The investment incurred to build and run Auto plants amounts to very high cost. The traditional model carried out by Auto companies was limited to engineering and manufacturing processes. Ford used to charge dealers based on model, the time they left the factory outlet, led to development of integrated automobile factory, “The River Rouge plant” which today has become a burden
The current scenario of auto industry today is entirely different, where in there is hair line margin between the best and worst, no longer there is much difference in terms of finished products and all vehicles meet the same standard, what defines best and worst is how brands are perceived by car drivers.
For example, Cherokee is considered still as a jeep even though manufactured by Magna in Austria and BMW 3 models are seen as German cars, even though they are manufactured in South Africa. It is very strange to observe, Penske’s Saturn does not own a single auto factory, design studio or proving ground, what all they own is intellectual property of the Saturn brand and that is what Penske stroke of genius.
Marketing strategy has become a vital tool for the auto company to sell their brands. Saturn has succeeded in the market although it was not much different from Toyota or Honda, but the smart way it was marketed with subtle promises of the brand coupled with excellent customer services and no haggle pricing
As per the current agreement, General Motors have agreed to build Saturn for Penske for a period of two years, there is talk from Penske, that future Saturn models may be sourced from variety of automakers around the world, the latest hearsay is Penske talks with Renault There is also possibility that they may re-badge the manufacturer existing models
According to CSM Worldwide, a reputed auto Industry forecaster, It would not be difficult to build 92 million vehicles a year, but the forecast for 2009 would be 60 million If the global economy would recover soon, the spare capacity could be higher
The Saturn brand is the driving force behind Penske success in selling the cars and trucks. The moral to learn is irrespective of vehicles made anywhere and by any automotive segment, the end result if it meets the performance, quality, equipment levels and economy, the purchase experience always would be on higher side.