Saturn Corporation

views updated Jun 11 2018

Saturn Corporation

1420 Stevenson Highway
Troy, Michigan 48007-7025
U.S.A.
(313) 524-5721
Fax: (313) 528-6300

Wholly Owned Subsidiary of General Motors Corporation
Incorporated: 1983
Employees: 6,904 in 1992
Sales: $750 million
SICs: 3711 Motor Vehicles & Car Bodies

Saturn Corporation grew out of a project begun in 1982 within General Motors Corp. (GM) to explore the potential for building a small car of superior quality and value as efficiently as possible, combining the most advanced technology with the newest approaches to management. Saturn realized its product goal by producing a car ranked behind only the Lexus and the Infiniti (imported luxury cars produced by Toyota and Nissan) in the 1992 J.D. Power & Associates customer satisfaction survey. Saturn is regarded as more than simply a successful product, however; the company is seen as an embodiment of GM’s vision of modern corporate ideals.

Saturn was the product of an extraordinary effort within GM to create a company from scratch, without any preconceived notions and combining the most advanced techniques and ideas in all areas. From community and employee involvement in decision making, to environmentally responsible plant design, to dealers trained to avoid the high-pressure sales techniques typical of traditional car salesmen, Saturn has sought to embody a 1990s model of corporate enlightenment. Recognized for its innovations in product design and production methodologies, the company has been the recipient of a great deal of positive publicity. While articles praising Saturn are plentiful, however, critics argue that its accomplishments have been achieved slowly and at great expense.

Saturn grew out of a particular climate within the car industry. At the time of the company’s conception, the “Big Three” car makers (General Motors, Ford, and Chrysler) had traditionally built large cars, emphasizing quality and comfort. The industry began to change in the 1950s when foreign car makers (notably Renault and Volkswagen) offered American consumers smaller cars at lower prices. Imports had claimed a 10.1 percent market share by 1959, but they were pushed back to a 4.8 percent share in 1962 after the introduction of the Corvair (GM), the Valiant (Chrysler), and the Falcon (Ford) in 1960.

By the late 1960s, the Big Three began to be challenged by Japanese car manufacturers. The Vega was GM’s answer to the challenge. In 1968 GM announced that it would build the Vega from scratch rather than redesign another GM car. The finished product, introduced in 1970, proved disappointing. Vegas were prone to rust and their aluminum engines warped. The Chevette, GM’s more successful small car introduced in 1975, was nearing the end of its 10-year product cycle when GM began to work on a replacement, code-named the S car. In 1981 GM determined that the S car could be built much less expensively by Isuzu (GM had bought 34.2 percent of Isuzu in 1971). Its next small car (the Chevrolet Spectrum) was built in Japan. This series of events confirmed in some people’s minds the suspicion that the U.S. couldn’t produce small cars competitively. As smaller cars were widely believed to represent the future direction of the industry, the episode called into question the likelihood of the long term survival of the Big Three car manufacturers. To address this concern, Ford initiated the “Alpha project” and Chrysler began work on “Concept 90”.

At GM an internal project to build an affordable, high-quality, small car to compete with the imports was approved in May of 1982 by GM Vice-Chairman Howard Kehrl in conjunction with Alex Mair and Robert Eaton, Vice-Presidents in charge of Design and Engineering. On June 15 Alex Mair sat down with engineers Joe Joseph and Tom Ankeny to sketch out the plan. By July the project had been dubbed “Saturn,” a reference to the Saturn rocket that propelled the American astronauts to the moon during the space race with the Soviets.

The project enjoyed strong sponsorship from the highest ranks of the company. In keeping with the emphasis on consensus throughout Saturn, no one in particular is considered the project’s founding father. In the words of then-GM Chief Roger Smith, “I don’t know who is the father of Saturn around here. I think all of us are promoting it and pushing it. I’ve been hot for it but I’m not going to tell you that I started it, because that wouldn’t be true.”

Although the project was to be kept confidential, press leaks began in early 1983. As cooperation with the union was vital to the success of the project, GM had begun behind-the-scenes discussions with Donald Ephlin, the UAW manager covering GM. By October, a joint GM-UAW Study Center was agreed upon.

Motivated in part by claims that the company was turning its back on the U.S. by building cars in Japan, on November 3, 1983, GM announced a new operating unit, the wholly-owned Saturn corporation, with an initial capitalization of $150 million. It would be the first nameplate added to the General Motors ranks since Chevrolet joined GM in 1918. Saturn would incorporate the latest technology available. The operations were to be completely computerized, with robots utilized to reduce direct labor, and flexible manufacturing techniques and just-in-time inventory systems introduced.

The importance of the project is evident in the wording of its announcement. Chairman Roger Smith announced Saturn as “the key to GM’s long-term competitiveness, survival, and success as a domestic producer.... We expect it to be a learning laboratory,” he said, “We also expect that what we learn with Saturn will spread throughout GM.” He described Saturn as the key to improving every GM plant and product.

Key staff recognized for bringing the project to this point included Alex Mair of the Technical Staffs Group, Bob Eaton of Advanced Product & Manufacturing Engineering, Irv Rybicki of the Design Staff, and UAW leaders Don Ephlin and Joe Molotke. Executives appointed to take the company forward included the former head of the Oldsmobile Division, Joseph Sanchez, as President; the former executive director of Saturn project, Reid Rundell, as Executive Vice-President for Strategic Planning; John Middlebrook as Vice-President for sales, service, and marketing; Tom Manoff as Vice-President for finance; Jay Wetzel as Vice-President for engineering; and Guy Briggs as Vice-President for manufacturing operations. Sanchez died suddenly on January 26 and William E. Hoglund was appointed President on February 4. Hoglund served until Richard G. “Skip” LeFauve succeeded him on February 3, 1986.

The company was launched. On December 19, 1983, a joint GM-UAW study center was announced. The following February, 99 people (“the Group of 99”) were designated to identify key founding principals for Saturn and to search the world for the best ideas in all areas. The group consisted of a functional cross-section of people, including plant managers, superintendents, union committee men, production workers, and skilled tradesmen, as well as UAW and GM staff from 41 UAW locals and 55 GM plants.

The group split into seven functional teams to explore stamping; metal fabrication and body work; paint and corrosion; trim and hardware; heating, ventilation, and air conditioning; and powertrain and chassis. In all, the Group of 99 visited 49 GM plants and 60 other companies around the world. They made 170 contacts, traveled 2 million miles, and put in 50,000 hours of effort.

The group’s findings were presented in April 1984. The principle keys to success identified included ownership by all employees, the assumption of responsibility by all, equality and trust among employees, the elimination of barriers to doing a good job, giving staff the authority to do their job, and the existence of common goals. Specific recommendations included the use of a conflict resolution process that had been developed by the group and the formation of consensus driven partnerships within work teams as well as between the union and company management.

The search for a plant location began immediately after the company was announced. Two days later, Illinois Governor James Thompson became the first to visit GM advocating a site in his state. By the end of the search process, 24 governors had paid visits to GM and 38 states had expressed interest. Donald Avenson, the Speaker of Iowa’s House of Representatives, offered to pay half of the first year’s wages for workers ($140 million) if Saturn settled in Iowa. Spring Hill, Tennessee, was .confirmed as the plant site on July 30, 1985, and in May 1986 construction began.

The plant is a mile long and half a mile wide, totalling 4 million square feet and consisting of four functional buildings: power-train (engine and transmission systems), body systems (frames, exterior panels), vehicle interior systems (interior trim), and vehicle systems (final assembly). The facilities’ core team, which designed the layout, included employees at all levels. The team considered unique lighting requirements in different areas; placed restrooms and cafeterias conveniently; and designed a sophisticated roadway that separates truck traffic from pedestrians, decentralizes loading docks so materials arrive where they are needed, and ensures that no one walks more than five minutes from parking lot to work.

As controlling labor costs was crucial to competing with the imports on a cost basis, cooperation with the UAW was an important factor. During the 1980s GM had suffered losses and had laid off 170,000 UAW workers. The competitive environment spurred both sides to work together on improving the prospects for American car manufacturing. Al Warren, Vice-President of GM’s Industrial Relations Staff, and Donald Ephlin, UAW Vice-President and Director for the General Motors Department, were instrumental in creating a strong bond between Saturn and the UAW.

On July 26, 1985, the UAW executive board approved a unique labor agreement for Saturn. It reduced the number of job classifications, allowed unprecedented flexibility in job content, eliminated work rules, and set pay rates at 80 percent of the base rate at other GM plants with the difference made up in performance incentives. All Saturn workers are salaried and participate in a “risk-reward” system in which they lose 20 percent of their pay if the company does not reach common goals (e.g. sales goals) but earn proportional bonuses if goals are exceeded. Each team manages its own budget, inventory, and hiring.

Training is an important part of Saturn’s human resource strategy. Workers spend from 250 to 750 hours in training to become “job-ready.” On the job, they spend a minimum of five percent of each year in training. Workers are acclimated to Saturn’s philosophy through core courses on conflict management, consensus decision making, and team dynamics. They also receive specialized technical training on machinery, parts quality, and working with vendors. The training program seeks to promote teamwork, self-direction, initiative, and responsibility. As of mid-1992, Saturn’s success in the human resource area could be measured by the lowest absentee rates in the industry. Absenteeism at Saturn was 2.5 percent, a far cry from the 14 percent figure at other GM plants.

As other elements of the company were being developed, product development staff were working on the cars. The first demonstration vehicle was completed on September 15, 1984. Although Saturn was a “no year” project (it had no set launch date), GM chairman Roger Smith was determined to begin production before he retired. He drove the first car off the production line on July 30, 1990, one day before he retired and turned the reigns over to Robert Stempel.

The first truckload of Saturns was sent to dealers in California on October 11, 1990. By November the company garnered several awards, including Popular Science’s “1990 Best of What’s New in Automobiles” and an award from the Society of Plastics Engineers for its thermoplastic door panel. In June 1992 the first exports went to Taiwan. Annual production quickly reached 240,000 units and buyers were lined up on waiting lists, but the company was still losing money. By 1993 Saturn expected to raise production to 320,000, allowing the company to turn its first profit; the product line included seven models of sedans, coupes, and wagons.

In developing parts and manufacturing processes, Saturn employed Product Development Teams (PDTs) consisting of manufacturing engineers, finance staff, materials managers, quality engineers, and UAW technicians. The teams decide what materials to stock and evaluate prospective suppliers for quality, price, and efficient organization.

In keeping with the “complete job-focus” philosophy, a part is manufactured from start to finish in one place. Ergonomics is another important consideration. Equipment is “low-tech and people-oriented.” It is chosen by its users and frequently adjusts to individuals. Whereas workers must crawl inside the vehicle to work on the cockpit of most cars, Saturn cockpits are assembled in a fixture that can be rotated for the comfort of the individual worker. A skillet system allows workers to ride on a moving platform with the car as it moves down the assembly line. While the basic system was copied from GM’s Opel facility in Germany, Saturn widened the platform and turned the cars sideways, saving 40 percent in floor space.

In the engine and transmission area, lost-foam casting was used on a large scale for the first time, providing casting precision, flexibility, material savings, minimal tool wear, and reduced machining. In making trim, plastic colors are mixed at the injection molding machine, reducing change-over time and costs. Other innovative production methods include an environmentally sound waterborne paint process and a method of testing transmissions with air rather than oil.

Marketing has also been a central issue at Saturn. The first marketing customer clinic was held in San Francisco in March of 1985, five years before production began. The car itself is designed to be adaptable to changing consumer preferences. Whereas older cars depend on exterior panels for structural strength, Saturns are structurally based on a strong “space frame” to which the exterior “skin” is attached, allowing for quick style changes. Saturn’s marketing philosophy was also concerned with bringing in “plus business” (non-GM buyers). Based upon the profile of imported car buyers, the targeted Saturn consumer would be an average of 38 years old, earning an average of $51,000 annually. A large percentage would live on the west coast and 50 percent would be college graduates.

The Saturn Marketing Planning Team incorporated the ideas of 16 dealers representing 25 manufacturers. Led by Donald Hudler, the team studied distribution methods of 30 major U.S. corporations and came up with Saturn’s Market Area Approach (MAA) announced on May 26, 1987. MAA set up 300 “territories” to be handled by individual franchised dealers.

Saturn sought the consistency of service lacking in the GM dealer network. In early 1989 dealers were invited to apply for franchises. Saturn dealers are trained in low-pressure sales and are encouraged to pay salaries rather than commissions. The strong demand for the car, coupled with significant dealership control over territory, has enabled Saturn dealers to average twice the unit sales volume of other car dealerships. In addition, the August 3, 1992 Business Week noted that a 17 percent gross margin is built into the “no-haggle” sticker price (other cars average 12 percent).

An important step in defining Saturn’s marketing strategy was the selection of an advertising agency. Fifty agencies had applied for consideration by a review panel composed of two Saturn executives, two retailers, and a UAW representative, but the agency chosen was not among them. Thomas Shafer, Director of Marketing Services, felt that it was important to consider West Coast agencies since the small car market was most competitive there. As a result, the Hal Riney & Partners agency was named as Saturn’s “communications partner” on May 24, 1988. Riney set about creating a “charismatic brand.” He felt strongly that model names would detract from the Saturn name and insisted that the cars simply be called “Saturns” (numbers would distinguish various models). Dealerships would be called “saturn of x” and colors would be “red” rather than the more pretentious “raspberry red”. Saturn advertising was designed to be emotionally driven, with a focus on the human element rather than the product. In February 1989 the first print ad was released even though cars would not be available for more than a year.

In addition to external marketing work, Riney assisted the new company with internal communications. In April 1989 Riney produced “Spring, in Spring Hill,” a documentary explaining the company to employees, suppliers, and the press. It was later aired as an infomercial. In the film team members explain what the project means to them. In the words of a Riney executive, “We wanted to get people rooting for Saturn, the company.”

Saturn lost $800,000 in 1990 with calendar year sales of 1,881 units. 1991 calendar year sales were 74,493 units, and 1992 sales reached 196,126 units by December 31, with a substantial number of additional units back ordered. In the 1992 model year Saturn earned a 2.8 percent market share. It is estimated that the company needs to sell 300,000 cars per year to make a profit. Increasing capacity significantly would require further investment in new facilities or the retooling of an existing plant. Building new capacity is unlikely as GM continues to close old plants; retooling, however, also presents problems, as duplication of the innovations in the Spring Hill plant is a formidable task. In addition, there are few existing facilities large enough to accommodate the manufacturing of all necessary components at one site, as Saturn does in Spring Hill.

By mid-1992 Saturn cars had 95 percent domestic content and were ranked as the highest quality American car, with defect ratings rivaling those of top Honda and Nissan vehicles and customer satisfaction ratings second only to Lexus and Infiniti. On the negative side, the company was far from recouping the undisclosed billions that GM had invested in it and was not operating at full capacity. In addition, an average of 35 hours of labor were required per car compared to the stated company goal of 20 hours.

In an effort to transfer experience gained at Saturn throughout GM, the company has moved several Saturn executives to other divisions. GM President and CEO Jack (John F., Jr.) Smith, who succeeded Robert Stempel in 1992 after the latter’s controversial ouster, talks about “Saturnizing” all of GM. Yet Donald Ephlin was quoted in the August 17, 1992, issue of Business Week saying, “One of the things GM does very poorly is spread improvements across the system.”

The future of Saturn remains unclear. Its parent company, General Motors, is undergoing a painful series of layoffs and other cost-cutting measures in response to its well-documented financial woes. The uncertainty about GM’s fiscal health has thus clouded speculation about the prospects of its fledgling subsidiary. Saturn’s product line, however, has enjoyed a generally warm reception, and GM obviously has high hopes for the company.

Saturn Corporation

views updated May 14 2018

Saturn Corporation

1420 Stevenson Highway
Troy, Michigan 48007-7025
U.S.A.
(800) 522-5000
Fax: (313) 528-6300
Web site: http://www.saturn.com

Wholly Owned Subsidiary of General Motors Corporation
Incorporated: 1983
Employees: 6,904
Sales: $750 million
SICs: 3711 Motor Vehicles & Car Bodies

Saturn Corporation grew out of a project begun in 1982 within General Motors Corp. to explore the potential for building a small car of superior quality and value as efficiently as possible, combining the most advanced technology with the newest approaches to management. Saturn realized its goal by producing a car ranked behind only the Lexus and the Infiniti (imported luxury cars produced by Toyota and Nissan) in the 1992 J. D. Power & Associates customer satisfaction survey. Saturn is regarded as more than simply a successful product, however; the company is seen as nothing less than the embodiment of GM’s vision of modern corporate ideals.

Saturn was the product of an extraordinary effort within GM to create a company from scratch, without any preconceived notions and combining the most advanced techniques and ideas in all areas. From community and employee involvment in decision making, to environmentally responsible plant design, to dealers trained to avoid the high-pressure sales techniques typical of traditional car salesmen, Saturn has sought to embody a 1990s model of corporate enlightenment. Recognized for its innovations in product design and production methodologies, the company has been the recipient of a great deal of positive publicity. At the same time, however, critics note that its accomplishments have been achieved slowly and at great expense.

Industry Climate Prompts the Birth of Saturn

Saturn grew out of a particular climate within the car industry. Traditionally, the “Big Three” automakers (General Motors, Ford, and Chrysler) had built large cars, emphasizing features and comfort. The industry began to change in the 1950s when foreign car makers (notably Renault and Volkswagen) offered American consumers smaller cars at lower prices. Imports had claimed a 10.1 percent market share by 1959, but they were pushed back to a 4.8 percent share in 1962 after the introduction of the Corvair (GM), the Valiant (Chrysler), and the Falcon (Ford) in 1960.

By the late 1960s, the Big Three began to be challenged by Japanese car manufacturers. The Vega was GM’s answer to the challenge. In 1968 GM announced that it would build the Vega from scratch rather than redesign another GM car. The finished product, introduced in 1970, proved disappointing. Vegas were prone to rust, and their aluminum engines warped. The Chevette, GM’s more successful small car introduced in 1975, was nearing the end of its 10-year product cycle when GM began to work on a replacement, code-named the S car. In 1981 GM determined that the S car could be built much less expensively by Isuzu (GM had bought 34.2 percent of Isuzu in 1971). Its next small car (the Chevrolet Spectrum) was built in Japan. This series of events confirmed in some people’s minds the suspicion that U.S. automakers couldn’t produce small cars competitively. As smaller cars were widely believed to represent the future direction of the industry, the episode called into question the likelihood of the long-term survival of the Big Three. To address this concern, Ford initiated the “Alpha project” and Chrysler began work on “Concept 90.”

At GM an internal project to build an affordable, high-quality, small car to compete with the imports was approved in May 1982 by GM Vice-Chairman Howard Kehrl in conjunction with Alex Mair and Robert Eaton, vice-presidents in charge of design and engineering. On June 15 Alex Mair sat down with engineers Joe Joseph and Tom Ankeny to sketch out the plan. By July the project had been dubbed “Saturn,” a reference to the Saturn rocket that propelled the American astronauts to the moon during the space race with the Soviet Union.

The project enjoyed strong sponsorship from the highest ranks of the company. In keeping with the emphasis on consensus throughout Saturn, no one in particular is considered the project’s founding father. In the words of then-GM Chief Roger Smith, “I don’t know who is the father of Saturn around here. I think all of us are promoting it and pushing it. I’ve been hot for it but I’m not going to tell you that I started it, because that wouldn’t be true.”

Although the project was to be kept confidential, press leaks began in early 1983. As cooperation with the U AW was vital to the success of the project, GM had begun behind-the-scenes discussions with Donald Ephlin, the UAW manager for GM. By October, a joint GM-UAW Study Center was agreed upon.

Motivated in part by claims that the company was turning its back on the United States by building cars in Japan, on November 3, 1983, GM announced a new operating unit, the wholly owned Saturn Corporation, with an initial capitalization of $150 million. It would be the first nameplate added to the General Motors ranks since Chevrolet in 1918. Saturn would incorporate the latest technology available. The operations were to be completely computerized, with robots utilized to reduce direct labor costs, and flexible manufacturing techniques and just-in-time inventory systems introduced.

The importance of the project is evident in the wording of its announcement. Chairman Roger Smith announced Saturn as “the key to GM’s long-term competitiveness, survival, and success as a domestic producer…. We expect it to be a learning laboratory,” he said. “We also expect that what we learn with Saturn will spread throughout GM.” He described Saturn as the key to improving every GM plant and product.

Key staff members recognized for bringing the project to this point included Alex Mair of the Technical Staffs Group, Bob Eaton of Advanced Product & Manufacturing Engineering, Irv Rybicki of the Design Staff, and UAW leaders Don Ephlin and Joe Molotke. Executives appointed to take the company forward included the former head of the Oldsmobile Division, Joseph Sanchez, as president; the former executive director of the Saturn project, Reid Rundell, as executive vice-president for strategic planning; John Middlebrook as vice-president for sales, service, and marketing; Tom Manoff as vice-president for finance; Jay Wetzel as vice-president for engineering; and Guy Briggs as vice-president for manufacturing operations. When Sanchez died suddenly on January 26th, William E. Hoglund was appointed president. Hoglund served until Richard G. “Skip” LeFauve succeeded him on February 3, 1986.

The 1980s: Saturn is Born

The company was launched. On December 19, 1983, a joint GM-UAW Study Center was announced. The following February, 99 people (“the Group of 99”) were designated to identify key founding principles for Saturn and to search the world for the best ideas in all areas. The group consisted of a functional cross-section of people, including plant managers, superintendents, union committee members, production workers, and skilled tradesmen, as well as UAW and GM staff from 41 UAW locals and 55 GM plants.

The group split into seven functional teams to explore stamping; metal fabrication and body work; paint and corrosion; trim and hardware; heating, ventilation, and air conditioning; and powertrain and chassis. In all, the Group of 99 visited 49 GM plants and 60 other companies around the world. They made 170 contacts, traveled two million miles, and put in 50,000 hours of effort.

The group’s findings were presented in April 1984. The keys to success identified included ownership by all employees, the assumption of responsibility by all, equality and trust among employees, the elimination of barriers to doing a good job, giving staff the authority to do their jobs, and the existence of common goals. Specific recommendations included the use of a conflict resolution process that had been developed by the group and the formation of consensus-driven partnerships within work teams as well as between the union and company management.

The search for a plant location began immediately after the company was announced. Two days later, Illinois Governor James Thompson became the first to visit GM, advocating a site in his state. By the end of the search process, 24 governors had paid visits to GM and 38 states had expressed interest. Donald Avenson, the Speaker of Iowa’s House of Representatives, offered to pay half of the first year’s wages for workers ($140 million) if Saturn settled in Iowa. Spring Hill, Tennessee, was confirmed as the plant site on July 30, 1985, and construction began in May 1986.

The plant is a mile long and half mile wide, totalling four million square feet and consisting of four functional buildings: powertrain (engine and transmission systems), body systems (frames, exterior panels), vehicle interior systems (interior trim), and vehicle systems (final assembly). The facilities’ core team, which designed the layout, included employees at all levels. The team considered unique lighting requirements in different areas; placed restrooms and cafeterias conveniently; and designed a sophisticated roadway that separates truck traffic from pedestrians, decentralizes loading docks so materials arrive where they are needed, and ensures that no one walks more than five minutes from parking lot to work.

Company Perspectives:

Saturn’s mission is to market vehicles developed and manufactured in the U.S. that are world leaders in quality, cost, and customer satisfaction through the integration of people, technology, and business systems and to transfer knowledge, technology, and experience throughout General Motors.

As controlling labor costs was crucial to competing with the imports on a cost basis, cooperation with the UAW was an important factor. During the 1980s GM had suffered losses and had laid off 170,000 UAW workers. The competitive environment spurred both sides to work together on improving the prospects for American car manufacturing. Al Warren, vicepresident of GM’s Industrial Relations staff, and Donald Ephlin, UAW vice-president and director for the General Motors Department, were instrumental in creating a strong bond between Saturn and the UAW.

On July 26, 1985, the UAW executive board approved a unique labor agreement for Saturn. It reduced the number of job classifications, allowed unprecedented flexibility in job content, eliminated work rules, and set pay rates at 80 percent of the base rate at other GM plants with the difference made up in performance incentives. All Saturn workers were salaried and participated in a “risk-reward” system in which they lost 20 percent of their pay if the company did not reach common goals (e.g., sales goals), but earned proportional bonuses if goals were exceeded. Each team managed its own budget, inventory, and hiring.

Training was an important part of Saturn’s human resource strategy. Workers spent between 250 and 750 hours in training to become “job-ready.” On the job, they spent a minimum of five percent of each year in training. Workers were acclimated to Saturn’s philosophy through core courses on conflict management, consensus decision making, and team dynamics. They also received specialized technical training on machinery, parts quality, and working with vendors. The training program sought to promote teamwork, self-direction, initiative, and responsibility. In 1992, Saturn’s success in managing human resources could be measured by the lowest absentee rate in the industry: absenteeism at Saturn was 2.5 percent, a far cry from the 14 percent at other GM plants.

As other elements of the company were being developed, product development staff were working on the cars. The first demonstration vehicle was completed on September 15, 1984. Although Saturn was a “no year” project (it had no set launch date), GM chairman Roger Smith was determined to begin production before he retired. He drove the first car off the production line on July 30, 1990, one day before he retired and turned the reins over to Robert Stempel.

The first truckload of Saturns was sent to dealers in California on October 11, 1990. By November the company garnered several awards, including the Popular Science “1990 Best of What’s New in Automobiles” and an award from the Society of Plastics Engineers for its thermoplastic door panel. In June 1992 the first exports went to Taiwan. Annual production quickly reached 240,000 units, and buyers were lined up on waiting lists, but the company was still losing money. By 1993 Saturn expected to raise production to 320,000, allowing the company to turn its first profit; the product line included seven models of sedans, coupes, and wagons.

In developing parts and manufacturing processes, Saturn employed Product Development Teams (PDTs) consisting of manufacturing engineers, finance staff, materials managers, quality engineers, and UAW technicians. The teams decided what materials to stock and evaluated prospective suppliers for quality, price, and efficient organization.

In keeping with the “complete job-focus” philosophy, a part was manufactured from start to finish in one place. Ergonomics was another important consideration. Equipment, which was “low-tech and people-oriented,” was chosen by its users and frequently adjusted to individuals. Whereas workers must crawl inside the vehicle to work on the cockpit of most cars, Saturn cockpits were assembled in a fixture that can be rotated for the comfort of the individual worker. A skillet system allowed workers to ride on a moving platform with the car as it moved down the assembly line. While the basic system was copied from GM’s Opel facility in Germany, Saturn widened the platform and turned the cars sideways, saving 40 percent in floor space.

In the engine and transmission area, lost-foam casting was used on a large scale for the first time, providing casting precision, flexibility, material savings, minimal tool wear, and reduced machining. In making trim, plastic colors were mixed at the injection molding machine, reducing change-over time and costs. Other innovative production methods included an environmentally sound waterborne paint process and a method of testing transmissions with air rather than oil.

Service and Marketing for the 1990s

Marketing was another central issue at Saturn. The first marketing customer clinic was held in San Francisco in March 1985, five years before production began. The car itself was designed to be adaptable to changing consumer preferences. Whereas older cars depend on exterior panels for structural strength, Saturns are structurally based on a strong “space frame” to which the exterior “skin” is attached, allowing for quick style changes. Saturn’s marketing philosophy was concerned with bringing in “plus business” (non-GM buyers). Based upon the profile of imported car buyers, the targeted Saturn consumer would be an average of 38 years old, earning an average of $51,000 annually. A large percentage would live on the West Coast and 50 percent would be college graduates.

The Saturn Marketing Planning Team incorporated the ideas of 16 dealers representing 25 manufacturers. Led by Donald Hudler, the team studied distribution methods of 30 major U.S. corporations and came up with Saturn’s Market Area Approach (MAA), which was announced on May 26, 1987. MAA set up 300 “territories” to be handled by individual franchised dealers.

Saturn sought the consistency of service lacking in the GM dealer network. In early 1989 dealers were invited to apply for franchises. Saturn dealers were trained in low-pressure sales and were encouraged to pay salaries rather than commissions. The strong demand for the car, coupled with significant dealership control over territory, enabled Saturn dealers to average twice the unit sales volume of other car dealerships. In addition, the August 3, 1992, Business Week noted that a 17 percent gross margin was built into the “no-haggle” sticker price (while other cars averaged 12 percent).

An important step in defining Saturn’s marketing strategy was the selection of an advertising agency. Fifty agencies had applied for consideration by a review panel composed of two Saturn executives, two retailers, and a UAW representative, but the agency chosen was not among them. Thomas Shafer, Director of Marketing Services, felt that it was important to consider West Coast agencies since the small car market was most competitive there. As a result, the Hal Riney & Partners agency was named as Saturn’s “communications partner” on May 24, 1988. Riney set about creating a “charismatic brand.” He felt strongly that model names would detract from the Saturn name and insisted that the cars simply be called “Saturns,” with numbers distinguishing various models. Dealerships would be called “Saturn of x” and colors would be “red” rather than the more pretentious “raspberry red.” Saturn advertising was designed to be emotionally driven, with a focus on the human element rather than the product. In February 1989 the first print ad appeared, even though cars would not be available for more than a year.

In addition to external marketing work, Riney assisted the new company with internal communications. In April 1989 Riney produced “Spring, in Spring Hill,” a documentary explaining the company to employees, suppliers, and the press. It was later aired as an infomercial. In the film, team members explained what the project meant to them. In the words of a Riney executive, “We wanted to get people rooting for Saturn, the company.”

Saturn lost $800,000 in 1990 with calendar year sales of 1,881 units. 1991 calendar year sales were 74,493 units, and 1992 sales reached 196,126 units by December 31, with a substantial number of additional units back-ordered. In the 1992 model year Saturn earned a 2.8 percent market share. It was estimated that the company needed to sell 300,000 cars per year to make a profit. Increasing capacity significantly would require further investment in new facilities or the retooling of an existing plant. Building new capacity was problematic as GM continued to close old plants; retooling, however, also presented problems, as duplication of the innovations in the Spring Hill plant was a formidable task. In addition, there were few existing facilities large enough to accommodate the manufacturing of all necessary components at one site, as Saturn did in Spring Hill.

By mid-1992 Saturn cars had 95 percent domestic content and were ranked as the highest-quality American cars, with defect ratings rivaling those of top Honda and Nissan vehicles and customer satisfaction ratings outpaced only by Lexus and Infiniti. On the negative side, the company was far from recouping the undisclosed billions that GM had invested in it and was not operating at full capacity. In addition, an average of 35 hours of labor were required per car, compared to the stated company goal of 20 hours.

In an effort to transfer experience gained at Saturn throughout GM, the company moved several Saturn executives to other divisions. GM President and CEO Jack Smith, who succeeded Robert Stempel in 1992 after the latter’s controversial ouster, talked about “Saturnizing” all of GM. Yet, as Donald Ephlin noted, “One of the things GM does very poorly is spread improvements across the system.”

In 1993 Saturn was set to sell 200,000 cars, garnering 1.4 percent of the market. Commentators noted that while the cars themselves were not exceptional, the company was truly excelling at advertising and customer satisfaction, giving the Saturn mystique considerable weight. In June 1994, for example 44,000 Saturn owners and their families drove their Saturns to Spring Hill for a three-day “homecoming,” a feel-good event in which the relationships between dealer and customers were further cemented. Saturn’s sales had fallen, however, from a peak of 25,000 per month the year before to 15,000 per month in 1994. The drop was attributed to several factors: GM, which was short of cash, cut back on Saturn’s advertising budget, which was halved; plans to expand the dealer network were put on hold, with 285 dealers serving only about 60 percent of the U.S. market; product enhancements, including a facelift and passenger airbags, were delayed from the 1994 to the 1995 model year; and modifications that would decrease engine noise were delayed until 1996. The car was also facing more formidable competition from domestic rivals, including the Dodge and Plymouth Neon. Michael Bennett, president of UAW Local 1853 in Spring Hill, stated that if Saturn didn’t build a second assembly plant soon, the company was doomed to extinction much like the American Motors Corp., which was too small to survive. While the Spring Hill plant was capable of producing 325,000 cars a year, Bennett maintained that Saturn needed 500,000 to make a profit. Profitability was impossible for outsiders to assess, as GM refused to release financial data on the company.

In 1995 Saturn reached two important milestones, as its millionth vehicle rolled off the line after ten years of production. Reports indicated that the company planned to add a larger sedan to its offerings, to be built at a plant in Wilmington, Delaware, that was otherwise scheduled for closing. While this was good news for the line, other GM divisions were concerned that expansion by Saturn would cannibalize their own sales. By May, sales of the original line were up 17.5 percent for the year, in a segment that was down 14.4 percent overall. However, officials were concerned about the effects of Saturn’s limited product line as the company’s target market, the baby boom generation, grew older and became interested in trading up. For their part, critics continued to complain about the Saturn’s dull styling and engine noise.

Nevertheless, the experiment continued, as Saturn took the battle for small-car dominance to its most formidable competitors’ home turf, appointing six distributors in Japan in 1996. Keith Wicks, general director of Saturn Japan, stated, “We are convinced the high quality of Saturn cars, combined with friendly customer treatment and service at our Saturn retailer, will make a difference even for very discerning Japanese consumers.” The right-hand drive vehicles were to be available in 10 to 15 showrooms when sales began in 1997. Sales remained strong at home: president Don Hudler stated at mid-year that if the company could produce them, Saturn could sell about 50,000 more cars a year, a number that would generate about $600 million in revenue. In August General Motors confirmed that it would build a mid-size Saturn in Wilmington. The car would be based on the same platform as the Vectra, a European offering from GM.

Noting that the car would be built at an existing GM facility, some observers took the decision as a sign that GM was serious not only about investing in Saturn’s success, but also about spreading Saturn’s accomplishments beyond Spring Hill, to the rest of the company. Commentator Drew Winter wrote: “From a business standpoint, or even according to Saturn’s own mission statement, it probably is too soon to call Saturn an unqualified success. But as sales remain strong, details of a global strategy continue to leak out, and GM’s overall customer satisfaction shows marked improvement, it sure doesn’t look like a loser.”

Saturn Corporation

views updated Jun 27 2018

Saturn Corporation

100 Saturn Parkway
Spring Hill, Tennessee 37174
U.S.A.
Telephone: (931) 486-5000
Toll Free: (800) 553-6000
Web site: http://www.saturn.com

Wholly Owned Subsidiary of General Motors Corporation
Incorporated: 1983
Employees: 9,600
Sales: $3.9 billion (est.)
NAIC: 336110 Automobile and Light Duty Motor Vehicle Manufacturing

U.S. automaker Saturn Corporation grew out of a project that General Motors Corporation (GM) began in 1982. The aim of the project was to explore the potential for building a small car of superior quality and value as efficiently as possible, combining the most advanced technology with the newest approaches to management. Saturn realized its goal by producing a car ranked only behind the Lexus and the Infiniti (imported luxury cars produced by Toyota and Nissan) in the 1992 J. D. Power & Associates customer satisfaction survey. Saturn was regarded as more than simply a successful product, however; the company was seen as nothing less than the embodiment of GM's vision of modern corporate ideals. Saturn was the product of an extraordinary effort within GM to create a company from scratch without any preconceived notions and combining the most advanced techniques and ideas in all areas. From community and employee involvement in decision-making, to environmentally responsible plant design, to dealers trained to avoid the high-pressure sales techniques typical of traditional car salesmen, Saturn sought to embody a 1990s model of corporate enlightenment. Recognized for its innovations in product design and production methodologies, the company received a great deal of positive publicity. At the same time, however, critics noted that its accomplishments were achieved slowly and at great expense.

INDUSTRY CLIMATE: 1950–1983

Saturn grew out of a particular climate within the car industry. Traditionally, the "Big Three" automakers (General Motors, Ford, and Chrysler) had built large cars, emphasizing features and comfort. The industry began to change in the 1950s when foreign car makers (notably Renault and Volkswagen) offered American consumers smaller cars at lower prices. Imports had claimed a 10.1 percent market share by 1959, but they were pushed back to a 4.8 percent share in 1962 after the introduction of the Corvair (GM), the Valiant (Chrysler), and the Falcon (Ford) in 1960.

By the late 1960s, the Big Three began to be challenged by Japanese car manufacturers. The Vega was GM's answer to the challenge. In 1968 GM announced that it would build the Vega from scratch rather than redesign another GM car. The finished product, introduced in 1970, proved disappointing. Vegas were prone to rust, and their aluminum engines warped. The Chevette, GM's more successful small car introduced in 1975, was nearing the end of its 10-year product cycle when GM began to work on a replacement, code-named the S car. In 1981 GM determined that the S car could be built much less expensively by Isuzu (GM had bought 34.2 percent of Isuzu in 1971). Its next small car (the Chevrolet Spectrum) was built in Japan. This series of events confirmed in some people's minds the suspicion that U.S. automakers couldn't produce small cars competitively. As smaller cars were widely believed to represent the future direction of the industry, the episode called into question the likelihood of the long-term survival of the Big Three. To address this concern, Ford initiated the "Alpha project" and Chrysler began work on "Concept 90."

At GM an internal project to build an affordable, high-quality, small car to compete with the imports was approved in May 1982 by GM Vice-Chairman Howard Kehrl in conjunction with Alex Mair and Robert Eaton, vice-presidents in charge of design and engineering. On June 15 Alex Mair sat down with engineers Joe Joseph and Tom Ankeny to sketch out the plan. By July the project had been dubbed "Saturn," a reference to the Saturn rocket that propelled the American astronauts to the moon during the space race with the Soviet Union.

The project enjoyed strong sponsorship from the highest ranks of the company. In keeping with the emphasis on consensus throughout Saturn, no one in particular is considered the project's founding father. In the words of then-GM Chief Roger Smith, "I don't know who is the father of Saturn around here. I think all of us are promoting it and pushing it. I've been hot for it but I'm not going to tell you that I started it, because that wouldn't be true."

Although the project was to be kept confidential, press leaks began in early 1983. As cooperation with the United Auto Workers union (UAW) was vital to the success of the project, GM had begun behind-the-scenes discussions with Donald Ephlin, the UAW manager for GM. By October, a joint GM-UAW Study Center was agreed upon.

Motivated in part by claims that the company was turning its back on the United States by building cars in Japan, on November 3, 1983, GM announced a new operating unit, the wholly owned Saturn Corporation, with an initial capitalization of $150 million. It would be the first nameplate added to the General Motors ranks since Chevrolet in 1918. Saturn would incorporate the latest technology available. The operations were to be completely computerized, with robots utilized to reduce direct labor costs, and flexible manufacturing techniques and just-in-time inventory systems introduced.

The importance of the project is evident in the wording of its announcement. Chairman Roger Smith announced Saturn as "the key to GM's long-term competitiveness, survival, and success as a domestic producer…. We expect it to be a learning laboratory," he said. "We also expect that what we learn with Saturn will spread throughout GM." He described Saturn as the key to improving every GM plant and product.

Key staff members recognized for bringing the project to this point included Alex Mair of the Technical Staffs Group, Bob Eaton of Advanced Product & Manufacturing Engineering, Irv Rybicki of the Design Staff, and UAW leaders Don Ephlin and Joe Molotke. Executives appointed to take the company forward included the former head of the Oldsmobile Division, Joseph Sanchez, as president; the former executive director of the Saturn project, Reid Rundell, as executive vice-president for strategic planning; John Middlebrook as vice-president for sales, service, and marketing; Tom Manoff as vice-president for finance; Jay Wetzel as vice-president for engineering; and Guy Briggs as vice-president for manufacturing operations. When Sanchez died suddenly on January 26th, William E. Hoglund was appointed president. Hoglund served until Richard G. "Skip" LeFauve succeeded him on February 3, 1986.

COMPANY PERSPECTIVES

Shortly after the first S-Series hit the road back in 1990, a unique tradition was born. Satisfied Saturn owners began dropping by the Spring Hill manufacturing facility to say 'hi.' After a few thousand visits, Saturn took the hint and renovated a horse barn on Haynes Haven Stock Farm. The original atmosphere of the place is still very much intact, a welcome reminder of the company's dedication to the people and the environment in which they live and work.

SATURN IS BORN

The company was launched. On December 19, 1983, a joint GM-UAW Study Center was announced. The following February, 99 people ("the Group of 99") were designated to identify key founding principles for Saturn and to search the world for the best ideas in all areas. The group consisted of a functional cross-section of people, including plant managers, superintendents, union committee members, production workers, and skilled tradesmen, as well as UAW and GM staff from 41 UAW locals and 55 GM plants.

The group split into seven functional teams to explore stamping; metal fabrication and body work; paint and corrosion; trim and hardware; heating, ventilation, and air conditioning; and powertrain and chassis. In all, the Group of 99 visited 49 GM plants and 60 other companies around the world. They made 170 contacts, traveled two million miles, and put in 50,000 hours of effort.

The group's findings were presented in April 1984. The keys to success identified included ownership by all employees, the assumption of responsibility by all, equality and trust among employees, the elimination of barriers to doing a good job, giving staff the authority to do their jobs, and the existence of common goals. Specific recommendations included the use of a conflict resolution process that had been developed by the group and the formation of consensus-driven partnerships within work teams as well as between the union and company management.

The search for a plant location began immediately after the company was announced. Two days later, Illinois Governor James Thompson became the first to visit GM, advocating a site in his state. By the end of the search process, 24 governors had paid visits to GM and 38 states had expressed interest. Donald Avenson, the Speaker of Iowa's House of Representatives, offered to pay half of the first year's wages for workers ($140 million) if Saturn settled in Iowa. Spring Hill, Tennessee, was confirmed as the plant site on July 30, 1985, and construction began in May 1986.

The plant was a mile long and a half mile wide, totalling four million square feet and consisting of four functional buildings: powertrain (engine and transmission systems), body systems (frames, exterior panels), vehicle interior systems (interior trim), and vehicle systems (final assembly). The facilities' core team, which designed the layout, included employees at all levels. The team considered unique lighting requirements in different areas; placed restrooms and cafeterias conveniently; and designed a sophisticated roadway that separated truck traffic from pedestrians, decentralized loading docks so materials arrived where they were needed, and ensured that no one walked more than five minutes from parking lot to work.

As controlling labor costs was crucial to competing with the imports on a cost basis, cooperation with the UAW was an important factor. During the 1980s GM had suffered losses and had laid off 170,000 UAW workers. The competitive environment spurred both sides to work together on improving the prospects for American car manufacturing. Al Warren, vice-president of GM's Industrial Relations staff, and Donald Ephlin, UAW vice-president and director for the General Motors Department, were instrumental in creating a strong bond between Saturn and the UAW.

On July 26, 1985, the UAW executive board approved a unique labor agreement for Saturn. It reduced the number of job classifications, allowed unprecedented flexibility in job content, eliminated work rules, and set pay rates at 80 percent of the base rate at other GM plants with the difference made up in performance incentives. All Saturn workers were salaried and participated in a "risk-reward" system in which they lost 20 percent of their pay if the company did not reach common goals (e.g., sales goals), but earned proportional bonuses if goals were exceeded. Each team managed its own budget, inventory, and hiring.

KEY DATES

1983:: GM launches a small car division called Saturn to compete against small, high-quality imports.
1985:: GM decides to build Saturn's plant in Spring Hill, Tennessee.
1985:: The United Auto Workers union (UAW) agrees to help Saturn design its company.
1990:: GM chairman Roger Smith drives the first Saturn off the production line on July 30; the first Saturns are delivered to a dealership on October 11.
1994:: Saturn's best-selling year; 286,003 units of the S-series are sold.
1998:: UAW authorizes a strike at the Spring Hill plant.
1999:: Saturn releases its second model called the L-series.
2000:: Saturn Ion replaces the S-series.
2002:: Saturn releases its first SUV called the Vue.
2004:: GM assumes more control of Saturn and restructures the entire division.
2006:: A new Saturn midsize sedan and two-seat roadster are introduced.

Training was an important part of Saturn's human resource strategy. Workers spent between 250 and 750 hours in training to become "job-ready." On the job, they spent a minimum of 5 percent of each year in training. Workers were acclimated to Saturn's philosophy through core courses on conflict management, consensus decision making, and team dynamics. They also received specialized technical training on machinery, parts quality, and working with vendors. The training program sought to promote teamwork, self-direction, initiative, and responsibility. In 1992, Saturn's success in managing human resources could be measured by the lowest absentee rate in the industry: absenteeism at Saturn was 2.5 percent, a far cry from the 14 percent at other GM plants.

As other elements of the company were being developed, product development staff were working on the cars. The first demonstration vehicle was completed on September 15, 1984. Although Saturn was a "no year" project (it had no set launch date), GM chairman Roger Smith was determined to begin production before he retired. He drove the first car off the production line on July 30, 1990, one day before he retired and turned the reins over to Robert Stempel.

The first truckload of Saturns was sent to dealers in California on October 11, 1990. By November the company garnered several awards, including the Popular Science "1990 Best of What's New in Automobiles" and an award from the Society of Plastics Engineers for its thermoplastic door panel. In June 1992 the first exports went to Taiwan. Annual production quickly reached 240,000 units, and buyers were lined up on waiting lists, but the company was still losing money. By 1993 Saturn expected to raise production to 320,000, allowing the company to turn its first profit; the product line included seven models of sedans, coupes, and wagons.

In developing parts and manufacturing processes, Saturn employed Product Development Teams (PDTs) consisting of manufacturing engineers, finance staff, materials managers, quality engineers, and UAW technicians. The teams decided what materials to stock and evaluated prospective suppliers for quality, price, and efficient organization.

In keeping with the "complete job-focus" philosophy, a part was manufactured from start to finish in one place. Ergonomics was another important consideration. Equipment, which was "low-tech and people-oriented," was chosen by its users and frequently adjusted to individuals. Whereas workers must crawl inside the vehicle to work on the cockpit of most cars, Saturn cockpits were assembled in a fixture that can be rotated for the comfort of the individual worker. A skillet system allowed workers to ride on a moving platform with the car as it moved down the assembly line. While the basic system was copied from GM's Opel facility in Germany, Saturn widened the platform and turned the cars sideways, saving 40 percent in floor space.

In the engine and transmission area, lost-foam casting was used on a large scale for the first time, providing casting precision, flexibility, material savings, minimal tool wear, and reduced machining. In making trim, plastic colors were mixed at the injection molding machine, reducing change-over time and costs. Other innovative production methods included an environmentally sound waterborne paint process and a method of testing transmissions with air rather than oil.

SERVICE AND MARKETING

Marketing was another central issue at Saturn. The first marketing customer clinic was held in San Francisco in March 1985, five years before production began. The car itself was designed to be adaptable to changing consumer preferences. Whereas older cars depend on exterior panels for structural strength, Saturns are structurally based on a strong "space frame" to which the exterior "skin" is attached, allowing for quick style changes. Saturn's marketing philosophy was concerned with bringing in "plus business" (non-GM buyers). Based upon the profile of imported car buyers, the targeted Saturn consumer would be an average of 38 years old, earning an average of $51,000 annually. A large percentage would live on the West Coast and 50 percent would be college graduates.

The Saturn Marketing Planning Team incorporated the ideas of 16 dealers representing 25 manufacturers. Led by Donald Hudler, the team studied distribution methods of 30 major U.S. corporations and came up with Saturn's Market Area Approach (MAA), which was announced on May 26, 1987. MAA set up 300 "territories" to be handled by individual franchised dealers.

Saturn sought the consistency of service lacking in the GM dealer network. In early 1989 dealers were invited to apply for franchises. Saturn dealers were trained in low-pressure sales and were encouraged to pay salaries rather than commissions. The strong demand for the car, coupled with significant dealership control over territory, enabled Saturn dealers to average twice the unit sales volume of other car dealerships. In addition, the August 3, 1992, Business Week noted that a 17 percent gross margin was built into the "no-haggle" sticker price (while other cars averaged 12 percent).

An important step in defining Saturn's marketing strategy was the selection of an advertising agency. Fifty agencies had applied for consideration by a review panel composed of two Saturn executives, two retailers, and a UAW representative, but the agency chosen was not among them. Thomas Shafer, Director of Marketing Services, felt that it was important to consider West Coast agencies since the small car market was most competitive there. As a result, the Hal Riney & Partners agency was named as Saturn's "communications partner" on May 24, 1988. Riney set about creating a "charismatic brand." He felt strongly that model names would detract from the Saturn name and insisted that the cars simply be called "Saturns," with numbers distinguishing various models. Dealerships would be called "Saturn of x" and colors would be "red" rather than the more pretentious "raspberry red." Saturn advertising was designed to be emotionally driven, with a focus on the human element rather than the product. In February 1989 the first print ad appeared, even though cars would not be available for more than a year.

In addition to external marketing work, Riney assisted the new company with internal communications. In April 1989 Riney produced "Spring, in Spring Hill," a documentary explaining the company to employees, suppliers, and the press. It was later aired as an infomercial. In the film, team members explained what the project meant to them. In the words of a Riney executive, "We wanted to get people rooting for Saturn, the company."

Saturn lost $800,000 in 1990 with calendar year sales of 1,881 units. 1991 calendar year sales were 74,493 units, and 1992 sales reached 196,126 units by December 31, with a substantial number of additional units back-ordered. In the 1992 model year Saturn earned a 2.8 percent market share. It was estimated that the company needed to sell 300,000 cars per year to make a profit. Increasing capacity significantly would require further investment in new facilities or the retooling of an existing plant. Building new capacity was problematic as GM continued to close old plants; retooling, however, also presented problems, as duplication of the innovations in the Spring Hill plant was a formidable task. In addition, there were few existing facilities large enough to accommodate the manufacturing of all necessary components at one site, as Saturn did in Spring Hill.

By mid-1992 Saturn cars had 95 percent domestic content and were ranked as the highest-quality American cars, with defect ratings rivaling those of top Honda and Nissan vehicles and customer satisfaction ratings outpaced only by Lexus and Infiniti. On the negative side, the company was far from recouping the undisclosed billions that GM had invested in it and was not operating at full capacity. In addition, an average of 35 hours of labor were required per car, compared to the stated company goal of 20 hours.

In an effort to transfer experience gained at Saturn throughout GM, the company moved several Saturn executives to other divisions. GM President and CEO Jack Smith, who succeeded Robert Stempel in 1992 after the latter's controversial ouster, talked about "Saturnizing" all of GM. Yet, as Donald Ephlin noted, "One of the things GM does very poorly is spread improvements across the system."

In 1993 Saturn was set to sell 200,000 cars, garnering 1.4 percent of the market. Commentators noted that while the cars themselves were not exceptional, the company was truly excelling at advertising and customer satisfaction, giving the Saturn mystique considerable weight. In June 1994, for example 44,000 Saturn owners and their families drove their Saturns to Spring Hill for a three-day "homecoming," a feel-good event in which the relationships between dealer and customers were further cemented. Saturn's sales had fallen, however, from a peak of 25,000 per month the year before to 15,000 per month in 1994. The drop was attributed to several factors. Despite building a reputation for having happy customers, Saturn was presented with several challenges in 1994. GM, which was short of cash, cut back on Saturn's advertising budget, which was halved; plans to expand the dealer network were put on hold, with 285 dealers serving only about 60 percent of the U.S. market; product enhancements, including a facelift and passenger airbags, were delayed from the 1994 to the 1995 model year; and modifications that would decrease engine noise were delayed until 1996. The car was also facing more formidable competition from domestic rivals, including the Dodge and Plymouth Neon. Michael Bennett, president of UAW Local 1853 in Spring Hill, stated that if Saturn didn't build a second assembly plant soon, the company was doomed to extinction much like the American Motors Corp., which was too small to survive. While the Spring Hill plant was capable of producing 325,000 cars a year, Bennett maintained that Saturn needed 500,000 to make a profit. Profitability was impossible for outsiders to assess, as GM refused to release financial data on the company.

In 1995 Saturn reached two important milestones, as its millionth vehicle rolled off the line after ten years of production. Reports indicated that the company planned to add a larger sedan to its offerings, to be built at a plant in Wilmington, Delaware, that was otherwise scheduled for closing. While this was good news for the line, other GM divisions were concerned that expansion by Saturn would cannibalize their own sales. By May, sales of the original line were up 17.5 percent for the year, in a segment that was down 14.4 percent overall. However, officials were concerned about the effects of Saturn's limited product line as the company's target market, the baby boom generation, grew older and became interested in trading up. For their part, critics continued to complain about the Saturn's dull styling and engine noise.

Nevertheless, the experiment continued, as Saturn took the battle for small-car dominance to its most formidable competitors' home turf, appointing six distributors in Japan in 1996. Keith Wicks, general director of Saturn Japan, stated, "We are convinced the high quality of Saturn cars, combined with friendly customer treatment and service at our Saturn retailer, will make a difference even for very discerning Japanese consumers." The right-hand drive vehicles were to be available in ten to 15 showrooms when sales began in 1997. Sales remained strong at home: president Don Hudler stated at mid-year that if the company could produce them, Saturn could sell about 50,000 more cars a year, a number that would generate about $600 million in revenue. In August General Motors confirmed that it would build a midsize Saturn in Wilmington. The car would be based on the same platform as the Vectra, a European offering from GM.

Noting that the car would be built at an existing GM facility, some observers took the decision as a sign that GM was serious not only about investing in Saturn's success, but also about spreading Saturn's accomplishments beyond Spring Hill, to the rest of the company. Drew Winter of Ward's Auto World wrote: "From a business standpoint, or even according to Saturn's own mission statement, it probably is too soon to call Saturn an unqualified success. But as sales remain strong, details of a global strategy continue to leak out, and GM's overall customer satisfaction shows marked improvement, it sure doesn't look like a loser."

In July 1998 the UAW squelched its sanguine relationship with Saturn when the union authorized a strike at Saturn's Spring Hill plant. Workers were unhappy about a proposal to outsource the assembly of future Saturns. They were also dissatisfied by the low-yielding goal-based bonus plan and skeptical about GM's long-term commitment to the Saturn brand. Much of GM's marketing budget was being used to stoke the popularity of GM's sports utility vehicles. The UAW only authorized the strike; it was never executed. Both parties resolved their differences by early September. At the year's end, Saturn's president Hudler was transferred to a new Saturn retailing unit. Hudler's vacancy was filled by Cynthia Trudell, who had served as president over GM's IBC Vehicles facility in the United Kingdom.

EXPANDING THE PRODUCT LINE: 1999 AND BEYOND

When Saturn finally did release a new vehicle in 1999 it was the ill-fated L-series, a midsize sedan designed to compete with the Toyota Camry and Honda Accord. The car was built at GM's Wilmington, Delaware, plant. After it was redesigned the L-series was renamed the L-300, and Saturn projected that it would sell 200,000 units a year. In reality, sales peaked at 98,000 units in 2001. In 2002 the L-300 was only ranked 19th out of 25 in a quality survey of midsize sedans conducted by J. D. Power & Associates Inc.

More new models followed. The Saturn Ion was released in 2000 to replace the S-series. Sales for the Ion were less than originally projected. Branching out from the small and midsize automobile market, Saturn released a gas-conscious SUV titled the Vue in March 2002. The Vue's 24 mpg gas mileage was achieved by using a system of pulleys instead of gears, keeping the SUV true to Saturn's alternative-car image. The Vue was criticized by automotive analysts for lacking style and entering the SUV market too late, but demand for the Vue steadily increased. Sales were up 6 percent in 2004 over 2003. Unimpressed, industry analysts predicted that the Saturn brand, which had cost GM billions, was nearing an end. Saturn's best year was 1994 when it sold 286,003 units of the S-series.

In 2004 GM executives decided that if Saturn was going to be profitable, they needed to shake up Saturn's infrastructure. To reduce manufacturing costs, future Saturn models would be designed to use parts shared by other GM divisions. Saturn's rewards program was also discontinued. Workers received a $3,000 bonus in 2004, and instead of rewarding employees when the company accomplished certain goals, the employees were told what their exact pay would be for the following two years. GM then assumed more control over Saturn's upper management.

In late 2004 the production of the unsuccessful L-300 ended. GM then promised to spend $3 billion producing new Saturn models. "You can say that we let the [Saturn] product get too long in the tooth, but I'm optimistic, confident, the new Saturn products will be very well received," Gary Cowger, GM's president of North American operations, said that year in The Globe and Mail. In late 2004 Saturn released its first minivan, called the Relay. Saturn then unveiled a convertible roadster, the Saturn Sky, at the 2005 Detroit Auto Show. Designed at GM's Advanced Design Studio in the United Kingdom, the wide-based Sky was one of the first Saturns widely praised for its styling. The Saturn Aura, a midsize sedan that was designed to replace the L-300, was also unveiled at the auto show. Neither the Sky nor the Aura were distributed until 2006. Favorable reviews about Saturn's new additions fanned excitement about the brand's resurrection throughout GM. In 2005 Saturn sold 214,000 vehicles, an improvement over previous years. Also in 2006, Saturn revealed hybrid versions of the Vue and a larger SUV called the Outlook to be available in 2007. Although Saturn still was not performing up to past expectations, and the auto industry in general was faced with enormous economic challenges, GM believed Saturn definitely had a future.

Mary-Sophia Smith

Updated, Paula Kepos, Kevin Teague

PRINCIPAL COMPETITORS

Ford Motor Company; Toyota Motor Corporation; DaimlerChrysler AG; Honda Motor Co., Ltd.; Kia Motors Corporation; Mazda Motor Corporation; Nissan Motor Co., Ltd.; Volkswagen AG.

Saturn Corporation

views updated May 21 2018

Saturn Corporation

SATURN RELAUNCH CAMPAIGN
WHY DIDN'T ANYONE THINK OF THIS BEFORE? CAMPAIGN

100 Saturn Parkway
Spring Hill, Tennessee 37174
USA
Telephone: (931) 486-5000
Fax: (931) 486-5059
Web site: www.saturn.com

SATURN RELAUNCH CAMPAIGN

OVERVIEW

After establishing a clear identity as a customer-friendly carmaker in the 1980s, Saturn Corporation, a subsidiary of General Motors Corporation (GM), lost its way in the late 1990s. To regain its footing, Saturn designed a new automobile, the Ion, in the early 2000s. Instead of turning over the marketing of the car to its longtime advertising agency, Publicis & Hal Riney, the company opened up the account to the bids of other shops. The winner, in early 2002, was Goodby, Silverstein & Partners, based in San Francisco.

Soon after hiring Goodby for the Ion account, worth approximately $30 to $50 million, Saturn decided to make a complete break with the past and relaunch the Saturn brand. It expanded Goodby's deal into a $300 million account that would encompass all of Saturn's advertising. The Saturn relaunch campaign, which stretched from 2002 until the spring of 2004, was supported by grassroots marketing efforts that involved dealers and included concert sponsorships and promotions at minor league baseball games.

The campaign culminated in the introduction in 2004 of a new tagline, "People first," replacing Saturn's first slogan, "A different kind of company. A different kind of car." While one of the television spots, "Sheet Metal," won prestigious awards, the campaign did not succeed in preventing the erosion of Saturn's sales.

HISTORICAL CONTEXT

Saturn Corporation was created in the early 1980s as GM's answer to the Japanese automakers that had been successfully selling small cars in the United States. Saturn's approach was unique for U.S. carmakers on a number of levels. Most notably the company replaced the traditional assembly line with flexible work teams and gave its employees extensive training in teamwork, self-direction, and responsibility. In addition Saturn established a "no-haggle" sticker price to appeal to customers who disliked the high-pressure sales tactics of traditional dealers. Years before the first car rolled off the production line, Saturn settled on its customer profile, which was similar to that of the imported-car buyer: people under 40 years of age with an average salary of $51,000, half of whom were college graduates. Because a major part of its market would be on the West Coast, Saturn in 1988 hired San Francisco-based ad agency Hal Riney & Partners (later called Publicis & Hal Riney).

Riney's goal was to build a charismatic brand. Thus all car models were to be called Saturns and distinguished only by numbers. The agency then crafted emotional advertising that focused not on the cars themselves but on the Tennessee town in which the cars were made, the people who built them, and the dealers who sold them. The idea was to get people to root for the company because they related to it. This approach was embodied in the tagline "A different kind of company. A different kind of car." Saturn's advertisements were pure Americana, warm and generous soft sells that told human stories.

Although Saturn was able to develop a mystique through its marketing, the company struggled to sell enough cars to make the venture a true success. By the late 1990s sales had become stagnant. In response Saturn introduced the L-Series midsize sedans and wagons in 1999. The advertising, however, failed to drive sales of these new models, leading some to question whether Riney's low-key approach had lost its edge and if a more traditional tactic might not work better. While Riney developed the advertising campaign for the Vue (Saturn's entry in the sport-utility-vehicle market), a new model called the Ion was in the works.

In 2001 Saturn invited competing ad agencies to bid on the Ion account, estimated to be worth $30 to $50 million, and it was won in 2002 by another San Francisco shop, Goodby, Silverstein & Partners. The agency's founders, Jeff Goodby and Rich Silverstein, were former protégés of Hal Riney who had left his firm in 1983 to start their own shop. Immediately after winning the Ion business Goodby inherited the entire Saturn account. Saturn's management had concluded that it was not wise to split responsibilities between the two agencies. Hence Goodby's task grew from promoting the Ion into relaunching the Saturn brand.

TARGET MARKET

Writing for Advertising Age in 2002, Bob Garfield maintained that Riney's "long-cultivated folksiness" approach to advertising the Saturn "attracted certain buyers but repelled many others. The same values that made Saturn appealing to middle-aged, female Consumer Reports subscribers made it uninteresting, even emasculating to men." In a separate Advertising Age article, Garfield described Saturn owners as "utilitarian souls who proudly wore their plodding not-quite-Nissans as badges of inconspicuous consumption." Aside from attracting more female than male buyers, the Saturn also appealed to an older market, with a median age of 44 for its owners. By not offering a version of the L-Series with both a six-cylinder engine and a five-speed manual transmission, the carmaker lost the business of younger drivers who wanted a more robust, fun-to-drive vehicle. A major reason Goodby won the Ion account was that its pitch appealed to these buyers. In its effort to promote the new Ion and to relaunch the Saturn brand, Goodby targeted small-car buyers aged 18 to 34 and attempted to reach a larger percentage of men than had previously chosen a Saturn.

COMPETITION

Saturn originally sought to compete with the Toyota Corolla and the Honda Civic in the subcompact sedan and coupé market, and during the mid-1990s it succeeded in luring a large number of buyers who had previously bought foreign cars. But when the brand was hot, cash-strapped GM failed to invest in bringing out new Saturn models, opting instead to put money into its Oldsmobile brand. While Saturn stood still, Japanese carmakers added features that it was unable to match. Moreover Saturn faced increased competition from South Korea's Hyundai Motor Co. and from U.S. automakers such as Chrysler, which introduced the Plymouth/Dodge Neon subcompact model in 1994. The L-Series, aimed at the midsize-car market, was supposed to be Saturn's salvation, but it proved a major disappointment, selling in far smaller numbers than expected. To make matters worse the company did not keep pace with changing consumer tastes as an increasing number of buyers opted for SUVs and luxury cars.

THE NAME GAME

At the time Saturn was founded, Japanese imports were luring large numbers of customers away from American cars. It was with a pro-American message in mind that GM chose the name "Saturn," a reference to the Saturn rocket that propelled U.S. astronauts to the moon, arguably the greatest technological feat ever accomplished by Americans.

MARKETING STRATEGY

Once the decision was made to move the entire Saturn account from Riney to Goodby, the two agencies shortened the usual three-month transition, and Goodby set to work. Its immediate task was to promote Saturn's newly redesigned small car, the introduction of which would be followed by the launch of the Ion and the redesign of the midsize cars. Instead of discarding the work done by Riney over the years, Goodby elected to build upon it and in some cases play off of it, as evidenced by the new tagline "It's different in a Saturn," which echoed Riney's "A different kind of company. A different kind of car." Nor did Goodby wish to abandon Riney's work in establishing Saturn's core values of honesty and integrity in the minds of consumers. Rather, the shop wanted to make the same points but with a little humor. The most significant departure from the Riney approach was to be an increased emphasis on the car; Goodby had concluded that, after a decade of advertising, the audience had already learned enough about the company. It was ironic, therefore, that the first major television advertisement Goodby developed for Saturn did not even focus on the car.

Jamie Barrett, a Goodby creative director, told Automotive News's Julie Cantwell how his team approached its task. After initial discussions about the car company and what it represented, the team began to focus on Saturn customers and generated concepts such as "people first" and "people before sheet metal." The latter idea became the inspiration for a television spot called "Sheet Metal," which set the stage for the commercials that followed. The concept was to show people pretending to be cars, punctuated by a voice-over at the end: "When we design cars, we don't see sheet metal. We see the people who may someday drive them." Saturn's marketing department instantly embraced the "big idea" nature of the spot, as did director Noam Murro of Biscuit Filmworks in Los Angeles.

Goodby developed four more ideas and then presented "Sheet Metal" before focus groups, where it "effectively bombed," in the words of Barrett, who wrote the script. Nevertheless neither Saturn nor the agency lost faith in the idea, although the reaction of the focus groups led the agency to add 9 seconds of footage of an L-Series car to the end of the 60-second commercial. In a review for Advertising Age, Garfield praised the spot: "The automotive body language of our car nation—from backing out of the driveway to sitting in traffic, to yielding at intersections, to riding the school bus—was reproduced, dead on, in actual body language … It was also beautiful. The choreography, cinematography, direction, and editing were crafted as if there were no joke afoot, and the accompanying piano etude by the Polish/French musician/composer Gregory Czerkinsky is a gentle and irresistible counterpoint."

Many television viewers found the "Sheet Metal" spot captivating, but it was important for other reasons. According to Garfield, "It was also a declaration that the old, clunky, homespun Saturn image was (if the advertising worked) about to change." Barrett told Alison Sloane Gaylin of Shoot that the spot "helped all of us understand what we were trying to do with Saturn. It created a reference point for us."

After creating the first spot, the intention of which was to shape the brand's image, Goodby fashioned product-focused TV commercials that built on the underlying concept of putting "people first" while also targeting younger car buyers. According to Jeff Goodby, the agency wanted to avoid the typical approach of selling cars to young people as "badges of cool." Rather, Barrett explained, the agency conceived of its target market as "young adults who are at an intersection—they are nostalgic about what they are leaving behind, but eager to make the move to full-fledged adulthood." Each of the four spots supporting the Ion launch in January 2003 showed four young adults driving in a car together through a town where everyone was experiencing the same life stages. For instance, in the spot called "Childhood" the passengers encountered an entire town of children playing on rocking horses, swing sets, and slides. Everybody was involved in the prom in one commercial, another portrayed a town devoted to college antics, and in the fourth everyone in town was getting married. Each spot closed with a voice-over that declared, "The all-new Saturn Ion. Specifically designed and engineered for whatever's next." Saturn hoped that the commercials would also appeal to older buyers, who could look back with fondness on their own passage through these stages of life.

"MORNING AGAIN IN AMERICA"

Hal Riney, the man behind Saturn's original soft-selling, folksy advertising approach, was also responsible for one of the most memorable television commercials in the history of politics, the "Morning Again in America" spot for Ronald Reagan's 1984 reelection campaign. The spot featured positive images of everyday people, portraying their lives as having greatly improved since Reagan had become president.

OUTCOME

Goodby's rebranding campaign, which employed the tagline "It's different in a Saturn," came to a close in 2004, when the agency introduced a new series of television commercials that used a streamlined tag: "People first." Research had shown that many people did not understand the line "It's different in a Saturn." As Barrett told Adweek, "We thought, 'Why get cryptic? Let's just tell people about it. Saturn is not about being overtly tricky or clever. We can get this done in two words.'" Although the agency was able to hone the Saturn message, it was not successful in selling more cars. After an uptick in 2002, sales in 2003 dropped 3.2 percent to 271,157 vehicles delivered, a far cry from the more than 1 million comparable entry-level sedans that Honda and Toyota each sold. "Sheet Metal" received a number of accolades, however. Primarily on the strength of the spot, Murro was nominated for the Directors Guild of America award for best commercial director. The spot also garnered the prestigious Gold Lion award for Goodby at the 2003 International Advertising Festival in Cannes, France.

WHY DIDN'T ANYONE THINK OF THIS BEFORE? CAMPAIGN

OVERVIEW

On November 1, 1998, the Saturn Corporation, a subsidiary of General Motors (GM), became the first car company to offer a three-door coupe when it introduced an updated model of its SC coupe. The third door, a rear access door, made it more convenient to load passengers and cargo into the back seat. Saturn hoped the innovation would shore up its flagging sales and carve out a niche for itself in the shrinking and highly competitive small-car market. Falling fuel prices and a vibrant U.S. economy had led many consumers to eschew smaller, more fuel-efficient cars like those offered by Saturn in favor of pickup trucks, sport-utility vehicles (SUVs), and minivans (vehicles collectively classified as "light trucks"). Saturn turned to its longtime San Francisco-based ad agency, Publicis & Hal Riney, to craft a campaign that would not only announce the coupe's arrival but also send a powerful positive message about the overall Saturn brand. The ensuing $40 million "Why Didn't Anyone Think of This Before?" television, radio, print, and outdoor campaign, which focused specifically on the utility of the third door, used the same quirky humor that had come to define Saturn's marketing.

The primary purpose of "Why Didn't Anyone Think of This Before?" was to highlight the practical elements of the coupe and to underscore Saturn's longstanding marketing position as a "different kind of company." Saturn had been receiving criticism for failing to expand or update its original line of small cars. In "Why Didn't Anyone Think of This Before," the company presented itself as the maker of innovative automobiles designed for the needs—from the utilitarian to the unusual—of innovative drivers. In one of the three commercials, for instance, a child stands alone in a vast, flat field playing "When The Saints Go Marching In" on a tuba. At the end of the spot, his mother arrives in a sporty red Saturn coupe. The third door clicks opens, and the boy climbs into the back seat with his tuba in tow. The message was clear: a Saturn three-door coupe could carry cumbersome items, offered easy access to the back seat, and was suitable for children. The commercial closed with a voice-over. "Arriving at last, from Saturn. The world's first three-door coupe. Why didn't anyone think of this before?" Two print ads that focused on the uniqueness of the third door accompanied the television spots.

Saturn planned to use the three-door coupe as a launching pad for additional new products. It expected to release its first midsize sedan (the LS) in 1999 and first SUV in 2001. Saturn wanted the coupe ultimately to be viewed as merely one facet of an innovative company. In any event, the three-door coupe and its supporting ad campaign proved to be unequivocal successes. Coupe sales rose immediately to unexpected levels, providing "one of the few positive notes in the small-car market," said the Sunday Gazette-Mail. Saturn continued to run "Why Didn't Anyone Think of This Before?" through the spring of 1999. "It was a launch campaign with enough life to last eight months," said Lisa Hutchinson, Saturn's marketing director.

HISTORICAL CONTEXT

Saturn was founded by GM in 1985 to convince young consumers to return to the flock of domestic car buyers. Years of bland products and bad press had convinced many U.S. consumers that American cars were inferior to Japanese imports, such as those made by Toyota Motor Corp. and Honda Motor Company. GM took care not to associate itself too closely with the Saturn name, and gave Saturn management free reign to institute more customer-oriented policies. When the first Saturns rolled off the production line in 1990, they managed to attract consumers who would not ordinarily even consider purchasing a GM vehicle. Saturn also revolutionized the often exasperating process of buying a car. Its dealerships were devoid of the high-pressure sales tactics and horse-trading that were so common in the automobile industry. Instead, Saturn used low-key sales representatives and set-pricing packages. Moreover, the company took pains to inculcate consumers with the notion that purchasing a Saturn was more like joining a community of Saturn owners and employees than simply engaging in a depersonalized financial transaction. Events such as the Saturn Reunion, a gathering at the company's plant in Tennessee to which all Saturn owners were invited, reinforced this image.

Saturn's advertising also stressed its distinctiveness among car companies. Since its inception, Saturn had used the tag line "A Different Kind Of Company. A Different Kind Of Car" in unusual ads conceived by Publicis & Hal Riney. The commercials were slice-of-life vignettes that featured actual Saturn employees and owners. Spots such as one that depicted a security guard who logged 100,000 miles on his Saturn without ever leaving his small town were "unexpected, understated, and unsurpassed in [their] ability to carve out a brand image," according to Advertising Age. "[They] had the most brilliant marketing campaign of any car in the last decade," a marketing analyst told the The Tennessean.

Although Saturn's small cars and unique brand image proved popular, rival companies were quick to imitate Saturn's friendly sales process and excellent service. In addition, the American small-car market grew more competitive, and U.S. gas prices were falling to new lows, undercutting consumers' interest in seeking out fuel-efficient cars like Saturn. Moreover, the booming economy produced more people willing to spend $30,000 or more for trendy SUVs. By 1998 the light truck market accounted for 51 percent of new car sales, while small car sales had plummeted 20 percent between 1997 and 1999. Saturn's troubles were compounded by its limited product line. With only one subcompact car—offered in sedan, coupe, and wagon versions—Saturn did not provide consumers with as many options as did competitors like Toyota. "Their life is dependent on how small cars are selling, and small cars have been tough to sell," an industry expert told AP Online. In the first nine months of 1998, Saturn's sales were 9.6 percent lower than in the same period of 1997, which themselves had been 10 percent less than 1996.

TARGET MARKET

Saturn's strength had traditionally been its appeal to young consumers. The two-door coupe was especially attractive to unmarried drivers who often traveled alone and liked its sports car-like style. The typical coupe was not, however, the most practical of vehicles. It was difficult for passengers to maneuver into the back seat through one of the two front doors, and it was also hard to access the space to stow even such cargo as groceries or laundry. As Saturn's core market of first-time car buyers began to start families, own pets, and grow a bit older, they came to favor roomier cars. Consumers with children were especially prone to disregard the coupe as a car choice. "Well, we've had a child now, so we'll have to go on to another product," said Dennis Aman, a member of the SC launch team. The debut of the three-door SC coupe was intended to address this problem. "We think the access door will … pull in some people who bought sedans before," Jim Ulrich, Saturn's chief engineer.

"Why Didn't Anyone Think of This Before?" reinforced this message by making children central to the campaign. In addition to the "Tuba" spot, Saturn also ran "Pick-Up," an ad that featured a father and a Little League team. After the coupe pulls into the driveway of a model suburban home and disgorges its passengers, a small boy dashes back to close the third door left open. These two commercials touted the utility of the three-door coupe by emphasizing the car's capacity to be a family car—with style.

While the campaign encouraged family-car owners to consider the coupe as a viable car option, Saturn recognized that the primary market for the coupe would still be its base of young, single consumers, who might not appreciate the car's ability to tow tykes and their tubas. A third commercial, "Mannequin," addressed these consumers. The spot opened with the scene of a young man waiting outside a restaurant as a woman leans on his shoulder. A Saturn coupe pulls up, and he proceeds to load the "woman"—now recognizable as a mannequin—through the rear door into the back seat. By stressing that the three-door coupe could carry any item, no matter how unusual, Saturn made its point to childless viewers. Moreover, even the commercials that did use kids as the focus did not resort to sentimentality. The edgy humor and quirky scenarios would draw in all viewers, with or without families.

COMPETITION

Saturn wanted to broaden the coupe's appeal because of the severe contraction in the small-car market. According to the Wall Street Journal, by 1998 "sales of conventional passenger cars have slumped to levels not seen since the early 1980s recession." As companies jostled to maintain market share in a shrinking pool of consumers, competition grew ever more fierce. In its bid to boost sales, Saturn was confronted by several rivals. In January of 1999, DaimlerChrysler AG debuted its model-year 2000 Neon, which it sold under both its Dodge and Plymouth nameplates. When the Neon was first launched it 1994, the company (then Chrysler) attempted to imbue the car with a likable personality. This "Hi" campaign anthropomorphized the small Neon. Although "Hi" was critically-acclaimed, DaimlerChrysler devoted $40 million to a new television, print, outdoor, and web banner campaign by BBDO Worldwide that began in March of 1999. "We tried to get away from cute, so the ads are more sophisticated," Arthur Liebler, a senior vice president at DaimlerChrysler told Advertising Age. The initial commercials were set to familiar song melodies, to which comedian George Carlin provided voice-overs of Neon-praising lyrics. In one ad, a Neon was shown in a field of sunflowers while Carlin intoned lines like "When your foot hits the gas and you're off in a flash—that's amore" to the strains of the Dean Martin classic. The Ford Motor Company's Escort was another challenger. In February 1998 Ford launched a new campaign created by ad agency J. Walter Thompson that encompassed the entire Ford division. These spots, which featured actor John Corbett, incorporated the tag line "Built to Last" into stories about Ford cars and their owners.

Saturn would also need to fend off imports to prosper. Toyota's Corolla received considerable media spending in the brand-wide "Everyday" campaign created by Saatchi & Saatchi, which debuted in the fall of 1997 and continued to run through 1999. The television ads incorporated the song "Everyday People" by Sly and the Family Stone and stressed Toyota's reliability. In March 1998 eight-page "Everyday" spreads appeared in major magazines like Life, People, and Time. In the summer of 1998 Toyota debuted the Solara, a coupe that directly challenged Saturn's SC. Honda's Civic also vied for the consumers Saturn desired. Although the model-year 1999 Civic was redesigned, Honda continued to use agency Rubin Postaer & Associates, which had crafted the company's advertising since the Civic was introduced in 1974. Spots for the Civic remained product-focused. Moreover, in March of 1998, Volkswagen AG launched its New Beetle into what the Wall Street Journal termed "a cutthroat market" and captured the bulk of the attention aimed at the small-car sector. To support the New Beetle, agency Arnold Communications conceived clever print and television ads that not only conjured up memories of the iconic original Beetle, but also proved popular among younger consumers.

MARKETING STRATEGY

"Why Didn't Anyone Think of This Before?" sought to carve out a distinct niche for the three-door Saturn SC coupe. To succeed in this venture, the campaign needed to make consumers take note of the coupe and its most unique aspect—the rear access door. This was, of course, no easy task since viewers were inundated with a virtual tidal wave of car advertising. But Publicis and Hal Riney strove to create ads that were intensely engaging and that captivated the viewer. One crucial aspect of this strategy was the initial teaser (or bookend) spot. Without revealing the brand or the product, Saturn aired a commercial that simply showed a child playing a tuba. During the next commercial break, the final version played, which showed the three-door Saturn coupe arriving and picking up the young tuba player. The goal was to entice viewers to wait for the follow-up ad and watch closely to see what product was being hawked with such an odd commercial.

Since Saturn hoped to reach a wide array of viewers, the company used national television as its primary venue. The campaign aired on an assortment of programs, ranging from 60 Minutes to shows that captured a younger audience, such as The X-Files and The Simpsons. This initial blitz was supported with print ads in both regional newspapers and national lifestyle magazines, such as Sports Illustrated, and newsweeklies. These print pieces broke new ground for Saturn. Rather than relying on its usual print method of presenting stories describing Saturn owners or employees, the company ran two mostly graphic ads ("Convention" and "Fox") that focused on the coupe itself. The copy was spare, the visual images striking and simple. Billboard versions of these spots were erected in major markets and made available to local Saturn dealers. Radio ads and point-of-sale material in Saturn dealerships provided the final elements of the campaign.

FROM THE MOUTHS OF BABES

The concept of the three-door coupe came from neither the company's design team nor from marketing planning sessions. Instead, Stuart Lasser, a Saturn dealer, suggested the idea at a meeting. His eight-year-old son had complained loudly about climbing into the rear seat of the family's two-door model. "Everybody just kind of stopped dead in their tracks and wondered why this hadn't been thought of before," a company representative told the Northern New Jersey Record.

OUTCOME

Despite the pessimism of some commentators who predicted the failure of both the three-door SC coupe and the campaign to support it, Saturn was so convinced of the coupe's potential that it made the three-door design standard. "It's going to bring a different customer into our coupes, a broader market," an SC launch team member told The Tennessean. After one month, Saturn's optimism was justified as sales rose. In December 1998 Saturn reported "its first month-over-month increase since April," according to the Sunday Gazette-Mail. Sales continued to increase through January. In fact, coupe sales were 28 percent higher than in 1997. Moreover, the portion of Saturn's overall sales composed of coupe sales rose from 15 percent to 20 percent. This double digit growth continued during the months after the campaign's inauguration. Even more striking was the fact that Saturn's coupe sales soared during winter months, normally a slow sales period for the sporty model.

The "Why Didn't Anyone Think of This Before?" campaign itself was also well-received. Advertising Age pronounced the commercials to be "marvelous." Marketing director Hutchinson told the February 8, 1999, edition of Advertising Age that the spots "broke through clutter and helped Saturn's coupe sales." The company continued to run the campaign through the spring of 1999, at which point it was shelved in favor of new ads touting the LS, Saturn's forthcoming midsize sedan.

Saturn Corporation

Saturn Corporation

Further Reading

Saturn Corporation

Saturn Corporation

Industry Climate Prompts the Birth of Saturn

The 1980s: Saturn is Born

Company Perspectives:

Service and Marketing for the 1990s

Further Reading

Saturn Corporation

Saturn Corporation

INDUSTRY CLIMATE: 1950–1983

COMPANY PERSPECTIVES

SATURN IS BORN

KEY DATES

SERVICE AND MARKETING

EXPANDING THE PRODUCT LINE: 1999 AND BEYOND

PRINCIPAL COMPETITORS

FURTHER READING

Saturn Corporation

Saturn Corporation

SATURN RELAUNCH CAMPAIGN

OVERVIEW

HISTORICAL CONTEXT

TARGET MARKET

COMPETITION

THE NAME GAME

MARKETING STRATEGY

"MORNING AGAIN IN AMERICA"

OUTCOME

FURTHER READING

WHY DIDN'T ANYONE THINK OF THIS BEFORE? CAMPAIGN

OVERVIEW

HISTORICAL CONTEXT

TARGET MARKET

COMPETITION

MARKETING STRATEGY

FROM THE MOUTHS OF BABES

OUTCOME

FURTHER READING

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