Penske's Saturn: The Post-Modern Auto Company

Auto companies have traditionally been engineering and manufacturing businesses, rather than marketing and retail businesses. Henry Ford, for example, insisted dealers pay for his Model Ts as soon as they left the factory door. But what made sense in Henry’s time, and reached its apotheosis with the huge River Rouge plant, the most vertically integrated automobile factory in the world, has become a liability today. Auto plants cost staggering amounts of money to build and to run. And in an era where the manufacturing process no longer delivers major differentiators in terms of the finished product — all vehicles have to meet similar safety and fuel economy mandates, and the cost and quality differences between the best and the worst are getting smaller all the time — that’s money many auto industry insiders wished they no longer had to spend. Especially as what largely defines an auto company these days is not where its products are made, but how its brands are perceived by consumers.A Boxster is still a Porsche, even though it is built in Finland by Valmet. A Grand Cherokee is still a Jeep, even though it is built in Austria by Magna Steyr. Right hand drive Mercedes C-Class and BMW 3 Series models are still seen as German cars, even though they are made in South Africa.Which is why Roger Penske’s Saturn play is a stroke of genius. With Saturn, Penske has the opportunity to create the first truly post-modern auto company. Penske’s Saturn doesn’t own a single factory, design studio, or proving ground. What it does own — and all it needs to own — is the intellectual property of the Saturn brand. It’s hard to imagine a more perfect candidate to become a post-modern auto company than Saturn. Envisioned by GM chairman Roger B. Smith as an import fighter because of advanced manufacturing techniques that included a highly automated plant and plastic body panels, Saturn succeeded not because the original car was good — actually, it wasn’t even remotely competitive with anything from Toyota or Honda — but because it was cleverly sold and marketed. Saturn consumers bought into the defining promise of the brand — no haggle pricing and great customer service — rather than the physical attributes of the vehicle.Although GM has agreed to build Saturns for Penske for at least two years, future Saturn models may be sourced from a variety of automakers around the world (the latest rumor has Penske talking with Renault). Saturn could simply rebadge another manufacturer’s existing model, paying for U.S. market certification costs and minor cosmetic changes, or it could commission an automaker to design, engineer and manufacture a complete new vehicle. Either way, it could bring new models to market for way less capital cost than a traditional automaker. Finding someone with spare factory space to build Saturns won’t be hard: The world’s automakers currently have the capacity to build 92 million vehicles a year, but will be lucky to build 60 million in 2009, says respected industry forecaster CSM Worldwide. And with the global economy expected to recover slowly from recession, there’s going to be plenty of spare capacity around the world for a long time yet.All Penske’s Saturn has to do to succeed is sell cars and trucks that deliver on the promise of the Saturn brand. The actual vehicles can be made anywhere, by anyone, and as long as they are competitive with the mainstream players in their respective segments in terms of performance, economy, quality, and equipment levels, it almost doesn’t matter what they are, because the Saturn brand is mostly defined by a classy purchase experience. And if there’s one thing Roger Penske knows how to do with class, it’s selling cars and trucks.
Source : blogs.motortrend.com/6538063/editorial/penskes-saturn-the-post-modern-auto-company/index.html