General Motors Corp. launched its Saturn division in 1985 as a "different kind of car company," one tasked with selling cars in a new way and competing with Japanese juggernauts such as Honda and Toyota.
The idea, simply, was to make money on the small, economical vehicles that had always been losers for the Detroit giant.
Now GM may be abandoning the brand altogether, even as it promises Congress it can recreate itself as a different kind of car company -- smaller, with a more cooperative relationship with its union, and a lineup of fuel-efficient cars to compete with the best of the foreign brands.
With its Saturn experience, at least GM knows how difficult the challenge will be.
A quarter-century ago, GM launched Project Saturn with the same goals. And it worked, for a time. Saturn owners, including many who traded in their Hondas and Toyotas to own the first models in 1990, became cheerleaders for the division's customer-friendly approach, while the United Automobile Workers union gave up many of its traditional restrictions to help Saturn succeed.
The brand became a media darling, and was featured on the cover of Time. "Can America still compete?" said the headline. "With its new Saturn, GM bets the answer is yes."
But Saturn quickly started losing its shine. GM executives cut spending on Saturn, and shoppers flocked to SUVs. Eventually, many workers resisted the new management style. Now the brand that was a symbol of GM's future will have a bit part, at most.
The sweeping restructuring plan GM released this week in hopes of squeezing $18 billion in aid out of Congress includes a pledge to "explore alternatives" for Saturn. GM officials say options include overhauling the lineup, partnering with another carmaker, selling the brand, or, potentially, sending Saturn off to the junkyard.
GM's Swedish luxury brand Saab might also be sold, and Pontiac will be transformed into a niche brand inside other dealerships. But the decision to potentially pull the plug on Saturn, the agile little startup that GM developed to reinvent the way it produced and sold cars, is a bitter reminder of just how deep the automaker's troubles run.
Saturn, after all, was created to do almost everything that GM, industry experts and many members of Congress say a modern car company has to in order to survive in today's market -- make a limited range of small, fuel-efficient cars, then sell them through a small network of dealers for a profit.
There was just one hitch. GM says Saturn never made a profit.
Saturn's simple, unfussy cars were designed to appeal to pennywise drivers. But the price point of the vehicles -- in recent years as low as $12,000 on some models -- was far too low to cover the costs of producing and marketing them, analysts say.
In response, the company drove up average sales prices on Saturns substantially, rising to about $17,000 two years ago and now averaging about $24,000. But to accomplish that, the company stocked the lineup with fancier, larger vehicles like the hulking Saturn Outlook sport utility vehicle.
It seats eight, starts at $31,000 and seemingly has nothing in common with the no-fuss economy sedans such as the S-Series, which debuted in 1991 with a sticker price of $7,995.
"To broadly stereotype, Saturn buyers are single women teachers," said Eric Noble, president of Car Lab, an industry consultancy based in Orange, Calif. "They don't need an eight-person SUV."
To some buyers, Saturn's marketing message still resonates.
Joseph Salzburg, a graphic artist from Richmond, Ill., said he bought a 2007 Saturn Sky sports car last year because he wanted to support the division.
"I bought it because of the reputation of the company and because I only buy American cars now," Salzburg said.
True believers in Saturn insist the concept behind the division could have kept GM from losing nearly half the market share it held when the first Saturns went on sale 18 years ago.
"I'm absolutely convinced that the Saturn way could have worked," said Michael Bennett, the first president of UAW Local 1853 in Spring Hill. "But what we had was never embraced or adopted."
Saturns no longer roll off the assembly line at the Spring Hill plant that was originally built just for Saturn. That factory today is used to build the Chevrolet Traverse, a crossover vehicle.
Bennett, like many others, can point fingers to explain why Saturn fell short of its promise. He blamed a lack of interest by the GM executives who succeeded Roger Smith, who as chief executive in the 1980s committed $5 billion to begin Saturn.
But those who followed him -- including John F. Smith Jr., who became chief executive in 1992, and GM's current chief executive, Rick Wagoner, who ran its North American operations in the 1990s -- had bigger worries.
They had to lead the company through the financial turbulence at GM in the early 1990s. And with managers at GM's other, older brands begging for investment, GM executives declared Saturn would have to prove it deserved more support, even though its small cars were accomplishing their main goal of winning buyers from imports.
Despite GM's pledge that Saturn would be run as a separate company, with its own car development and purchasing operations, it was folded into GM's small-car operations in 1994, and its lineup did not receive any new models for the next five years.
So far this year, Saturn sales are down 21 percent below 2007 levels, compared with a 16 percent drop for the auto industry as a whole.
Two years ago, GM announced plans to bring much of the lineup from its German division, Opel, to the U.S. and rebadge them as Saturns. The idea was to deliver high-styled yet efficient European-made cars that would compete with the likes of the Honda Accord and the Toyota Corolla.
The first such import, the Saturn Astra, arrived on dealership lots in January. But it sells fully loaded at just $21,000 -- and with the Euro skyrocketing against the dollar earlier this year, it became unprofitable at that price.
On the other hand, the small Saturn Aura that is part of the lineup based on vehicles from GM's European division, "might be the best undiscovered car in America," said Jack Nerad, the executive editorial director at Kelley. Aura sales are up 2.8 percent this year, while Saturn's sales overall are down 21 percent compared with 2007.
Mark LaNeve, GM's vice president for North American sales, service and marketing, said it was too early to be sure of what exactly would be done with Saturn. But in light of the company's current woes, he said, "it's very difficult to say we can afford the luxury of keeping brands that are not profitable."
The final option, LaNeve said, would be to eliminate the brand, something he says GM does not want to do. That may be partly because its contracts with its 211 dealers (who operate 425 stores) require payouts when a brand is shuttered. GM paid more than $1 billion to kill Oldsmobile early this decade.
Another hurdle would be the unusual franchise agreement GM has with Saturn dealers. With other brands, GM has unilateral decision-making power. But Saturn dealers have eight seats on a 16-member "Franchise Operating Team" and have a vote in major business moves, such as the decision this year to allow all GM dealers to sell certified pre-owned vehicles from all other GM brands.
That structure gives dealers such as Michael Greene, owner of Saturn of Whittier and Harris Buick Pontiac GMC in Southern California, some reason for optimism. He lost his Oldsmobile franchise in 2001 when that brand was killed, but in exchange GM helped him acquire the Buick Pontiac GMC franchise.
"I don't believe that Saturn will go away," Greene said. "I doubt very seriously they will close a brand they have put this much time and money into."
The New York Times New Service contributed to this story.
