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It’s 1981, and GM elects a new Chairman and CEO, Roger Smith. A GM lifer who rose to become company treasurer by 1970, he’s promoted to vice president in 1971, then executive vice president in charge of finance, before becoming the company’s Chairman and CEO in 1981.
The General Motors he inherits is solidly profitable with tens of billions of dollars in cash flow at a time when Chrysler Corp. was surviving with the aid of government-backed loans and Ford is losing billions of dollars. GM controls 43.5% of the U.S. new vehicle market, down from its 1962 market share of 51.1%, but still formidable.
But it’s a time of change.
Whereas American automakers once dominated their home market accounting with more than 90% of sales in 1965, by 1981, Japanese automakers claim an 18% share of the U.S. market, up from less than 4% a decade earlier, while the Big Three account for 74.1% of U.S. sales.
As Chrysler CEO Lee Iacocca advocates the federal government limit imports of Japanese cars, something the Japanese voluntarily agreed to do that same year, Smith vows GM will meet the threat by becoming more competitive — and few had reason to doubt him.
New ideas fail to halt sliding market share
But Smith’s ideas of competitiveness included destroying Alfred Sloan’s carefully constructed divisional product ladder that had served the company so well for decades.
He commanded that all GM cars — save the Corvette — become front-wheel drive. He partnered GM with Toyota to form New United Motors Manufacturing Inc., or NUMMI, to learn the secrets of Japanese manufacturing, a move that alienates customers, dealers and employees. But none hindered GM’s ability to compete so much as his next move: the formation of Saturn Corp.
This week in 1985, General Motors launches a new brand the first time in 67 years: Saturn. It was another attempt by GM to compete against surging Asian imports. Committing $5 billion to the new Saturn Corp. subsidiary, the brand would launch six years later selling the compact Saturn S1 sedan that looks like an Oldsmobile that was left in the dryer too long.
The brainchild of CEO Smith, who had come up through GM’s accounting office, Saturn was a subdivision of GM — an independent car company within General Motors. Marketed by GM as “a different kind of car company,” it was — for GM, that is.
A company within a company
Saturn was established in 1985, to better compete against Toyota, Honda, Nissan, Mazda, Mitsubishi and Subaru. It wouldn’t be a division of General Motors, but a subsidiary, an autonomous car company within General Motors.
This meant it had its own engineering, manufacturing, legal and marketing staffs and so on — an enormous duplication of effort. Smith hoped that by being independent of GM, its cars wouldn’t fall victim to the usual GM compromises.
But it saddled Saturn with enormous overhead that would prevent the company from being profitable, including its initial product: a modestly priced compact sedan.
Yet Saturn proved successful on a couple fronts.
For one, the company had its own plant in Spring Hill, Tennessee, governed by a unique UAW agreement meant to foster a strong union-management partnership. Its cars didn’t incorporate any existing GM parts. Its retailers were chosen from the GM’s best, and dealers were given massive, exclusive sales territories that prevented inter-brand price warfare.
GM even insisted on no-haggle pricing, perhaps the one lasting legacy of the brand. Marketers created a tagline that resonated with consumers, “A different kind of car company, a different kind of car,” going on to create the Saturn Homecoming festival, a Woodstock-on-wheels lifestyle event built around its cars.
And the car was different too. Dubbed the SL1, it used plastic body panels attached to a space frame, also used by GM on the 1984 Pontiac Fiero. This meant freedom from rust and the absence of parking-lot dents. But the plastic expanded and contracted, necessitating large, unappealing door gaps.
As for the car itself, it was extraordinarily average in both appearance and performance. Debuting in 1991, a year after Roger Smith retired from GM, its unique manufacturing and keen marketing helped make it a success — at least initially.
Success comes at a price
By then, Smith’s ideas on competitiveness reduced GM’s market share to 35%, and Saturn’s success would come at a cost, both to Saturn and GM.
It’s no secret that other divisions, principally Chevrolet, Pontiac and Oldsmobile were jealous of Saturn’s favored child status and the $5 billion it received. And with Smith being its champion, his retirement meant the new brand lost its most valuable cheerleader. When the company needed money to expand its line-up, Saturn was told to earn it.
Eventually, Saturn fielded a larger sedan based on GM Europe’s Opel Vectra, with GM spending $900 million to convert its construction to the familiar space frame/plastic body panel configuration.
It was a resounding flop.
It was followed by the Vue, a small sport-utility vehicle also using Saturn’s unique construction. But increasingly, Saturn was pulled into GM’s orbit, as the vehicles that were introduced, including the Sky roadster, the Aura sedan, the Outlook midsize crossover and an all-new Vue, lacked Saturn’s unique construction.
But the smart marketing that established the brand faded along with Smith’s reputation, and ultimately Saturn fell out of the GM constellation in 2009, after burning through $10 billion that could have been used for established GM marques that desperately needed the capital.
But the brand did prove popular, at least initially. But soon, it became just another GM brand as its uniqueness faded.
Saturn’s legacy
Ultimately Saturn did little to help GM fend off the Japanese juggernaut. In 2022, GM’s market share measured 16.2%, according to Cox Automotive, down from the more than 51% from 1962.
Today, Saturn’s Spring Hill plant is GM’s largest American facility at 7.9 million square feet. The plant now manufactures the battery electric Cadillac Lyriq, following a $2 billion renovation in 2020.
The facility will be joined by an electric vehicle battery plant, a $2.3 billion investment by GM and South Korean battery company LG Energy Solutions first announced in April 2021.
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