John McElroy: Why Saturn Failed

John McElroy from Autoline Detroit via AutoBlog: In the early 1980s General Motors launched a top-secret program to figure out how it could build a small car to successfully compete against the Japanese automakers. It was called the S-car program and the results of this study shocked top management at GM. It conclusively proved General Motors could not profitably build a small car in the United States that was priced against the Japanese — at least not under the current GM system. And that launched another study to figure out what it would take become competitive. GM concluded that it needed a clean-sheet approach to designing, engineering, manufacturing and retailing small cars in the American market. In other words, it needed a whole new car company. And so Saturn was born. To use a military analogy Saturn represented a beachhead for General Motors. It had successfully invaded enemy territory, and now had a toehold where it could capture import buyers. And sure enough, Saturn was definitely bringing in customers who otherwise would never by any other General Motors' products. Saturn walked away from its customer base. Instead of telling Saturn it had to live off its own cash flow, GM should have poured whatever it took into keeping that beachhead. Had it done so, the results could have been far different. But in the end the effort to save Saturn was too little too late. Just like Oldsmobile.

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