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After Talks to Sell Fall Through, GM Says Goodbye to Saturn

Penske Automotive Terminates Deal Due to Concerns About Securing New-Product Source

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DETROIT (AdAge.com) -- It's the end of the road for Saturn, as General Motors Co. pulls the plug on the iconic car brand following an11th-hour breakdown in talks with would-be buyer Roger Penske.

The deal to sell the brand to the race car legend turned successful businessman was to have closed this month -- perhaps as early as this week. But GM President-CEO Fritz Henderson said late today that Penske Automotive Group "has decided to terminate discussions with General Motors to acquire Saturn," which he called "very disappointing news" following "months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality."

He said the decision was not based on interactions with GM or Saturn dealers; rather, Penske terminated the deal because it was unable to secure a source of new product beyond what GM would build on contract.

A Different Kind of Company

Saturn carved out a place in automotive-marketing history when it made its debut as GM's import-fighting brand in 1990 from a vision crafted by a skunk-works group given free rein in the mid '80s by then-Chairman Roger Smith. That group at Saturn hired Hal Riney & Partners, San Francisco (now Publicis & Hal Riney), headed by legendary ad man Hal Riney, and the agency created the memorable "different kind of car, different kind of car company" image that paved a new path for the category. Its marketing was ahead of its time, built on a backbone of strong customer service, relationship marketing and community-building among its owners.

Shirley Young, a former GM corporate ad manager, told the Saturn crew at the time that the launch ads would never work, but the brand's founding fathers (and mothers) ignored that advice, said a former Saturn account person from that agency. Mr. Riney "taught people what a brand is; GM still doesn't know what a brand is," the former account person said. "[Mr.] Riney ... was able to give a voice to what people wanted to believe in a car." And voice it he did by narrating early commercials for Saturn.

Image based on service
The brand built its image on impeccable customer service, and Saturn dealers were able to top even luxury brand Lexus in third-party surveys in that arena, a testament to the dealers.

Homecoming

Riney captured that essence in folksy commercials, including one in which "Julie" is celebrated by the entire dealership when she buys her first car, a Saturn. The agency captured the quirky differentiator of Saturn's polymer doors in an ad showing a baseball bouncing off it without a dent.

But GM starved Saturn for product. The brand sold virtually the same small-car model for nine years, yet still managed to reach its peak sales year in 1994, with 286,003 units. That year, thousands of owners from all over the U.S. drove to Saturn's "homecoming" in Springhill, Tenn., where its plant was, to celebrate their beloved brand during a rainy weekend.

Sheet Metal

Saturn moved the account in 2002 after a review to Goodby, Silverstein & Partners, San Francisco, as the brand was expanding its product lineup. Goodby created memorable ads such as "Sheet Metal" in 2002 (at the time considered a Cannes favorite, though it ultimately did not win) and "People First" in March 2004, which showed people moving about on roads without vehicles but as if they were in one.

Selling would have been 'stupid'
Deutsch, Los Angeles, came up a winner in 2007 when GM awarded it Saturn's national and dealer creative account without a review. Deutsch had a big job as Saturn expanded its line. But GM admitted last year it did not spend enough on advertising Saturn's new products, and GM terminated Deutsch a few months ago. The agency's last work ran earlier this year and was themed "We're Still Here" to get the word out that Saturn was still in business.

We're Still Here

But it's barely here: Saturn's U.S. sales through August are off 59% to 57,223 units vs. the first eight months of 2008.

Maryann Keller, an auto consultant with a firm bearing her name, said selling Saturn would have been "stupid," because GM would have ended up competing with one of its former brands. "We all felt sorry for Saturn because, at the end of the day, it was the orphan child inside GM."

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