also lost money. Saturn and Pontiac were closed because they could be closed, symbolically. The brand consisted only of letterhead, plastic cladding, and an advertising budget. And dealership contracts.

  3. Good afternoon Robertas and Ingvar. Yes, Saturn really was a sorry tale. Did Saturn’s supposed ‘non-car’ customer base really care about the innovations and uniqueness, or did they simply want a comfortable and reliable car at a competitive price?

    I can’t help wondering if Saturn wouldn’t have been better off eschewing all the clever plastic body panel stuff and, in the first instance, simply building an absolutely conventional Corolla rival, concentrating on product quality and consistency above all else. The European Kadett/Astra in four-door saloon and four-door estate form would have been a decent starting point for a straight Corolla rival.

    In fact, GM had a whole range of European Opel models which could have been more cheaply and quickly converted into Saturns. They eventually started to do so, but only after a great deal of money had been wasted on unique Saturn models.

    1. GM gets it wrong even when trying to get it right. That´d be my boiling down of Daniel´s analysis. I think there was a sincere wish to re-think car manufacture and sales. I can imagine that if GM did take a nice Kadett or Astra and rebody it and add some slick and user-friendly sales it would have been called cynical. Taking an even stricter line, all GM had to do was to ensure everything they made was well-constructed and that sales channels upheld high standards. Was that too much to ask? Oldsmobile and Pontiac are part of the answer; Buick is shadow of its former self. I can´t recall what Cadillac sells but I am sure every car Genesis makes is better than the equivalent Cadillac (if there is one). Cadillac offer five crossovers now and two saloons and one e-car. They are padding out the page by showing trim variants as separate lines. Fiat do that too.
      Take a look at this line-up of what I think are some rather regal cars:
      https://www.genesis.com/worldwide/en/main.html

    2. If we compare Ford USA to GM we can see corporations of similar size and maturity. Ford simply can´t match the number of dundering choices made using the same socio-economic resources as GM. Chrysler is case number three, a disaster for five decades. Tesla has come along since then and it too has the same socio-economic resoureces as the other American companies. So, while we can say there are issues in the American economy and society, it´s not American-ness that drags GM and Chrysler down but less-than-mediocre management. And that in turn lets down the large number of talented people in GM who, down the years, turned out some very agreeable cars.
      I haven´t read it but I should: https://www.aeaweb.org/articles?id=10.1257/jep.28.1.49
      “Management Practices, Relational Contracts, and the Decline of General Motors”
      Susan Helper & Rebecca Henderson
      Journal of Economic Perspectives
      vol. 28, no. 1, Winter 2014
      (pp. 49-72)

    1. The second generation Croma (Type 194) is based on the GM Epsilon platform, as the Saturn Aura.

  4. Good afternoon, Daniel.

    Your question as to whether GM/Saturn should simply have built an absolutely conventional Corolla rival was answered by NUMMI. The Chevrolet Nova version of the Corolla differed only in trim and minutiae — my brother’s Nova was serviced at the Toyota dealer in town because the Chevy dealer was, umm, lacking — yet it still lacked the reputation, relative prestige, and resale value of the Corolla.

    An attempt by GM/Saturn to out-Toyota Toyota was done in by Toyota’s reputation (in the U.S., if not elsewhere) for vehicles that could be abused terribly and still soldier on, while GM was advising customers to not ruin their steering wheel ignition locks by putting so many keys on their car’s key ring. Car buyers’ memories linger; even if Saturn had somehow matched the build quality and integrity of a Toyota with Job 1, only time would verify that GM could pull that off. As it turns out, they could not.

    1. The whole point of the Nummi JV was for GM to learn from Toyota how it was supposed to be done. The failure of that JV is the failure of GM to learn from that experience and implement the knowledge wholesale. Which they never did. As such, it was a complete failure, and left Toyota hanging high and dry.

  5. GM is an old business, with all sorts of legacy costs, plants and practices. It is harder for them to adapt to new environments; however, I’m not defending the poorer aspects of their management.

    It makes me wonder whether there comes a point with some high-tech businesses when everything needs to be quietly put in the bin while something new is developed – effectively what many older manufacturers are now doing with EVs. I find it a fascinating subject.

    Saturn’s approach reminds me a bit of Daewoo, which was eventually sold to GM, ironically.

  6. Interestingly and perhaps somewhat appropriately, nummi means an idiot in northeast UK

  7. Good afternoon all and thanks for your thought-provoking comments.

    My suggestion that Saturn should instead have produced federalised Opel models from the off would still have resulted in a distinctive (and coherent) models range without obvious doppelgangers to compete against, unlike NUMMI’s ‘jumble sale’ approach to its range.

    NUMMI failed because everyone knew they were passing off other manufacturers’ vehicles as their own. Why would you buy a GEO Prizm when it was simply a Corolla in drag and Toyota’s after-sales service was perceived to be superior?

    1. >> Why would you buy a GEO Prizm when it was simply a Corolla in drag and Toyota’s after-sales service was perceived to be superior?

      Because the Prizm was notably less expensive to buy (new or used); Toyota (and other non-U.S. manufacturers) were still expanding their dealer network to more remote places like Frostbite Falls, Minnesota; and the Toyota dealer offered only the traditional “I’ll make you this deal for today only but I gotta run it past my manager first” buying experience, very different from the customer culture Saturn offered at retail.

    2. Hi Steve, I take your point about the Prizm being cheaper than the identical Corolla, but am confused by the reference to Saturn customer culture. I thought GEO was a sub-brand of Chevrolet and sold through that division’s dealership network.

      Incidentally, I had to Google ‘Frostbite Falls’ to be sure it wasn’t a real place, knowing Minnesota to be a bit chilly in Winter!

    3. You are correct, Daniel, Geo’s dealer network did not offer the same retail experience as Saturn. Given Saturn’s fate, I’m not sure that sales approach did them much good so I can understand it not being carried over to Geo.

      One substantial selling point of the American brands is that they can be serviced anywhere in the country, including the really sparsely populated parts, even if the model in question is a straight rebadging of a model manufactured outside North America. Point to Chevrolet/Geo for that even if the lineup was a motley assortment of vehicles from Somewhere Else.

  8. The whole Saturn thing is a bit puzzling to me: it was a brand for non-car people which – at least occasionally – sold distinctively designed and cleverly engineered cars and tried to offer the customer experience and quality from the Japanese? That’s about as focused as a bokeh spot that’s had too much to drink. At the end, it only got worse in time-honoured GM fashion, until it was basically Opel without the European connection (cachet?).

    As often before and since, from the confusion and bureaucracy that is GM some interesting cars emerged. I quite like the S series, particularly the SL. The Aura’s nice too, if a bit derivative at the front. The SC could use some work though, especially around the wheels:

    I think tucking in the sills would improve its stance:

    I’ve only now noticed the king of unnecessary details on the Saturn Ion, a car that’s seemingly entirely made up of unnecessary details, the little chrome “tear duct” next to the headlights:

    Reading this, above all it seems to me Saturn failed to take off because of a lack of what appear to be the deciding factors in automotive success: focus and staying power. Define what you want your brand to be and iterate on the best products to achieve that (and have the structure in place to make that possible). The BMW 3 series would be an example, as would the Volkswagen Golf. Fiat’s entire line up would be an example of the opposite, but even a brand like Peugeot that has been present in the C-segment for ages, has lost focus and suffered as a result. In the case of Saturn, that lack of focus and staying power had everything to do with the management structure of GM, of course. As Daniel mentions, there was a loyal group of customers for Saturn, it just wasn’t big enough, so that plays a part as well. The market has moved in the direction of the 3 series during its existence, for instance (and is now moving away towards SUVs). All this is of course a gross simplification: reality is much more complex, but I think one of the hallmarks of great managers and leaders is that they can juggle the complexity of the day-to-day and the simplicity of the long term goal. I think it is this that for instance the 3 series and Golf get right (got right until recently?).

    1. Curiously that chrome “tear duct” seems a headlight washer…although I don´t think it was available in a car so basic (perhaps it was for the Canadian market…?)

    2. It would seem that it’s just that the pre-facelift headlights were carried over and the bumpers weren’t adapted properly (different committee perhaps). Here’s the pre-facelift version (warning for Daniel and anyone else sensitive to panel gaps):

      and here’s a nicely cared-for example that as far as I can tell shows that they’re probably just panel gaps:

      This one’s from Canada, but Ions that were photographed in the US have the same front ends.

    3. Headlight washer was my first thought too – but it seems it’s only a filler that allowed them to use unaltered Phase 1 headlamps on the facelift!

    4. Wow I must have sent my comment at the exact same time as Tom! Here’s a pic that shows more clearly what’s behind that little chrome thingy – apparently it would be entirely possible (and better) to do without it!

    5. It’s quite emblematic for Saturn at that stage that they facelifted the car in such a careless manner. Even making it some sort of air intake would have been more convincing, as you can see in Megasigma’s picture. They probably thought they’d change the headlights too, but then decided against that but never bothered to redesign the bumper.

    6. Indeed this little detail is quite indicative of the things that went wrong – at least there is some interesting thinking behind this idea, I wouldn’t be surprised whoever thought of it were proud (I have a lot more trouble understanding stuff like the taillight caps of the Mercedes CLC or the headlamp boogers of the Yaris/Corolla facelifts of the era).

    7. Yeah, the CLC was an equally clumsy update of the ill-named SportCoupé. You can understand the thinking, updating the round design to something resembling the much straighter design language of the new C-class, but the execution was shoddy. At least the teary-eyed Toyotas were actual changes to the design of the headlights it’s not an appealing design, but at least it is how it was intended. How much trouble would it have been to change the moulding for the Ion’s front bumper to properly incorporate the headlights?

    8. Hi Tom. There would have been no need to change the bumper moulding, as it was already new for the facelifted model, just do it properly to fit the headlamps in the first place!

    9. The Ion resembles a car missing important bits of trim. The C-pillar is particularly raw-looking.
      Mercedes had no excuse with the CLC. I´ve seen it before though I had forgotten how abysmal it was. If they have had any integrity they´d a) have invested in new pressings or b) dropped the model. The plastic caps are like somthing Chrysler or Fiat would do but I can´t be sure they actually ever did something so low-rent/bad.

    10. Hi Richard. You’re forgetting about the facelifted Chrysler Avenger with with crude cappings covering the corners of the rear wings. Here are before and after photos:


    11. Hi Richard, if I put on my tin foil hat, I’d surmise that Mercedes wanted to really hammer home to any prospective customer how low rent these cars were, just to make the upsell easier.

      Daniel: that’s what I meant, just design the bumper properly (or redesign it if the headlights were changed back to their original shape at some late stage). I can just imagine the Headlight Committee proudly presenting the result of two years’ worth of meetings: “we keep the shape the same!” while the Front Bumper Assembly people are down the hallway designing a snazzy new bumper, all within budget.

      The Avanger somehow reminds me of the Maserati GT, the 3200 having lovely boomerang taillights, while its successor the 4200 (or just GT) had boring conventional units, supposedly for the American market (where the 3200 GT wasn’t sold):


      Fortunately, no filler panels were used, which for the 3200 GT means the metal pressing was quite intricate.

  9. So GM wasted almost $20 billion and 20 years in the Saturn failure, when all that money and time could have been spent applying more efficient manufacturing process, trimming down the enormous models portfolio (in 1994 the Buick range was: Skylark, Century, Regal, Le Sabre, Park Avenue and Roadmaster; how about just three models that didn´t compete with other GM cars?), improving after sales customer satisfaction and, of course, building better quality and more competitive cars (with a technology that didn´t need to be state of the art; for example, the popular 3800 V6 was smooth, reliable and well liked). But surely I´m simplyfing things too much. Perhaps GM is just a dinosaur, and we know what happened to them.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: