The Product Dies, the Brand Lives On
What's the difference among Ford, GM, Chrysler, Toyota, and Honda? Not only the amount of bail-out money each did or didn't receive. Before the economic downturn, each company had built a brand (in the case of some, multiple brands to correspond with each product line) that connected with consumers. They also manufactured different types of cars, trucks, and SUV's. So which is more important to their survival: product or brand?
Faced with asking for a huge loan from the Federal government, GM prepared a restructuring plan last month to show how it intended to pay back the bail-out funds. Among its goals was selling or phasing out three brands, including Saturn. When that prospect first surfaced in December, I wrote about how Saturn customers (including myself) were left hoping the company didn't desert them.
When GM announced plans to discontinue the brand in 2012, Saturn's GM sent a letter to customers assuring them Saturn was still committed to its founding ideals: no-haggle pricing, economic vehicles, and superior customer service. Within a few days, it became apparent the network of Saturn dealers was working to find a way to save the brand, even if GM wouldn't manufacture any more vehicles under the Saturn name.
I can see how it's tempting for GM, which just announced huge fourth-quarter losses, to focus on more profitable divisions in the short-term. The company sells more Cadillacs and Buicks, which also have higher margins. The question is whether that's sustainable. Saturn dealers are convinced that the future rests with smaller cars and more focus on customers. They want to buy the brand from GM and sell their own cars, which would be manufactured by anyone from Honda to Ford to Chrysler (to even GM). The constant wouldn't be the icon on the car; it would be the experience at the dealership. I know it sounds crazy at first, but just think about it.
Despite low sales numbers, Saturn owners are very loyal customers. The plan hasn't fully taken shape, but if done correctly the dealerships would be able to maintain their customer relationships and have more control over what kinds of cars they offer. What do you think? Is it the car or the experience that's more important?
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The interesting issue is that the Saturn range is based pretty much on top selling European marques. The Astra under the Opel and Vauxhall brand name here is a huge seller.
But in Germany there are major talks about delinking Opel from GM. One size fits all management has not impressed the Germans at all.
If that delinking happens then the putative new Saturn will be buying its cars from Opel and Vauxhall in the marketplace.
Saturn will lose all brand values if it goes into the used vehicle market. Dealerships run on a low and predictable inventory of spare parts delivered as Just In Time as possible. so broadening that will be a cash issue, not just cash flow.
Body shell sharing, for example, has half worked in Europe. SAAB and some other unrelated manufacturer shared a shell for a while. Engine sharing works too. But delegating entire vehicle creation? I guess that would work if a Honda or Toyota were to use a GM production plant!
You could do like we've done and sell our car industry to India and China!
Tim-
From my understanding (they haven't announced any specifics yet) there are two ways this could work:
1. Saturn acts as a second-hand seller of other brands like a CarMax currently does. They would buy Hondas, Fords, etc... directly from the manufacturers and compete on service against the other dealers.
2. Saturn hires the other manufacturers to create models specifically for them (i.e. use Honda or GM factories and labor). They would retain the Saturn label, but the cars would be manufactured by a variety of companies.
I don't know which scenario will happen (if either will) and personally I think the second would work better and avoid some of the pitfalls you point out.
If I have this right, if I am a Saturn customer and love all the cranky and quirky GM values, and this goes ahead, my next Saturn might be a badge engineered Toyota.
Well, apart from getting a much better car (0.9 probability), that means that my quirky GM values are gone.
But I loved(!) those, and so I don't want my badge engineered Toyota. See, the wipers are worked by the wrong stalk, which works reliably without falling off. I'm not used to that and I storm off in disgust.
I don't get my cars dealership serviced. When they are out of warranty I get a mobile mechanic to come to me. I really don't care about the dealership at all.
So how will this work?