GM Inside News Forum banner

Five Years Later: GM's Loss Is Hyundai's Gain; Ex-Saturn Dealerships A Big Benefit

8K views 61 replies 33 participants last post by  SierraGS 
#1 ·
Automotive News

October 20, 2014

In the aftermath of the 2009 market crash, good retailers found themselves too valuable to disappear. Stores targeted for closure by one troubled brand were snapped up by a rising brand.

Hyundai, for instance, made a concerted effort to benefit when prime stores became available, says John Krafcik, then-CEO of Hyundai Motor America. "There were great General Motors facilities that were becoming vacant," says Krafcik, now president of the vehicle pricing firm TrueCar. "Hyundai moved in almost immediately with their dealer partners to occupy those facilities and retain some of those great people.

"We were very opportunistic, and, in particular, we were able to gain a lot of Saturn stores," Krafcik says, referring to General Motors' decision to eliminate the Saturn brand and its more than 400 franchises. Krafcik told Hyundai's retailers in 2008 that he wasn't out to create a lot of new franchise points. But Hyundai would look for opportunities to improve the existing network with better stores and improved street addresses, he says.

At the beginning of 2008, there were 787 Hyundai dealers. Today, there are 825. But more significant was a surge in exclusive Hyundai dealerships -- 621 today vs. 434 before the crisis. For the first nine months of this year, Hyundai has had a 4.5 percent U.S. market share -- up from 3 percent at the end of 2008.

"The Saturn stores we picked up came with people who had a Saturn mindset," Krafcik explains. Saturn had built a strong customer-satisfaction record by meticulously training its dealer network to create a positive retail experience.

"It was exactly what we were looking for," Krafcik says. "And as it turns out, there was a lot of similarity between Saturn customers and the Hyundai customer from a demographic and psychographic standpoint. So pulling some of these folks and their facilities into the Hyundai dealer network was a very positive thing for us."
 
See less See more
#2 ·
"We were very opportunistic, and, in particular, we were able to gain a lot of Saturn stores"
Hindsight is 20/20.

Closing the Saturn division may look like a huge mistake today, but back then Chevrolet needed product funding and so did Saturn - in the worst way. Saturn got the imported and doomed to fail Astra, GM had the Cruze coming.

I'm sure the choice was not difficult. Kudos to Hyundai for pumping cash into it's dealership network during the financial crisis.
 
#4 ·
A bad situation for GM, they did the right thing in closing Saturn. And Hyundai saw an opportunity and took it.

I do agree that a stand alone store is better than these mega dealers. I have a stand alone GM dealership a mile or so down the road from a megadealer that sells almost everything, including Jeep. Each brand has it's own building, but some, for example Jeep, I can barely find every time I need to bring my wife's Grand Cherokee in for servicing. And the experience seems so impersonal vs. what I get. I drive into the service area, a concierge takes my keys and leads me to the service desk. They then lead me to the waiting area and offer me refreshments. The Jeep mega dealer experience: drive around until you can find a spot to park your car in the overcrowded lot, find the small entrance to the service area where the indifferent guy takes your keys/info and tells you your car will be done in a hour, go wait in the uninviting (yet newly remodeled) waiting area for an hour only to find out they forgot to service your car.....
 
#5 ·
Good for Hyundai.

Retaining Buick was the biggest blunder of the screw the taxpayer era - but I understand - in order to get the Chinese to fund the bailout, Buick had to be retained since folding Buick would have hurt the Chinese more than US consumers (who bought Buicks here?). Since Saturn was becoming the US Opel, the transition would have been smoother here in the US than taking Opels and cross-dressing them into Buicks.

Buick is still a real non-factor here, but hindsight is 20/20.
 
#42 ·
Same thing with Saturn of Cool Springs in Franklin, TN.

https://www.google.com/maps/@35.9540476,-86.8152449,3a,75y,208.13h,83.8t/data=!3m4!1e1!3m2!1s43y_VCz1yrMXeOTkho-h-g!2e0!6m1!1e1

closing SATURN was the biggest idiot move ever made my GM. BUILT IN customer loyalty over 2 decades tossed to the wind.... no hindsight needed. It was a dumb move from the beginning and a far more idiotic move to saddle upscale Opels as rebadged Saturns.

GM had no idea what it was doing with the line up in the stable.
You act like GM didn't do things like this before opening Saturn.
 
#9 · (Edited)
closing SATURN was the biggest idiot move ever made my GM. BUILT IN customer loyalty over 2 decades tossed to the wind.... no hindsight needed. It was a dumb move from the beginning and a far more idiotic move to saddle upscale Opels as rebadged Saturns.

GM had no idea what it was doing with the line up in the stable.
 
#11 ·
"The Saturn stores we picked up came with people who had a Saturn mindset," Krafcik explains. Saturn had built a strong customer-satisfaction record by meticulously training its dealer network to create a positive retail experience.
As an ex-Saturn fixed ops employee, the "Saturn mindset" is not rocket science, nor is it anything out of intergalactic space. It's treating people right using honesty and integrity. Simple. Saturn tainted me because I have such high expectations comparative to what is provided by automotive retail operations. When I get fed up enough with my experiences to bring it to the facility's attention, I'm met with deer-in-headlights stares and silence. Truly a shame.
 
#13 ·
Shame Saturn had to go, but they had become a division like any other division. when the first saturn came out in the early 90s it was a very innovative car for GM, DOHC/SOHC engines, futuristic styling, 4 wheel independent suspension, polymer dent resistant panels. but the final lineup was impressive, but could all have been badged chevy, buick, or pontiac. and had competed with other GM brands for sales.

sad part was the no haggle pricing and great service also had to go elsewhere. my one trip to a saturn dealer i was amazed how nice and easy going things were. i did not buy anything that day but i would have had they not shut down a short time later. also surprised how it was an all female sales staff, never seen that before or since
 
#16 ·
but could all have been badged chevy, buick, or pontiac. and had competed with other GM brands for sales.
This is true. At bankruptcy, GM just had way too many brands and too many copies of the same cars. Saturn had become redundant. Hopefully some of the lessons of customer service from Saturn still live in the new GM. They do seem to be doing better in this regard, and my experience buying and owning my 2014 Silverado was been very positive so far.
 
#21 ·
I'll disagree slightly with some of you fellas regarding Saturn's product at the end. The problem wasn't the fact that they offered higher end models, it was the simple fact that they no longer offered true economy vehicles at all. That was their base and had been since the first stores opened in 1990.

Every "economy" brand that has moved up has followed the same pattern, whether it was VW, Toyota, Honda, Nissan, Hyundai, Kia, etc.: They continued to offer their economy cars alongside their new higher end models. That did not happen at Saturn. There was nothing for the typical S Series or ION buyer to buy had they come in for a replacement. The same goes for all those who knew that Saturn was an economy brand, but had never bought, and would come in looking for cheap transportation. The Astra was simply priced too high for these buyers. In many cases, due to financing, incentives, and the lack of factory support for the Astra (which I won't go into here), it was often cheaper for buyers to drive out of the Saturn store with a brand new Aura instead of an Astra...

Had they decided earlier to make Saturn the Opel of the West, the Corsa could've been designed to pass U.S. crash standards (Now, where have I heard that one before?) to become the new "S Series." I spoke to Jill Lajdziak regarding this in 2007 and she told me that the Corsa was going to be a Saturn in the "next generation." Not soon enough, apparently...

Yes, we all know that Saturn only posted a profit once (1994), but it was moving positively with the new product. It's not the brand's fault that two of its five models generated negative returns for GM (Sky & Astra). That was GM's fault, not the brand's. The Vue sold extremely well, as it had become well known in the industry. The Aura & Outlook sold well for being new to the market. I have no doubts that Saturn would've become profitable in the coming years with the Aura, Vue, Outlook, American built Astra (as was originally planned), and Corsa... The "new" Saturn simply wasn't around long enough (only 2 years) to make the brand profitable at the time of the bankruptcy.

Saturn's lack of profitability at the time of the bankruptcy was only part of its demise. Saturn was closed because the U.S. Government wanted GM to reduce the number of dealerships they had in their portfolio. The agreements that every Saturn retailer signed with GM stated that the brand could be closed at any time, without compensation to the owners, as Saturn was an "experimental venture." This was different than every other agreement out there. So, it was easy for GM to shed 400+ dealerships...

Now Hyundai & Kia have exploded in the market. They are building some nice machines and are earning their place as alternative brands to the domestics & Japanese. Saturn could've been GM's alternative brand. It does not matter that their models were similar to those offered by Chevrolet. It's branding that matters to many. Saturn was a quirky alternative brand with excellent sales facilities and very loyal customers... Everything that GM would kill for today. It's a shame that they've never learned from the experiment that was Saturn. For a failure, it had some true successes...
 
#29 ·
I'll disagree slightly with some of you fellas regarding Saturn's product at the end. The problem wasn't the fact that they offered higher end models, it was the simple fact that they no longer offered true economy vehicles at all. That was their base and had been since the first stores opened in 1990.
There are a lot of opinions as to what GM did wrong with Saturn and there is probably some truth in all of them. As a Saturn Vue owner I loved the brand, the buying process and the service. I totally agree with wrote (although I shortened it in the quote). I'd just add another mistake GM made with Saturn is they never recaptured anything to make them stand out or be a different kind of car company. When you have too many divisions or brands you have a great opportuinity to focus on what each brand means. Saturn was economy brand and could have become the green and fuel efficient brand. They could have been the brand to make standard the higher fuel effieciency versions, to use the mild hybrid drivetrains and to have been innovative small cars. Instead they became Oldsmobile - but even in the end they genereated a lot of sales per store.
 
#23 ·
Saturn of Grand Ledge indeed became a Hyundai dealer but the lady that owned it decided to close it a year or two ago. The one Saturn dealer in Grand Rapids remains vacant
 
#24 ·
Interesting reading. You could have said much of the same about Oldsmobile just a few years before. That they closed right when they had their best product in years, the dealers all got made over into competitors' sites, and that their "vision" was clouded at best. Neither made money, and there was too much within GM that was not making money (see Saab, Hummer brands, and many individual models). What's too bad is that there weren't some way of preserving just the very best of each and keeping it around. It just would really mess up the dealership channel strategy...

I can see it now. You could still sell Olds upper-range midsize cars, Saab 93s and 95s, low-frills Saturn small cars and and even the Hummer H3 in today's market. Oh, and I didn't forget Pontiac, either. They could sell at least a couple of performance-oriented cars like a Firebird and some kind of actual hot hatch (not a Vibe or convertible) that differed from Chevy, like maybe an AWD rally car...

And, then I woke up.
 
#26 ·
FWIW, my Saturn dealer turned into Buick/GMC/Cadillac. It's also a Sutliff dealer, which -- if anyone knows pre-90 history of the Saturn brand -- will recognize him as one of the dealer-owners involved in the planning of the brand itself.
 
#35 ·
AMEN to that.

As far as lessons learned? LOL, I wouldn't go to Vegas with those odds.:fall:
 
  • Like
Reactions: marinerbc
#37 ·
In NJ, the enormous Saturn dealership in Denville (Morris County) became an enormous KIA dealership - just in time to ride Kia's popularity wave. Years ago, when Saturn was sinking, that dealer sued GM to allow him to have a KIA dealership share the space with Saturn, but GM said no and the court backed GM. On the other hand, the smaller Saturn dealership in Livingston is now a liquor store, I believe.
 
#39 ·
Our Saturn dealership sold used cars for a little while for their sister Cadillac/Volvo store which was located on the same property with a separate building. They then bought up a local Subaru franchise, and haven't looked back since. I went with my son to buy a new WRX 2 years ago there. Same great sales staff from their Saturn days. My fine old gentleman salesman we had bought 2 Saturns from in the past, handled the sale & tradein as smooth as ever. He said he really wished they had been selling Subaru from the beginning. They seem to fly off the lot. He said the hardest part about selling Saturns was the set price, and only offering the S model for too long.
 
#43 ·
Reminds me of a great argument here on GMI...

GM spent $5 billion to start the Saturn project...they could have used that to build one hell of a Cavalier/Sunbird...
 
#47 ·
All the references here to Saturn as an "economy" brand might not be entirely correct. There was nothing necessarily economical about the original Saturn. It was bigger than its intended competitors of the time (Corolla and Civic) and was never any sort of budget cheapie car like a Tercel.

Saturn wasn't a modern-day Ford Falcon — some nasty budget item stripped down to a low price — it was a well-made, well-designed (if ungainly) and well-equipped contemporary small car that was in many ways superior to much larger offerings (it was better than the vile and ghastly Lumina). Many went out the door with transaction prices above that of the competition — hardly an "economy" job.

I think it would be more accurate to refer to Saturn's raison d'etre as purveyor of small cars than economy cars, as the two aren't necessarily synonymous...
 
#53 ·
I guess it depends on your definition of "economy." I still see the Chevrolet Sonic as an economy model, though you can certainly purchase vehicles that are priced considerably lower like a Chevy Spark or Nissan Versa.:)

The Saturn SL1 did have a starting price about $1,500 more than a base Toyota Tercel, which was considerable in 1991 terms. It was comparable in price to the Corolla & Honda Civic, though it was slightly larger than both... Which is not surprising as one of the cars benchmarked for the Saturn project was actually the Honda Accord, not the Civic. The Accord just grew a little by the time the S Series came out. The original Saturns were indeed built much better than their contemporaries and offered the relatively powerful DOHC engine, which is why I purchased one in '91. In 1991, the average new car in the U.S.A. cost just over $16,000. You could not equip a Saturn to reach that price. However, one could easily buy a Toyota, Honda, Chevrolet, Nissan or VW for considerably more than that. That's why I would define Saturn as an economy brand. It simply didn't offer a luxury or performance variant to its models in the 1990's. They focused mainly on economical transportation. But it's all in the way you interpret it...:)

Was Saturn a bottom of the barrel economy brand like Hyundai (at the time), Suzuki, or Yugo? No, of course not. Building good small economy cars is not necessarily the same as building small economy cars...;)

But even later on with the introduction of the L Series and VUE, they did not crossover into the upper reaches of mainstream pricing. You knew if you shopped in a Saturn store you weren't going to pay a lot for that mid-size sedan or small crossover... Things changed drastically in 2007...
 
#48 ·
One of the Saturn dealers here re-opened as a Hyundai dealer... and lasted less than a year. It is now a big chain used car dealership (Car Rite) which, ironically, often features used Saturns on the front line.
 
#54 ·
GM should have kept all of the Saturn dealers and sold the Volt there as the GM Volt and in time created a line of "Voltec" product sold using Saturn's "No-Haggle" pricing that was based on a reasonable feature/price points.

Saturn would have been the perfect "Green" Brand for GM and done wonders for GM's image and outflanked Tesla before they got started.
 
#58 ·
Never understood the need to close dealers in order to "make more money" when as has been illustrated by several posts, the "closed" dealers remained "Open" and cost GM sales revenue and profits.

Did GM need to get rid of some bad dealers?

Yes.

Did GM need to "thin out" some overlap?

Yes.

Did closing Saturn dealers help GM?

No, it cost them and the Feds money.

GM lost on sales and the Feds lost on dollars that went overseas to the home countries of new foreign cars sold in old GM dealers. Yes some of those "foreign" cars are more "American" than some GM cars but the money still ends up elsewhere, as do most of the tax dollars.
 
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top