GM’s Ambitious Gamble

What happens in a country where the median household income has climbed to about $22,000 but the average price of a new car has soared to $12,000? What happens is that millions of consumers find themselves forced out of the new-car market, unable to afford what has pretty much become a necessity of life. That is exactly what has been happening in the United States.

The explanation for this unhappy condition is that American auto manufacturers, starting too late and spending too little, still haven’t mastered the techniques for building smaller, cheaper, high-quality cars that they can sell at a profit. Meanwhile, of course, a consumer-punishing import-quota system has drastically reduced the number of cheaper Japanese cars on the market. The result is a serious unmet need for good affordable cars. General Motors has now announced a highly ambitious plan that will, maybe, help satisfy that need.

The qualifier is called for because right now no one knows how much GM’s projected Saturn cars will sell for. Pricing will be fixed, GM says, depending on market conditions when the car first becomes available three or four years from now. Certainly GM intends for the Saturn to be a less expensive car. That’s why it has set up an entirely new company and adopted what for America is an entirely new approach to developing and producing cars. That’s why, with the help of the United Auto Workers union, cost-cutting labor practices and work rules will prevail in the Saturn plant.

GM plans to spend $5 billion to get the Saturn rolling. It not only envisions using state-of-the-art technology that can be applied in its other car divisions but also anticipates innovations that could put it in the international forefront of automotive manufacturing. This is a bold agenda. It is also a welcome one, for there is demonstrably an eager market for cheaper, highly fuel-efficient, top-quality cars. GM says it is confident that it can build such a car. We wish it success.