Saturn: That Awkward Moment When GM Started a Japanese Car Company

Starting a company isn’t easy. Trust us — we’ve been there. Starting a car company — well that’s damn near impossible. The amount of capital, both human and physical, that is required is absolutely daunting. Since about the midpoint in the past century, few upstarts have been able to cope with the stringent regulations and vicious marketplace that is the automotive industry. This is why the seeming ethereal emergence of the Saturn company is so impressive, and why it caused more cocked eyebrows than Leo DiCaprio’s performance in Django Unchained.

In this article, we are going to be looking at one of the most fascinating companies to ever grace the automotive stage. A company that didn’t make the most innovative or even interesting cars, but a company that was built from the ground up to be new, innovative, and inherently competitive — and how it all went terribly wrong.

Mountain Thunder Cavaliers

To be perfectly clear, the human and physical capital but did come straight from GM. Thought up in the early 80’s as a small car concept, the Saturn was supposed to be a cheap, economical, and completely new entry level car. After several years, they had a fully functioning concept that was originally supposed to go under an existing GM brand. However, it ended up being its own brand, with its own dealer network and its own manufacturing plant, using its own people to build them. This was the beginning of something entirely new — and in many ways, something truly revolutionary.

Branded as a new type of car company, 1990 saw the birth of the first Saturn. By 1993, they had sold half a million. By 1995, they had sold a million. They had 1 model that came as a wagon, 4 door, and coupe. They had 2 engines, both inline 4 cylinders with single or dual overhead cams. They didn’t make a ton of power, and in many ways they were very spartan. But they sold a million in 5 years. That is one of the most impressive feats in automotive history.

Their marketing was fantastic as well. With taglines such as: “A Different Kind of Car Company” and “A Different Kind of Car, a Different Kind of Company” echoed the need for change throughout the automotive world. Because of the fact that they were in such close proximity to the hub of FedEx, they could transport massive amounts of replacement parts all over the world quickly and inexpensively — even going so far as to overnight a seat to a customer in Alaska (much to the chagrin of everyone who worked behind their parts counters).

In an industry that has typically been less than accepting, Saturn was a tremendous place to work for women and minorities. They were also an early adopter of clean manufacturing technologies — again in an industry that is also seen as one of the major causes of pollution. This commitment to doing things differently in the face of a changing automotive marketplace is something that many car makers have tried to capture, but few have had this level of success. It was basically Subaru, just without the AWD models.

An American Car Dressed Up as a Japanese Vehicle

Their business model was impressive too. They had a “no-haggle” policy that was very attractive to car buyers, especially on the lower end of the fiscal food chain. You would get the feeling if they didn’t have to put radios in them, they wouldn’t. Going back and driving these early examples, they really are just cars — as generic and bland but reliable as they could possibly be. And people loved them. They loved that the exteriors were plastic, and did not rust out. They loved that they we’re more about function than form. They loved their simple, reliable “Japanese” cars — that were built in Tennessee.

This is the real crux of the article. People had no idea where these cars came from. Moreover, they were going to start selling them in Japan, until their economy took a turn for the worse in the late 90s. By the end of the decade, there had been 2 million Saturns sold. However, of those 2 million Saturn’s sold, 41% of them were sold to customers that already had a GM vehicle. This made GM take notice and deem the brand cannibalistic, as it siphoned some $5 billion from other projects and makes. This lead to GM buying out the brand and putting their models onto established GM chassis.

Let’s look at this from the flipside of this coin. Yes, 41% of the Saturn’s sold were sold to existing GM customers, that means 59% were sold to people who didn’t own a GM car. That means that they sold well over 1 million cars to people who we’re not driving GM cars. And let’s not confuse that with a failure. Stealing 59% of anyone’s market share, is a really big deal. This lead to a snowball effect of bringing Saturn more in house to GM, and making sure that they did not continue to outpace their more established brands. This is quite possibly the worst business decision that GM has ever made.

When Your Success is So Great, You Drive It Off a Cliff

It is the opinion of many consumers that America cannot make a good, reliable, cheap car. We are not going to go into why that opinion is not correct in this article, but we are going to tell you how Saturn broke that claim. By making a car in the model of a Japanese car maker, Saturn showed GM what they were missing. We do not feel that the small, cheap, reliable GM cars of the 90’s were bad, but consumers did. They were constantly moving to Korean and Japanese cars for their low-end automobile needs and abandoning GM. By launching Saturn, GM filled a gap in their market share — because no one knew that it was a GM car.

The trouble only started for Saturn when GM started putting their name on them, and began expanding the platform to be more inline with their other makes and models. The Vue was an Equinox. The Outlook was a Traverse. The Relay was that godawful Uplander thing. The ION was the Cobalt and the Aura was the Malibu. The jig was up, leading to a massive loss of sales. Why would I buy this off brand Saturn when I could get a Chevy?

The grand experiment was over. GM had successfully created a Japanese car company out of the ether, sold millions of cars, and then due to infighting and a need for brand supremacy, drove it straight off a cliff. However, we still see a lot of these on used car lots, and a lot of them on Surfwrench. People still drive them, people still like them, and people still get them fixed. Because at the end of the day, “it’s basically just a Cavalier”. That’s right, what ultimately doomed the brand is one of the main reasons why people keep them around.

Dear Tesla,

There are many lessons to be learned from the sudden rise and fall of Saturn. In the 20 years that it cranked out cars, we learned that if you want to start a car company, you really need to have a lot of people who have built cars in your corner. “The 99” that started Saturn were all experts at building cars. The second lesson here: do not let any outside forces compromise your brand. If you’re making something your own way, and people come in and tell you to do it a different way, really examine the motivation of the people who are telling you to change. Are they as invested in the product as you are, or are they simply trying to cover their own ass?

That is not to say don’t take people’s feedback — feedback as we all know is what makes products better. The final lesson here is for those at GM: if it’s not broke, don’t fix it. You had a brilliantly simple, cheap brand that was making a lot of money. Yes, it was cutting into the number of Cavaliers and Sunfires sold, but all of that money ended up in the same place. Moreover, it was stealing money from your competitors — and that is important when you’re fighting for market share.