FROM OUR ARCHIVES: How Saturn became major player in GM galaxy

From left: GM President Bob Stempel, UAW President Owen Bieber, GM Chairman Roger Smith and Skip LeFauve, Saturn's president, in 1990 with the first Saturn
This story was originally published 9/15/09

With the mammoth Saturn project, General Motors set out in the 1980s to find a new way to manufacture cars in America.

But Saturn's lasting legacy was a new way to sell cars.

In the beginning, Saturn's factory stole the nation's attention. GM, beleaguered by Japanese competition, wanted to prove that it could make top-quality small cars with the much-maligned American auto worker.

In the early 1980s, a committee of 99 GM managers and union representatives hashed out how GM could compete with the Japanese.

Under the plan that emerged from the wide-ranging discussions, Saturn workers at the plant in Spring Hill, Tenn., would learn consensus decision making. They would have ergonomic tools and less stressful working conditions. They would work a four-day week, giving them three-day weekends. The union agreed to resolve conflicts rather than striking. The corporation agreed not to lay them off in response to market fluctuations.

Meanwhile, GM undertook another campaign — to improve auto retailing — that was no less ambitious. The goal: Win customer loyalty by dealing with shoppers in an honest, nonthreatening, low-pressure way.

Customers would be spared the ordeal of haggling over price. Dealership salespeople would work on salary, as information providers, rather than pushing sales with high-pressure tactics. Honesty would reign. If all went as planned, showroom customers would look forward to coming back for an oil change or a second purchase.

Key Saturn events
1990: Saturn entered market
1995-98: Saturn topped industry in J.D. Power measure of customer sales satisfaction
1999: Saturn expanded into mid-sized car market with second factory in Wilmington, Del.
2002: Saturn ranked No. 1 in industry customer satisfaction for service, according to J.D. Power
2007: Original Spring Hill plant ceased Saturn production

Blank sheet

Among the young GM managers solicited to join the retailing project in 1986 was Jill Lajdziak, a 28-year-old Chevrolet merchandising manager. She took a pass.

"I had a Chevy bowtie tattooed on my fanny," she quips today. "I liked working for Chevrolet."

She would soon discover that this vague new project was seeking people like her who "had a mind-set for change," in her words. She joined the team to work on selecting dealers.

"We began to see that something new and different was going on here," says Lajdziak, who, 22 years later, runs Saturn Division as general manager. "Our task was to find retail partners who also wanted to be change agents. What we discovered was that some dealers got it and some dealers didn't."

Saturn's Jill Lajdziak: "Some dealers got it."

Big franchises

A guiding body of prominent GM dealers who did get it, called the Franchise Operations Team, slowly hammered out the brand's retailing ideas. Saturn would award large geographical areas as exclusive franchises, so dealers would not compete against nearby dealers of the same brand.

Saturn's stores would be exclusive, requiring employees to give their full attention to the brand. The stores would follow a consistent architectural plan, not unlike a fast-food restaurant chain. And most important, Saturn would post accurate, realistic and nonnegotiable prices. Customers would be assured that everyone was getting the same deal.

Many U.S. dealers wanted to sign on. As the car moved closer to market, GM received approximately 20,000 dealer applications. Identifying the true change agents among them required dealer principals to write essays about what they envisioned as Saturn dealers.

Lajdziak and her colleagues then dropped in to conduct seven-hour site visits with potential dealers. She and other Saturn representatives interviewed individual sales personnel, inspected service shops and examined financial and performance data.

End results

By the time Saturns began rolling into new dealerships in October 1990, customers were intrigued by an American-made small car assembled in an innovative Tennessee factory. But they also wanted to go shopping in what Burbank, Calif., retail consultant Mark Rikess calls "a safe haven."

"The no-haggle sales approach attracted a lot of people who disliked negotiating, particularly women," says Rikess, who has followed the Saturn brand from the earliest days. "In the benchmarking we did, we found that women tended to define sales negotiation as 'arguing.' Saturn gave people a way to avoid all the unpleasantness. It worked."

Nearly two decades later, much has changed at Saturn. Spring Hill ceased to be a Saturn factory, and the brand's products now come from different GM factories around North America and Europe. GM decided that maintaining separate manufacturing and product development for Saturn was inefficient.

But George Honiotes, owner of two Chicago-area Saturn stores, says the retail concept is still working as envisioned in the 1980s.

"Back then, in quiet moments, we really worried about whether all this would work, and whether customers would accept this idea of no-haggle selling," Honiotes says. "But they did.

"You're not going to sell every customer on a car this way. But you know, you didn't sell every customer on a car the old way either," he notes. "But in Saturn's approach, when it's all over, what you end up with is a customer that feels good about the car he just bought. And that's pretty much what Saturn set out to do."

You can reach Lindsay Chappell at lchappell@crain.com

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