There is an old adage on Wall Street: If Business Week calls a trend, sell and run. TTAC has followed the dalliances between China and Detroit for many months now. The rumors ran the gamut from SAIC buying all of GM to a small Chinese manufacturer picking up Hummer. So far, nothing materialized. Now, Business Week jumps on the bandwagon: “The last hope to stop General Motors Corp.’s wounded Saturn brand from falling out of the solar system appears to rest with some unknown automaker building cars for the dealers to sell. Chinese and Indian automakers, which have made noise about entering the U.S. market, would be the most likely suppliers.” A bit belatedly, Business Week made some calls.
They found Saturn dealers receptive to the idea. No wonder: selling Chinese cars beats closing a shop that’s not protected by state franchise laws. Writes Business Week: “Carl F. Galeana, who owns two Saturn dealerships in Michigan, said he would welcome a buyer from China or India, as it would keep the company going and bring innovation to the product line.”
Then Business Week called India. They could have saved the long distance money.
Predictably, Tata Motors spokesman Debasis Ray said the company wouldn’t be interested in the Saturn brand or its distribution network.
“We are happy as we are,” he said. Which was an exaggeration. Overlooked by Business Week: Tata is hanging on for dear life.
Mahindra declined to comment. They probably are sick repeating what they have said as early as December: They don’t have the money.
As for Chinese manufacturers to ask, Business Week could only remember BYD. They didn’t return the call.
Now why on earth would a Chinese or Indian car manufacturer be interested in buying Saturn of all people? According to Business Week logic, “Saturn’s dealers, with laid-back salesmen and no-haggle pricing, often match luxury brands’ scores in independent customer satisfaction surveys. Their locations could be a ready retail network for a foreign automaker to come to the U.S.”
There will be no shortage of willing car dealers when a foreign automaker will set foot into the U.S. What Chinese automakers need is a recognized brand with some technological know-how that helps them overcome their (real and perceived) deficiencies in the safety and quality dept. If they don’t want Volvo or Saab, why would they want Saturn?
“They found Saturn dealers who are receptive to the idea. No wonder, selling Chinese cars beats closing a shop that is not protected by the franchise laws.”
I don’t understand this. Are Saturn dealers not protected by state franchise laws that protect other dealerships?
“Carl F. Galeana, who owns two Saturn dealerships in Michigan, said he would welcome a buyer from China or India, as it would keep the company going and bring innovation to the product line.”
What innovation. Has anyone seen a Chinese car? It is the one thing that most have GM feeling better about themselves at night.
HUMMER’s will never ever sell again. Period. Not unless they manage to turn out an H2 that gets 100 MPG and is made of 100% recycled materials so that the “Greeners” can adore it.
Its really sad to see range rover and Jaguar go to Tata motors. The XF is such a nice car.
“are Saturn dealers not protected by state franchise laws that protect other dealerships?”
No, I guess when Saturn started, GM created different dealer contracts for them. I don’t know how it works, I am sure someone here can explain better than I can.
BTW, I have a friend that works at one of the Galena Saturn stores. Stopped in Friday to see how they were taking the news. They were playing cards, as no customers had walked in the place in several days.
Saturn was set upa as a wholly owned subsidiary of GM,was incorporated as an individual entity with Saturn specific rules for it’s franchises.It worked under a different union contract as well, a one page document that allowed more input between the workers and the management than the standard UAW agreement.
This is all show biz to keep up the pretense that Saturn will continue beyond the build out of the current generation of models.
They’ll probably still be trying to flog leftover 08 Astras in 2011.
Of course for some on the fan sites, this means everyone’s “excited” about the future direction of Saturn, sales aren’t tanking and everything is going to be lollipops rainbows and sunshine. Independence day from GM. Yay! No plant, no cars in the pipeline, no prospects. But, hey kids, let’s start our own car company !!! The level of denial is staggering.
The mistake is thinking there will be actual cars involved in a Saturn Distribution & Marketing spin off. Where will SD get it’s money with dealers closing left and right ? No sales to generate cash ? No lending going on, especially for such high risk ventures as a start up car company/distribution/marketing company with an untried business model.
And as stated above: no car company is interested in hooking up. No one is interested. As an independent entity the set up has nothing but real estate, warm bodies and a wounded brand to offer.
Any good will and reputation Saturn had built has been pissed away over the past 15 years, so even that is no reason to scoop up the dealer network.
This is called painting the deck chairs on the Titanic before rearranging them.
Even Chrysler’s viability plan is more concrete than Saturn’s.
Saturn couldn’t make it with unlimited GM funding since it’s root beginnings in the mid 80s. What fool would think it possible to make a go of it now. Perhaps with Cerberus as an investor, or Chrysler building minvans for them as they do VW ? There’s a recipe for black ink!
I’ve been a fan and have two Saturns currently, but GD stop all the bullsh*t, GM.
The only viable solution I can see, is a possible Opel/Saab/Saturn tie-up. Of all the possible deals, that is the one that makes the most sense. It doesn’t really make sense at all, thinking about it, my point is that it is the only possible solution right now, for better and for worse.
Ingvar:That would be an attractive grouping with a newly independent but still interlinked [platforms,engineering of Saab/Opel] Opel/Saab/Saturn and a ready made dealer network.
That is possibly the one solution that would be workable.
Think GM would sweeten the spin off/kiss of and Opel & Saab by throwing in the Saturn dealer/marketing arm ?
Well, the point is synergies… And they would complement each other, if they weren’t interlinked with the rest of GM.
The only problem I can see is: Would GM let go of an in the future possibly money making branch, while they’ll have to sell it for cheap today? An independent Saab/Opel/Saturn branch would be a future competitor to GM itself. Perhaps if they won’t get the money they want right now, they will risk less in the future by just liquadating all three together?
Saturn was a bad idea from the start. GM needed to fix the organizations it already had, not play Hail Mary by setting up yet another one.
Worth noting that Wagoner was quoted a couple of weeks ago that he thought GM could “hang on to Saturn”. This is his genius; he sees value where no one else does. Unfortunately, that no one else includes would be customers. Job 1 for the Fed. crew mulling the GM bailout is dumping this pretender; otherwise it’s money down the drain.
GM has played the game brilliantly, almost as well as Chrysler. Instead of dealing with their systemic problems years ago, problems they knew about as they were losing money year after year, they simply continued doing what they were doing as market share slipped away. Now that their situation has become hopeless, they have thrown themselves on the mercy of governments all over the world in the sure knowledge that it would be political suicide for most of those governments to let the car companies go bankrupt, putting tens of thousands of voters out of work. Wagoner has shown himself to be a genius, with no shame, standing at the table with his hand out for more and more cash, with the economy in tatters, and the threat of complete collapse in his other hand. Pay or face social unrest and marching in the streets. The governments have no choice. The domestics know it. The multi-millionaire investors in Cerberus certainly know it and know they don’t have to put any of their own money into a failing Chrysler because the government will save their investment. Heck, maybe even the captive imports will get a muzzle into the trough before it’s all over. After all, they have voting constituents in and near their factories too. As for Saturn, who cares? It was never GM anyway.
What Chinese automakers need is a recognized brand with some technological know-how that helps them overcome their (real and perceived) deficiencies in the safety and quality dept. If they don’t want Volvo or Saab, why would they want Saturn?
Because Saturn would be much cheaper than Volvo or Saab, give them a ready dealer network of 400 stores and still have better brand recognition than Changfeng or Chery.
The point is that the US market has too many brands and too many dealers. If I had a few billion $, I would sit back and wait a few years. If the US government keeps GM in business, then there is ZERO benefit to making an investment.
Compete against the US Govt.? Duh…
This is the pickle we have… If we stop the welfare, then GM dies. If we maintain the welfare, we attract no investment (foreign or domestic)…
I don’t envy Obama right now.. He needs the wisdom of Solomon and the speed of Michael Phelps…
Pay or face social unrest and marching in the streets. The governments have no choice.
The American Government is already so much in debt, it will only increase the social angst by dumping money in the insolvent, beyond repair GM.
I noticed that Hillary shut down the talk of Human Rights this week in favor of “Pretty please China, keep buying our debt”….
At some point people will need / want to sell our debt and the dollar will tank.
We had near panic when one commodity (gas) doubled in price. Imagine going to the store and your bill goes up 20% from the week before for the same food.
So then everyone will demand stable prices, but also no new taxes and to make it interesting we will be in debt up to our eyeballs….
Like a family who makes $20K a year, just coming back from a Disney vacation to find they were foreclosed on and so they go to the local bank to get pre-approved for a few hundred grand so they can go home shopping again.
Rock, meet hard place…
Saturn was never GM anyway?
Well slightly,I think: every dime,every engineer,every designer, line worker, nut and bolt and all the intellectual property were 100% provided and subsidized by GM. Saturn was a stand alone on paper, but it has been 100% GM all the time since it’s inception. It’s the purest essence of a “GM” car.
Ingvar: I think GM has held onto Saab and Saturn for so long as a possible money making branch, they’ve nearly bankrupted themselves waiting.
Perhaps they’d just be glad to be rid of the lot with the least trouble.
Besides, when did GM look further in the future than the next quarter anyway? Probably never even crossed their collective mind. Too busy planning the next “red toe tag sale”, I think.
Saturn of Gwinnett her is the Atlanta suburbs closed up shop a couple weeks ago without notice. Thier website is still up, offering President’s Day Sales…
What is Business Week smoking? There’s no “there” there. Saturn is a dead brand. They have rebaged generic GM CUV’s and rebadged Opels. The brand has no inherent value, other than the goodwill of some customers who like no-haggle pricing (which went away long ago).
Shut ‘r down and cut your losses. If GM can di without incurring state franchise law costs, so much the better.
Which, of course, begs the question: Why didn’t GM do this 3 years ago?
I don’t pretend to understand franchise law but if I were a Saturn Dealer, and as a Saturn Dealer, I was well known for very high customer service rankings…why would I want to A: continue to sell Saturns? B: have any desire to sell a Saab-Hummer-SAIC-Changfeng-Opel hodgepodge of cars that are not selling well?
Again, I don’t understand franchise law nor the arrangement between GM and my Saturn dealership…but, would I not, as a businessperson be able to utilize my great customer service rankings and go get a dealership from Honda, Toyota, Mazda, VW, Subaru, Hyundai or Kia?!?!? A brand that actually might make me money and has a future?
I think the tendency on here is to forget that most dealers own their dealerships and are able to make moves on their own…they do not have to follow lock step with the OEM’s wishes for which they deal…or do they?
If I were a Saturn dealer, I would be burning the phone line up everyday to my area Toyota, Honda and Hyundai-Kia district offices until I got me a new brand to sell…If I were those very same OEM business offices, wouldn’t I tend to look at Saturn dealers as a great opportunity to expand sales, especially since they already have great customer service?
Can someone with a good understanding of the dealer-OEM covenant tell us why that could or could not happen?
Keep in mind that most business owners are VERY optimistic. You would have to be in order to have bought / started a GM dealership in the last 10 years.
Many of these owners have poured every cent they have into these dealers. Mortgaged their homes, emptied retirement savings.. just one more month and things will get better… One more month and our luck will turn around…
In my experience, the line between a professional gambler and small business owner is typically pretty thin…
Buying Saturn would be a nice, easy way for a foreign manufacturer to quickly set up a US and Canadian retail distribution network. If would probably also be cheaper than doing it from scratch.
They could keep the Saturn brand or toss it out. The cars would certainly not have to be GM products. A buyer would be acquiring infrastructure, a name and perhaps a market concept and a brand, not GM vehicles.
It wouldn’t surprise me if this were to happen later this year. The dealers won’t necessarily benefit from the arrangement, though; whose to say that their new Asian overlords would give them better products to sell than did Detroit?
“There is an old adage on Wall Street: If Business Week calls a trend, sell and run.”
That bit of folk wisdom is underscored by a couple of BW covers I recall from the early 80’s or thereabout. One pronounced “The Death of Equities” (the stock market had no future, the Dow hadn’t topped 1,000 in ages). A “Driving For 55” story (cover photo of smiling GM execs, confident that under their exemplary leadership GM would soon command a 55% market share).
By the way, the Oklahoma City Saturn dealer just moved to a larger facility. WTF?
FWIW, Business Week was just regurgitating an Associate Press story, and a slim one at that. There are many more news “outlets” in the world now than there are actual news gathering organizations.
This is why “One Ford” makes such great sense.
There is absolutely no point to Saturn anymore – GM should use it’s European small cars as common worldwide platforms and offer them as Chevys in North America.
Even Chrysler/Fiat will use this strategy.
-Jeff
DrivingEnthusiast.net
“Ingvar: I think GM has held onto Saab and Saturn for so long as a possible money making branch, they’ve nearly bankrupted themselves waiting.”
I beg to differ. They have held on too long with too little investment. Lack of proper funding is why Saab hasn’t replaced the 9-5 for over a decade. The competition has gone through two or more cycles in between. Lack of proper funding in proper Saturns is why the Saturn portfolio is filled with rebadged Opels ang GM part-bins specials. Lack of proper funding, and lack of strategy. They didn’t know what they had, or how they could profit from it. They didn’t know where to go, or even where they wanted to go. In short, after twenty years with both Saab and Saturn, GM still looks absolutely clueless.
It is becoming obvious that Business Week has a laymen’s knowledge of the auto industry. At this point pundits are just throwing ideas into the wind.
Saturn has no unique product, unless you count different colors.
Saturn was always and only a different way to interact with the customer. That has been completed diluted away as well, since all the divisions are Saturn-esque in pricing now anyway.
I see no point to Saturn. None. Sorry Saturn-lovers.
Has any foreign automaker ever bought out an automaker to get a distribution network? Don’t the dealers buy the land and put up the buildings? Doesn’t it actually cost very little for a manufacturer to sign up dealers, who then build the “network” with their own capital? I don’t really see buying a “network” when you can get others to build it for you.
OK there is a lot more to a network than land and buildings, and all GM really has to sell is the contractual relationship between it and it’s dealers. I’m no lawyer, but I’m not sure the contractual relationship is transferable. This ain’t baseball.
In my view, the Saturn name is now worthless. Saturn no longer stands for small cars with plastic panels. It stands for re-badged GM cars – and who the hell wants to be selling those? (Except Opels, but you have to sell those at a profit) And after 2011 there won’t be any possibility of selling re-badged GMs.
If a Chinese buyer did come along, buyers would know the cars are Chinese made, and they’d be cautious – How many broken Chinese products have you thrown out this past year?
Could Saturn maintain a no haggle policy selling low-end Chinese-quality cars? I doubt it.
Isn’t the most likely way the Chinese and Indians would enter our market the same way the Japanese did – selling through established dealers who want another line to sell?
I say, stick Saturn in Uranus!
Saturn is calling this plan their new moonshoot. I call it an explosion on the launch pad.
The Chinese buyer part reminds me of an old Bob Seger (I think) where he sings of some woman ‘I checked the Bahamas and they said she was gone.’
It’s too bad. Opel-Vauxhall-Holden-Saturn-Saab-Shanghai (GM China) could all be managed as one global business if only GM NA (Chevrolet-Pontiac-Buick-Cadillac-GMC-Hummer) went byebye.
Flashpoint: “HUMMER’s will never ever sell again. Period. Not unless they manage to turn out an H2 that gets 100 MPG and is made of 100% recycled materials so that the “Greeners” can adore it.”
I don’t know Flashpoint, even if there was a technology that resulted in a 100 mpg Hummer, the Greenies would probably still hate it because that same technology applied to an aerodynamic sedan would yield 200 mpg.
“There will be no shortage of willing car dealers when a foreign automaker will set foot into the U.S.”
When the LSA category was approved a few years ago, there were more people wanting distributorships and dealerships than there were people wanting to buy the planes. Okay, I exagerate, but it was pretty close. I had little luck convincing any manufacturers that if their dealers were not flight schools, they were better off using a direct model (which isn’t a choice for car manufacturers).
Ingvar: what you said is absolutely true, yet GM gave Saab protected status because they believed it was their way to get a premium brand into Europe.
I’ve read that when asked about Saab’s place in the GM heirarchy that the execs never questioned the wisdom of having Saab and keeping it, the unspoken response being the reporter was stupid for asking.
And yet they spent nothing to develop it. Or Saturn. Unless it was to shove another SUV or clone crossover or minivan or an Opel based derivative into the line, they didn’t spend much on the other brands either. Totally clueless.
The question is why did they hold on to them for so long ? I think it’s both our answers. Profit sometime in the future. Via the GM way of business as usual for all brands.
Saturn as a future business proposition is no more relevant that your local neighborhood lemonade stand. Neither is capable of creating their own product line.
As a trainwreck saturn is going to be an interesting study of a failed business plan.