Saturn Case 1.

Situation Analysis: Saturn was developed by GM as a separate brand and independent subsidiary in the late 1980s, to deal with the shrinking domestic market share for passenger cars. Saturn started strong, building a company centered on making a small car of superior quality and value as efficiently as possible, while combining the most advanced technology with the newest approaches to management. In 1994 sales began to drop and was attributed to several factors: Narrow product line, lack of innovation and adaptation to market trends, resistance to expand the dealer network, and formidable competition from domestic and foreign rivals. |Strengths |M |I |R |Opportunities |M |I |R | |Quality Products |3 |3 |9 |Economy/High gas prices |3 |2 |6 | |Excellent customer service |3 |3 |9 |Demographic shift |2 |3 |6 | |Good Company Image |2 |2 |4 |Sociocultural/ Green movement |2 |2 |4 | |New product entry |3 |3 |9 | | | | | |Weaknesses |M |I |R |Threats |M |I |R | |Lack of innovation/adaptation | -3 |3 |-9 |Economic downturn |-3 |3 | -9 | |Narrow Product Line | -3 |2 | -6 |Competition |-3 |3 | -9 | |Limited Distribution | -2 |2 | -4 |GM on the downfall |-3 |3 | -9 | |Unclear Marketing Strategy | -3 |3 | -9 |Changing customer needs/tastes |-2 |3 | -6 | |Limited Financial Resources | -3 |3 | -9 | | | | | A. Internal Analysis- Saturn is struggling with many internal issues. Most of them refer back to the lack of aid from GM. Although the company has much strength to build on, there are many internal issues that need to be addressed. Strengths: 1. Quality Products: Saturn is known for the quality of their cars. Saturn has recently won many awards honoring new product introductions. The 2008 OUTLOOK has won several prestigious awards and in 2007, the AURA, was named North American Car of the Year. Saturn strives to produce automobiles of superior quality and value. They play on product themes such as safety, utility, and value. 2. Customer Service: Saturn excels in customer service and operates alongside a straight-talk philosophy. Saturn salespeople avoid high -pressure sales and offers service and advising only when the customer asks for it. They offer their customers an overall buying experience. In 2002 Saturn ranked first in a J.D.

Power & Associates survey of satisfaction with dealer service departments. (Ferrell & Hartline, 2008) 3. Company Image: Saturn is still perceived as being an American brand despite it s recently diversified the origins of its vehicles. This is an excellent advantage for Saturn while many consumers prefer an American brand. 4. New Product entry: With the help of GM committing $3 billion to help rejuvenate Saturn in 2004, Saturn has been able to introduce new products. Saturn is now introducing cars with a European influence with a price tag slightly higher than traditional Saturn cars. The new product introductions include a hybrid, minivan, crossover, roadster, and a small SUV. This new product line-up is helping them compete in several product categories. Weaknesses: 1. Lack of innovation and adaptation to market trends: Historically, Satu rn has missed the mark on design and innovation. They fail to respond to shifting customer preferences. For example, Saturn introduced its SUV, the VUE, into the market in late 2001. By then, it was several years behind in the SUV market. This has been a trend throughout the lifespan of the company. 2. Narrow product line: Saturn has long been criticized for lacking variety in its product line. Until recently, the Saturn product line consisted of low -cost, small cars, targeting only a small segment of the automobile market. 3. Limited Distribution: Saturn only has about 430 dealerships throughout the US. Must are in major metropolitan areas and very few cater to the smaller, rural areas. This is affecting Saturn because it is only penetrating the market in those specific areas. 4. Unclear Marketing Strategy: Saturn s marketing strategy has been lacking a clear path for years. Since 2002, the company has changed its slogan four times. The new slogan is an attempt to return the company to its roots. The company is struggling to market the brand to the 18- to 34- market as well as to males. Current advertising is targeting the younger population, but the average age of a Saturn buyer is 43 and over half are female. 5. Limited Financial Resources: With little backing from GM, Saturn has minimal funds to create new products. They also don t have the funds they need to market them successfully. This is key in creating a successful brand. B. External Analysis-. Saturn and the entire automotive industry are currently facing some major external issues. Saturn is being hit by the weak US and global economy, rising fuel prices, and social and political environmental concerns and issues. Opportunities: 1. Economy: In 2008, with the rapid rise in oil prices, Saturn and the automotive industry as a whole started experiencing a combination of pricing pressures from raw material costs and changes in consumer buying habits. Although oil prices have lowered, people still question their stability. People are steering away from purchasing big trucks and large SUVs. They want a more economical vehicle that gets better gas mileage. This is a great opportunity for Saturn to showcase its competitive advantage of producing economical cars that have great value. 2. Demographic shift: For many years now, the baby boomers generation has been Saturn s main target market. This generation is now getting older,

preparing to retire and spend less money. Now, the baby boomers children (Generation X) represent an enormous part of the market. This is a great opportunity for Saturn to focus it s marketing on people in their mid 20 s and 30 s who now represent a large part of the market. 3. Sociocultural: Customers are becoming more and more concerned with environmental issues. This green movement can be an opportunity for Saturn to introduce cars that are more economical and safer for the environment. Saturn has already taken a step in the right direction by introducing an SUV hybrid. With hybrid technology being so new, this gives Saturn the opportunity to step forward and be a leader in innovation and technology. Threats: 1. Economic Downturn: The economy can be an opportunity for Saturn, but it can also be a major threat. People have less money to spend and are weary of buying new cars. This factor alone has affected sales for the entire automotive industry. 2. Competition: The automotive industry is clearly a saturated market. Not only does Saturn have to compete with domestic companies, they also have to compete with foreign companies as well. 3. GM on the downfall: Saturn needs some major funding to rejuvenate its image and keep up with innovation and technology. With GM on the downfall, there is less willingness to help Saturn financially. GM may even consider dropping Saturn altogether. 4. Changing Customer needs/tastes: Customers needs and tastes are always changing. With our society being so advanced in research, there is always new technology being developed. This puts a lot of pressure on Saturn to keep up with the ever-changing advances in technology, which costs a lot of money. 2. Problem Definition Saturn's sales are down, and market share needs to be increased. Also, the product line is too narrow. The problem is, Saturn does not have the funding it needs to keep up with the changing market. They need to be backed by GM to rebuild the Saturn name. Saturn does not have the money to do this alone. If GM does not commit to he lping Saturn, they will never be a successful, profitable company. Saturn needs GM s financial backing. 3. Alternate Solutions 1. Invest in the Saturn Brand-- Saturn needs to find a way to improve its relationship with GM and get GM to financially back them. Saturn could be a viable opportunity for GM to reach the markets that their cars cannot. GM is often criticized for having too many brands and those brands cannibalizing each other. Saturn is a different story. According to an analysis done by Edmunds Auto Observer, not a single GM model ranks among the top 10 vehicles crossshopped by potential Saturn buyers across its line. (Krebs, 2007) However, cars that are being looked at by potential Saturn buyers are Nissan and Toyota. GM has always been hesitant to support Saturn. In the late 1990s, GM threw loads of money into Oldsmobile, Cadillac, and Pontiac when Saturn was desperate for product expansion. They ve been starving Saturn of new products for years. The lack of attention Saturn received from GM in the late 1990s had set back the company in its attempts to respond to shifting customer preferences. (Ferrell & Hartline, 2008) In 2004, GM committed $3 billion to

rejuvenate Saturn. The money has been used on new product development and marketing and has started to pay off. In 2007, the AURA was named North American Car of the Year. The 2008 OUTLOOK has also won many awards. Saturn has the foundation for future development. It just needs GM to fully support this process. If GM can get rid of some of their other brands like Pontiac, Saab, or Hummer; it can afford to support product development and marketing campaigns for Saturn. This way Saturn can regain it s name and become profitable. This will be beneficial to both Saturn an d GM. 2. Faze out the Saturn Brand- Hard economic times have affected GM and everyone in the car industry. GM has way too many brands to keep up with. The company has lost market share and been criticized for boring designs and slow reaction to changes in consumer preferences. (Ferrell & Hartline, 2008) GM is also struggling with internal issues and may not have the funds to support Saturn. Saturn may not be able to bounce back from the lack of support from GM. It would cost GM billions of dollars to rebuild the Saturn name. GM could faze Saturn out as a brand, but that s not cheap either. Eliminating dealers isn t easy. Strong state franchise laws make it difficult because automakers must buy them out. When GM eliminated Oldsmobile, for example, it cost the company about $1.2 billions to settle with dealers. (Snell, 2009) Although this may cost a lot of money upfront, it may save GM money in the long run. 4. Decision Invest in the Saturn brand. Saturn has the ability to compete against competitors that the GM brands cannot, like Honda, Toyota and Nissan. If GM financially backs Saturn in product development and marketing, then Saturn can rebuild the brand and become a very profitable company. Consumers value quality, which is what the Saturn name is built on. They also value design and innovation, which is what Saturn, has recently been working towards. If GM will fully commit to stand by the brand, Saturn will regain strength and become a profitable company that can stand on their own. GM needs to fully commit to the Saturn brand by giving them the financial support they need for product innovation and strong marketing campaigns. If GM needs to eliminate another brand to do so, so be it. References Ferrell, OC & Hartline, Michael D. (2008) Marketing Strategy, 4th Edition. Mason, OH: South-western Cengage Learning. Krebs, Michelle. (2007, February 28). Saturn: GM s Best Defense Against Toyota. Edmunds Auto Observer. Snell, Robert. (2009, January 24). GM: Saturn could survive; Chrysler: We ll be viable by Spring. The Detroit News. GM Saturn Case Study Ron Rubinstein Strategic Marketing Management course NYU SCPS x Fall 2005 Key Issues


How (whether) to revive a faltering brand after impressive initial success in early 90s.
How to regain competitive advantage after loss of momentum, and failure of initial business strategies to sustain long-term sales growth.
How to penetrate wider demographics (younger, male)
How (whether) to penetrate foreign market Key findings: Environmental/General
Saturn developed by GM as a separate brand and independent subsidiary in the late s80s, to deal with shrinking domestic market share for passenger cars: w from 44% to 33% between '85 and '90 w 42% of buyers didn't even consider buying GM w Main competition were compact Japanese cars, due to perceived higher quality and value.
Factory was established in Spring Hill, TN, to isolate from Detroit mentality
Key strategy to ensure quality: maintain good labor/management relations through cooperation with UAW in all aspects of business. Key findings: Product Strategy
Initial concept: Compact, high-quality cars: w SC1, SC2 coupes w SL1, SL2 sedans
Technology innovation, e.g. p lastic bodies
Target Market: w Demographics: baby boomers, college educated, 25-49 w Sell 80% to "Converts" (wouldn't otherwise buy GM)
Larger vehicles were added later: w SW1, SW2 station wagons (1993) w L-Series mid-size sedan and station-wagon (1999) w VUE SUV (2001) Key findings: Promotion Strategy
Unique, "folksy", "straight-talk", $100M+ consumer ad campaign, building a focused brand image, using themes such as: w Saturn employees' enthusiasm, and dedication to building cars "in a brand new way" with US can-do spirit. w Saturn buyers' lifestyles, playing up baby boomer themes of utility, value and safety.
Brand focus strengthened by using model numbers (not names), and calling dealerships "Saturn of [location]"
No haggle, stress free, high-integrity selling at dealerships Key findings: Pricing & Placement Strategy
Dealership strategy: Large territories (to prevent internal competition), e.g. one dealership per metro.
Traditional import-car markets (East, West coast), not to cannibalize stronger GM heartland markets. Dealers chosen with import-brand expertise.
Pricing:

w One price x no rebates or promotions. Facilitates option of calculating total package pricing and finance costs from the ease of one's home on website. w Affordable pricing with high value Key findings: Successes and Failures
Initial success very high: w 170Kunits sold in '92: 170% more than '91, and representing 2.1% share of domestic market. w Cult-like following that drove sales growth until '96.
Failures: w Employment model did not scale well to increased production. Increase attempts harmed quality and employee relations. w Failure to reach 300Kunit/yr sales goal. Sales declined from peak in '95 of 285Kunits. w Electrical vehicle launch (in line with innovative image) was a flop w Very late launch of SUV line in 2001 (SUV market was hot from '96) w L-series mid-size sedan line was a total flop, due to launch glitches, uninspired design, and failure to break out of compact-car image. w Saturn perceived mainly as a "chick-car" w Average buyer age is 43 despite belief that Saturn is for youngsters Key findings: SWOT
Strengths: w GM parent company (funding, expertise) w Established brand, cult-following, buyer loyalty w Culture of quality manufacturing
Weaknesses: w GM parent company (hesitation, strategy constraints) w Tarnished image (ranked 31st among 38 car brands -- down from 23rd in 2002*) w Declining sales and heavy losses ($1B/yr*) w Problematic demographics w Foreign cars still lead in perceived quality w Weak design Conclusions
GM got caught up in Saturn "Kool -aid" x failed to differentiate between marketing image, which created initial success in building brand and buyer following, and strategies that did not sustain advantages, like employment/manufacturing methods & focus on compact cars. As a result, key adaptive measures were delayed.
GM also seems to have implicitly viewed Saturn as a short-term strategy, creating GM buyers that would mature from Saturn into more luxurious brands. This didn't materialize, but definitely tied Saturn's hands.
Innovation should only be taken so far x too much of it doesn't drive sales in majority markets.
SWOT seems to indicate keeping the brand. Baby-boomer Saturn followers are a lucrative market worth maintaining. Recommendations:
Keep brand basics (folksy marketing, made in USA, high-quality)


Revive the brand with more luxurious, well designed models that appeal to the aging but rich Baby-Boomers, and don't weigh down product strategy with other GM brands. Advantages: w Increase appeal to males. w Increase margins and profitability.
Keep no-haggle, no-stress dealership policy that is Saturn's hallmark. Today's buyers have an information advantage with the Internet that doesn't favor older sales models.
Focus on domestic market x Brand has no recognition or competitive advantage in foreign markets (yet).
Modernize manufacturing strategies to support both higher volume but do not hinder quality (if the Japanese can do itg) Case Analysis #1 SATURN Decision Focus Saturn has tried to uphold its image as "a different kind of company" since its establishment in 1985. To do this, it has concentrated on creating and maintaining a strong relationship with its customers. The company was launched with a $5 billion investment with high hopes that a GM could reach a new market area with a new line of compact vehicles. The goal was to sell 80 percent of Saturn vehicles to people who otherwise would not have bought a GM product. Saturn made their debut in the market for compact cars in 1990. By 1993 they were experiencing success in the already crowded market, selling nearly 230,000 vehicles. The next three years the numbers looked even more promising, averaging over 280,000 vehicles per year. Unfortunately, from 1997 to 1999, Saturn experienced a trend reversal and sales dropped to average around 235,000/yr. To combat this, Saturn concentrated on pushing their newer L-Series, which helped bring an increase over the following 3 years (widely helped by the expanding product lines). Much of the struggle Saturn struggled (late 90s) was attributed to the lack of diversity in their product lines. The L -Series helped greatly during its first two years in 1999 and 2000, accounting for as much as one-third of total sales. In 2002, the VUE and the Ion began making an impression, and Saturn once again topped the 280,000 mark. Now Saturn is faced with keeping sales figures up, even though averages industry wide are dropping. It's no secret that manufacturers are having some trouble consistently selling cars, and that makes it harder for Saturn to gain market percentage and sell more vehicles. Saturn must find how to sell more cars in order to gain and keep momentum in the vehicle market, which is expected to see dwindling sales in the upcoming year (Appendix Article 2). SWOT Analysis Strengths w Unique identity as "A different kind of company, a different kind of car." w Reputation for satisfying customers

w w w w

Built from the ground up Part of General Motors, although fulfills a satellite persona Completely uses its own production lines Benefits from caring employee reputation

Weaknesses w Small selection of vehicles w Operates in a crowded market of compact vehicles w Reputation as a "chick's car" w Small customer base w Lack of variety when it comes to quality of product Opportunities w Currently changing market trends w Still has image as a "newer" brand w Not tied down to any image as a "cheap" or "expensive" brand w General Motors has recently dissolved Oldsmobile, an upscale product line Threats w Currently in a dwindling market as vehicle sales are expected to drop w Pressure from competitive import companies w Track record brings a reputation as a company that misses trends Alternative Choices 1. Crossbreed vehicles with other GM products and/or other lines in order to gain customers based on variety/price. 2. Increase money into advertising and distribution channels of vehicles with hopes that heightened awareness and availability will spark a rise in sales. 3. Concentrate on expanding Saturn to new design concepts and fresh vehicles, somewhat altering their image, but also coinciding with Saturn's individual identity as "a different kind of car". Evaluation of Alternatives 1. Crossbreed vehicles with other GM products and/or other lines in order gain customers based on variety/price. to

Saturn is, of course, one of the well-known distribution arms of General Motors Corporation. This gives Saturn one of the world's largest financial and intellectual pools to dip in, both when it comes to creating ideas and also when backing them. This gives them the opportunity to expand their vehicle selection not only by new design and production, but also by co mbining successful existing parts and designs from other GM vehicles with the Saturn spin. Also, Saturn already has been involving Honda engines in their designs, so this suggests that decision makers are not totally opposed to integrating other ideas to sell vehicles. General Motors has several lines they use to sell cars, trucks, and

vans. The Chevrolet label carries vehicles such as Malibu and Impala Sedans, the Chevy Venture minivan and the S-10 pickup, and the more famous names like the Silverado pick-up, and of course the Camaro. Pontiac and GMC Dealerships are littered with models such as the Grand Am and Grand Prix, the Montana minivan, the Yukon and the increasingly popular Envoy. Buick offers a more luxurious option for drivers with options s uch as the Park Avenue and the Rendezvous, but GM offers the coup-de-grand selection of elegance and quality with the Cadillac Series. This gives a large sibling variety to Saturn's role model selection, and if GM needed to answer a question Saturn asked they would have a lot of examples to answer with. Hypothetically, it would make sense that any steps Saturn could take to cut costs and provide the market with a less-expensive vehicle should be taken. It is not uncommon for automakers to share frames among vehicles, such as the Ford Taurus and the Mercury Sable. Also, many vehicles share similar parts such as window motors and switches to cut down production, installation, and even training costs for mechanics and assembly workers. This helps lower the sticker price of the vehicles and makes them more affordable, hopefully attracting additional customers. General Motors needs to make sure they don't get too stubborn as they did before, going almost nine years without giving Saturn a new product (Appendix Article 1). However, one large part of Saturn's history is their "different kind of car, a different kind of company" approach. This would mean that involving any other car lines could violate their slogan, and this may look hypocritical to some customers, especially if that customer was looking to get away from a certain type of car that was now collaborating with Saturn. The Saturn line was built up from scratch on its own strategy, and it was so important to give Saturn its own identity that even the factory was strategically located away from Detroit to give Saturn a unique identity characterized by smiling residents of Spring Hill, Tennessee. 2. Increase money into advertising and distribution channels of vehicles with hopes that heightened awareness and availability will spark a rise in sales. The second alternative deals with a very basic strategy, increasing funding. The "it takes money to make money" approach could spark sales for Saturn, hopefully increasing the popularity of the li ne in general. In late 2004, Saturn had 454 dealers (Appendix Article 3). If there are more dealers in major cities and even in smaller, remote locations, the potential to distribute more cars would grow. Even in today's growing age of information, when it comes to selecting a vehicle, many buyers don't look much farther then their local car dealership. Dealerships are the major point-of-sale for car companies because customers have all of the information available, along with the vehicles themselves, and of course don't forget the salesman suggesting -or pushing- the people buy the vehicles. An increase in the amount of dealerships would make the vehicles more accessible to the public, and this could also make current Saturn drivers happier by offering more service facilities. Almost necessary with the increase in dealerships is an increase in advertising investment. Just because a new building pops up in someone's area

doesn't mean they will be inclined to visit the establishment. Investing in advertising, especially in the areas the dealerships are placed, would raise awareness of the product that the potential customers are now exposed to. It would be necessary to invest a sufficient amount to properly express the angle that Saturn is trying to display alongside the investment in new dealership establishments. Hopefully the combination of new dealerships and a new ad campaign properly implemented in a well-researched marketing plan would pan out as a sufficient increase in sales. Although the "it takes money to make money" approach is often a popular avenue for increasing a customer base and sales, it is not a sure-fire road to success. It must be noted that Saturn initially, in 1990, believed they could sell one-half million units a year, while they have never topped 300,000 in any year of their existence, and only sold 271,157 units in 2003 (Appendix Article 3). It may be wise to take this fact into account when making assumptions of how the public will respond to future advertising and dealership presence, since it would be very unfortunate to make the same mistake twice. 3. Concentrate on expanding Saturn with new design concepts and fresh vehicles, somewhat altering their image, but also coinciding with Saturn's individual identity as "a different kind of car". This option would place more weight on the intellectual assets of Saturn. Instead of pushing themselves to increase the quantity of their products, this approach would necessitate concentration on improving the quality of their products instead. Saturn has consistently produced attractive looking vehicles at decent prices, they now need to produce a newer, more unique, must-have vehicle. If Saturn can fill a niche that only they can fill, then the popularity of the brand should expand, along with the customer base. One of Saturn's dealership in Minnesota is even quoted as saying: "We needed new products five or 10 years ago" (Appendix Article 3). Saturn has always prided on their reputation as "a different kind of car", but in many instances, they can't adequately compete with the Japanese vehicles. Taking this into consideration, it is possible that maybe Saturn has not been a different "enough" kind of car. American car companies have lost a lot of sales to imports because of price and available warranty coverage. Saturn can not always compete on these platforms, so they will need to differentiate on others such as style and performance if they want to compete. Saturn's identity has been their gloating point since their conception, and it is important not to forget this. They missed the boat on integrating SUVs into their line-up, so it is imperative to do their best to lead the next trend, not catch up to it. Automotive sales dropped in 2004, and with the amount of new cars on the road right now, there could very likely be a drop in sales in 2005 (Appendix Article 2). This should signal Saturn that they must be very serious about their next products, because they can not afford any more flops. Now, while this option doesn't shell out abnormal operating expenses such as excessive advertising or new building construction, new car designs do require investments of time and money involved in creating new ideas and making others aware of them. The most sensible aspect of this alternative is that it will be necessary for Saturn to produce new vehicle ideas anyways, and as long

as they take the pressure seriously, they can succeed to the best of their ability. Saturn needs to gain for themselves some type of unique image as a niche brand, or at least add to their current image attributes, such as offering the customer a higher level of quality and prestige. The unfortunate fact is that the company is already over 15 years old, and reinventing themselves is going to be more difficult then if they would have taken a more favorable shape from the get -go. Decision Focusing on the direction a company is going is a constant aspect that must repeatedly be addressed. Looking at the three alternative options discussed here, it appears to me that the best decision is to choose option number three. It would be foolish to start dumping money into additional construction of dealerships when the existing ones aren't performing as expected already, and brand awareness is not a crippling issue. Furthermore, one of Saturn's strengths is their image as a somewhat independent brand. If General Motors were to fully integrate Saturn's operations into the core of GM itself, this identity would be lost. The reality of the market today is that customers exist, so it is not necessary to dump any money into making people aware of Saturn's products. Instead, Saturn needs to concentrate on attracting customers to their products, through newer vehicles and ideas. Saturn has consistently "missed the boat" on trends such as the SUV and the mid-size sedan, and when it finally did enter these markets, the results were always below what their executives had expected. This brings attention to the idea that instead of following in the footsteps of companies that are leading sales figures on new vehicles, Saturn needs to break through with some ideas of their own that will start trends with their vehicles. Today's market is full of many similar vehicles with similar features. Year's ago, Saturn released the issue of GM's first electric vehicle, but the market was not ready to accept. With the new environmental awareness crazes, a second look at this strategy could pay off, but it will have to be aptly timed and the vehicle must look acceptable enough to today's drivers. Perhaps one of the greatest opportunities decision three would bring, along with the fact that GM has recently dissolved Oldsmobile, is Saturn now has a new niche to fill as a higher quality brand than competing imports. The potential for Saturn is extremely high if the right decisions are made and followed by appropriate actions. While researching this case, I came across material that supports my decision as action Saturn should proceed with. S aturn is releasing two new heavy-horsepower vehicles that may show whether or not Saturn can thrive as a healthy product line. These vehicles, the Saturn Sky (a sporty two-seater roadster), and the Saturn Aura (a mid-size sedan), are scheduled to go on sale in 2006 (Appendix Article 1). Saturn is in the middle of a renovation that one executive has described as costing "a couple billion" in R&D for designs and adding as many as 80 dealerships to their force (Appendix Article 3). Whether or not this will be successful remains to be seen, but it is easily observed that people are working hard to put more Saturn vehicles to our roads.

Saturn is a company that prides itself on producing economical, quality automobiles, offering innovation and practicality, which was supposed to give it a high rating of customer satisfaction in its industry. It borrowed many of GM s strategies and applied them to create a Saturn s business model. However, things haven't gone as planned. In fact, Saturn has been something of a fiasco. "I view Saturn as a failure," says George Magliano, director of automotive industry research for Global Insight. "It hasn't done what they expected it to do. Saturn has had two or three incarnations, and none of them has worked. I read two articles on Saturn. Most of the recent articles about the state of the company are 4 to 5 years old. This tells us that the current state of the company or the brand is now just lumped in with GM. The articles gave us a look into Saturn from 2004 until the present time. In 14 years of operation, Saturn has built a gigantic new factory, introduced three all-new models, conducted massive ad campaigns, and cost its parent company billions of dollars. Saturn s attempt to make low -margin small cars proved totally unworkable, and competition from Japan, and later Korea, has proved to Saturn it cannot be competitive. GM has invested a grand total of $15 billion into Saturn and the division has not turned a profit. Its auto operations in North America and E urope are both in the red, and it has run up unfunded retiree pension and health -care obligations. GM has taken away the special status and made it into a plain division of GM, with the same centralized engineering and marketing as all the other brands. Unlike the original models that were developed by Saturn engineers, not to mention designed by Saturn designers and built in dedicated Saturn plants, the new vehicles are coming from GM's development system and will be built in GM factories. Rick Wagoner, GM's chairman and CEO, likes to say that the simplest way for GM to boost its profits is to stop selling cars that lose money. Saturn is one of those cars that is losing for GM. Yet GM still wanted to keep this brand alive and a new transformation began. Due to Saturn utilizing the same platform as other GM cars there entry into the minivan market was hurt as well as other lines. Saturn's roadster, named Sky, which arrived in early 2006, is built from the same architecture as Pontiac's Solstice. This takes from the original philosophy of A different Kind of Car, A different Kind of Company. Saturn is no longer different. Another thing buyers will notice about the new models is that the plastic body panels are gone. Saturn used to promote the panels heavily because it had little else to sell, featuring them in commercials that showed them fending off dents from trash cans and bicycles. Some had argued that they were integral to Saturn's brand identity, but there was no room for them in GM's complex global product-development system. Lutz says tapping into GM's global resources "is exactly what will deliver the variety of product Saturn needs." But with Saturn sharing components with other GM divisions, there is a danger that it may cannibalize other models' sales. Saturn executives say they expect to boost its volume from the 215,000 units forecast for 2004 to 400,000 in 2007. Since GM's market share has been declining for 40 years, a bump up in Saturn volume could mean a downturn for other GM brands.

As we fast forward to today, Saturn is now on the chopping block. We all have been listening to the news and understand that the automobile industry here in the United States is in shambles. In my opinion there are many reasons why the auto industry is in the shape that they are in. When Saturn was first born the concept of this was to be genuinely different for the concept of car design and sales. The problem GM ran into was not truly making if a different company. They lost focus on what the original mission was. For the first decade or so Saturn lived by its mission, but then slowly moved away from it and just became another part of GM. As we look at the fall of the US auto market you can see how they ran into problems. In US Congressional hearings on December 2nd, 2008, General Motors announced its intentions to only focus on four core brands (Chevrolet, GMC, Buick, Cadillac), with the sale, consolidation, or closure of Saturn and the remaining brands. This makes my analysis of the future of Saturn very simple. They will no longer be in existence and therefore speculation of the company is easy, they won t be a part of GM and probably will lose the Saturn brand and that is not a bad thing. The big three s survival will be dependent on management and how they plan to restructure their respective companies. They need to transform the past and move into the present. This will enable them to better compete with companies like Toyota and Honda. One of the first places for GM to start is by filing for bankruptcy. This will enable them to restructure the current contracts they have with the unions that are not favorable. When you compare other car companies like Toyota to GM you will find they do not have u nions at their factories yet there is no problem with job security, benefits or pay. Toyota offers the employee s profit sharing, and due to the efficiencies there the employee s actually make more money than the employee s at GM. The second suggestion for GM would be to get rid of the current management team and bring in a specialist who knows how to turn a company around. Why a company s board of directors would allow the same people to stay in charge who drove the company into the ground does not make sense. If the shareholders and board of directors decides to keep them in charge they deserve to go under and out of business. The last thing GM might want to consider is to actually break up the company as it stands today and sell each brand. This will accomplish all of the above suggestions. By breaking up GM and selling each brand you will still have an US automobile industry, just with 4 or 5 mini companies. Each one will have its own management team and will be able to structure in the most profitable way possible. You also solve the problem of millions of people losing jobs due to the fact each company will still need to rely on the suppliers. The automobile industry is in shambles and will not exit as it does today. Unless the big 3 can figure out a way to become profitable they will no longer exist. With careful reorganization and better management it is possible they can stay in business. The unfortunate part is how the whole country is affected by the poor management and decisions that were made by these companies. We will be stuck with the 14 billion dollar bill when they cannot pay back the loans. SATURN CASE

Things are about to change at Saturn. The General Motors brand had only three iterations of the same compact car for the entire decade of the 1990s. But Saturn will soon introduce an all-new lineup of vehicles that includes a midsized sport sedan, an eight-passenger crossover vehicle, a two-seat roadster, a new compact, and a hybrid SUV. Having anticipated the brand's renaissance for years, Saturn executives, employees, and customers are beside themselves with glee. But with all this change, industry observers are wondering whether Saturn will be able to maintain the very charac-teristics that have distinguished the "brand since its inception. Given that Saturn established itself based on a very narrow line of compact vehicles, many believe that the move from targeting one segment of customers to targeting multiple segments will be challenging. Will Saturn still meet the needs of one of the most loyal cadres of customers in the automotive world? A NEW KIND OF CAR COMPANY In 1980, GM recognized its inferiority to the Japanese big three (Honda, Toyota, and Datsun) with respect to compact vehicles. The Japanese had a lower cost structure, yet built better cars. In an effort to offer a more competitive economy cat, GM actually turned to the enemy. It entered into a joint venture with Toyota to build small cars. Soon, a Toyota plant in Northern California was turning o ut Corollas on one assembly line while making very similar Chevy Novas on a second. Meanwhile, in a long-term effort to make better small cars, GM gave the green light to Group 99, a secretive task force that resulted in formation of the Saturn Corporation in 1985. From the beginning, Saturn set out to break through t GM bureaucracy and become" A different kind of car. A different kind of company." As the single most defining characteristic of the new company, Saturn proclaimed that sole focus would be people: customers, employees, communities. Saturn put significant resources into Customer research and product development. The first Saturn cars were made "from scratch," without any allegiance the GM parts bin or suppliers. The goal was to produce n only a high-quality vehicle, but one known for safety al innovative features that would "wow" the customer. Saturn's focus on employees began with an unprecedented contract with United Auto Workers (UAW). The co " tract was so simple, it fit in a shirt pocket. It established progressive work rules, with special emphasis given benefits. work teams, and the concept of empowerment the retail end. Saturn selected dealers based on careful crafted criteria. It paid service personnel and sales associates a salary rather than commission. This would help create an environment that would reverse the common customer perception of the dealer as a nemesis. Finally, in addition to customer and employee relation Saturn focused on soci al responsibility. Human resource policies gave equal opportunities to women, ethnic minor ties, and people with disabilities. Saturn designed environmentally responsible manufacturing processes, even going beyond legal requirements. The company also gave heavy philanthropic support to various causes. All of

these action earned Saturn a number of awards recognizing its environmentally and socially responsible actions. When the first Saturn vehicles rolled off the assembly line on July 30, 1990, the company offered a sedan, a coupe, and a wagon in two trim levels each, all based on a single compact vehicle platform. In spite of this minimal approach, sales quickly exceeded expectations. By 1992, Saturn had sold 500,000 vehicles. That same year, the company achieved the highest new-car sales per retail outlet, something that had not been done by a domestic car company for 15 years. Indeed, customers were drawn to all the things that Saturn had hoped they would be. They loved the innovations, such as dent re sistant body panels, the high-tech paint job designed to resist oxidization and chipping longer than any in the industry, and safety features such as traction control, antilock brakes, and unparalleled body reinforcements. They were overwhelmed by the fresh sales approach that included no-haggle pricing, a 30-day return policy, and no hassle from the sales associates. The noncommissioned associates spent as much time with each customer as they wished, even going on extended test drives. Absent were typical high-pressure tactics so commonly used by automo-tive salespeople. By 1994, Saturn had developed an unusually loyal customer base. .The depth of customer relationships became apparent when 38,000 Saturn loyalists made the trek to company headquarters in Tennessee to celebrate the first five years at the company's Spring Hill Homecoming. It was "just like Woodstock without all the patchouli oil," beamed one proud SL2 owner. The homecoming set the mold for many company-sponsored customer gatherings to follow. As Saturn's customer base grew, it became apparent that the Saturn brand was attracting customers who would not have otherwise purchased a GM vehicle. Interestingly, the Saturn buyer did not appear to be all that different from a Chevrolet buyer. With respect to household income, age, gender, and education, typical Saturn buyers appeared to represent the same Chevy-like cross section of middle-class America, But Wisconsin mega dealer John Bergstrom said his network of 22 GM dealerships draws different types of customers to the two brands. With trucks accounting for 65 percent of his Chevrolet sales, he described the Chevy owner as "a true-blue, bow-tie America consumer." However, "the Saturn guest is a little different guest. They might buy an Asian car or a Korean car or a Saturn. They are very much into safety and value, and how they're treated is critically important. I don't think we'd get those kinds of people in our Chevy stores if we didn't have the Saturn brand." During Saturn's first years of operations, the accolades rolled in. The list included "Best Car" picks from numerous magazines and organizations, along with awards for quality, engineering, safety, and ease of maintenance. But the crowning achievement occurred in 1995, as the 1,000,00Oth Saturn took to the road. That year, Saturn ranked number one out of all automotive nameplates on the J.D. Power and Associates Sales Satisfaction Index Study, achieving the highest score ever given by the organization. It would be the only company ever to achieve the highest marks in all three categories ranked by the satisfaction index (salesperson per. Performance, delivery activities, and initial product quality)

Saturn earned that honor for an astounding four consecutive years, and it was the only non-luxury brand to be at OJ near the top of J.D. Power's scores for the better part of 1 decade.