The other day I saw a billboard for 2010 models for Saturn, the soon to be defunct GM brand. I thought to myself “Who in the world would buy a Saturn now?” Saturn has always had the reputation of being a risky brand because they make their cars a little bit differently than the competition. My ex-girlfriend Julianne used to drive one. I thought that they were great right up until a driver suddenly decided to stop at a green light in some weird panic and Julie failed to break in time. That wasn’t the Saturn’s fault, but the repair bills were astonishing (and Julie was declared at-fault, and the other driver was unlicensed and uninsured anyway, so she had to foot that bill). It’s hard to imagine that the repair bills are going to get any lighter even if GM is saying that they’ll still service them. That’s the same sort of thing that makes me lukewarm on the prospect of buying an Isuzu (who recently pulled out of the US market).

Anyhow, for those of you that don’t know, Saturn was originally supposed to be bought by Roger Penske but that fell through when they couldn’t line up a manufacturer.

It’s a shame that a solid brand name and an existing distribution network is about to fall by the wayside. Presumably GM will incorporate as many as they can for their other badges, but since Saturn was a distinct enough brand that they’re going to have to worry about market cannibalism and will close more than a few. What’s interesting is that what Penske had in mind was a variation of what I was thinking that a foreign carmaker without an American presence should consider. I was thinking about it back when the dealerships were going to be cut loose and I had a slightly different idea, but it would apply doubly to Saturn and Pontiac and other to-be-discontinued brand names.

My idea was thus: An Indian or Chinese (or whatever) car company should consider buying a discontinued brand name from a US dealership. The most obvious one that came to mind was Geo, which was an import badge anyway (meaning that GM didn’t make Geos, they bought models from Suzuki and other manufacturers and rebranded them). Geos were known for being inexpensive cars, that Indian company (Tata) was known for producing inexpensive cars, so it would be a natural fit. Most people wouldn’t know that the new Geos were not the GM-branded cars of old, but it would at least be instantly recognizable. Then they could let the dealerships that were being cut loose on cannibal grounds (as opposed to profit/loss ones) in on the ground floor.

Penske had a similar idea, except with the less dusty Saturn brand. Get GM for a couple of years and then bring in foreign cars. An article in the New York Times was ambiguous as to whether or not these cars would be rebranded Saturn, though my impression is that they would have been. Saturn is certainly more expensive than buying the Geo brand would have been (if GM had been willing to sell it), but the distribution network in place was a much better idea than my hodge-podge gang of reject dealerships. Plus, Saturn is well-regarded by some while Geo is probably unknown by what would be Tata-Geo’s target demographic (young people). In any event, it looks like neither model is workable.

Of course, all of this is running around the fact that we are dealing with three automobile manufacturers that are unable to compete in the modern marketplace. It’s easier for foreign car companies to come into the US and make cars here profitably than it is for local manufacturers. The Big Three are bogged down in pension obligations and union contracts that soak up funds that could otherwise be directed towards engineering a better car. Maybe the recent re-orgs will work out, but it’s a shame that we can’t start over from scratch and deal on a level playing field with Hyundai and Honda and Toyota cars that are also built here.

And while I’m throwing my (ahem, relatively ignorant) opinions out there, I also wonder if one of the foreign companies that don’t have any existing contracts in the US couldn’t actually make a go at primarily selling through the Internet. I know that in my car search the dealership model is proving decidedly inconvenient. I’ve been contemplating the ramifications of going to a dealership and giving them a “Build a Car” from the dealer’s website, but the logistics leave a lot of room for maneuvering in the low-trust environment of auto sales (though Linus makes it sound like less of a hassle than maybe I fear). Instead, I wonder if there’s room for a business model out there where they can keep “test drive” vehicles at affiliated locations (I’m thinking used car dealerships, rental car agencies, or repair shops). Or make a deal with a rental agency and if someone wants a test drive they can rent the car at a special rate or an hourly rate or something and get a feel for it. But most selling would take place over the Internet. With their dealership agreements, it would be nearly impossible for a current automaker to sign on to such a model, but I think it’s something that one trying to break into the US market should consider.


Category: Market, Road

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5 Responses to The Explosion of Saturn

  1. Peter says:

    Your suggestion for a new type of car sales system makes plenty of sense but unfortunately would not be possible. Car dealers have a legal monopoly on new car sales in almost all states thanks to their extremely strong lobbying of state legislators.

  2. web says:

    and the other driver was unlicensed and uninsured anyway

    If the other driver is unlicensed and uninsured, they should 100% not have been on the road, and you should NEVER be judged “at fault” in that situation. It should be considered covered under your UM/UIM coverage, period.

    This at least in The World According To Web.

  3. trumwill says:

    Peter,

    I’d thought that the main issue was the contracts that the makers have with the dealers, but apparently you’re right. The applicable law in most states is that makers can only sell to authorized dealers. That being said, if a maker does not have any contracts with dealers, I think that there’s still room to maneuver within this framework.

    Most rental agencies have dealership licenses so that they can buy wholesale. Plus, going through a used car dealership would be workable. Since the used dealership isn’t competing in the new car market, they have less to lose by buying and then immediately selling the custom car and would probably be willing to sign “Will Not Haggle” contracts in exchange for making a little money on each car sold. And worse comes to worse, they could simply go with the Gateway Country model. Set up a dealership in each state (or multiple dealerships in areas where it’s worth their while) where they don’t keep cars on hand (except maybe for test drives, though I still think going through rental agencies is the better bet) but have people that can tell you about the cars and so on.

    Toyota and Ford can’t do this very easily because the second they try out anything of the sort they get enormous pushback from dealerships on whom they rely and with whom they have contracts. A new entrant into the market wouldn’t have this problem.

    The biggest threat would be a push on the part of auto dealers to “close the loophole”, but I think that it would be a pretty difficult loophole to close without raising the ire of used car dealers. Further, I think now more than in the 90’s, you would see a lot more pushback from the general public that has gotten really used to buying things online.

  4. trumwill says:

    Web,

    I agree that’s what the law should be. In Cascadia it actually is (I had a coworker from this area at the time). The same applies to drunk drivers, who are automatically considered at-fault because there would not have been an accident had they not been on the road. But in Delosa, they are very rigid in the notion that whichever car is behind the other in the case of a collision is considered at-fault. Having such a law has its benefits, because if you know you’re going to be at fault for any collision you’re more likely to maintain a safer distance, but I do think an exception should be carved out for people that shouldn’t be on the road because they’re drunk or unlicensed. Of course, that’s a convenient belief for me given my experience with Julie (as well as a near accident with a drunk driver that slammed on the breaks to slow down to 20mph on the Interstate… another story altogether and one I think I’ve told here before), but it does strike me as quite fair.

    I don’t think she had UIM insurance. I think she strictly had liability.

  5. Abel says:

    I’m not an American brand car lover by any means but was sad to see Saturn go. MG has owned a Saturn since 2001 — I now drive it to work every day. It’s actually been a great car. 8 years old and, aside from routine maintenence, the car’s had no problems.

    Since Saturn isn’t going to be around in the future, I plan on driving it into the ground then upgrading to a Toyota. 🙂

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