Penske Backs Out; General Motors to Stop Saturn's Orbit

artistic saturn badgeIn a shocking last-minute decision made just a day before contracts were to be finalized, the Penske Automotive Group has announced that it has ended its discussions with General Motors to acquire the Saturn automobile brand. This very disappointing news comes after months of efforts by hundreds of dedicated employees and Saturn retailers who tried to make a new Penske-run Saturn a reality.

Sadly, as a result of Penske's decision, General Motors will be winding down the Saturn brand and dealership network, in accordance with the wind-down agreements that Saturn dealers recently signed with GM.

Penske's announcement explained that their decision was not based on interactions with General Motors or Saturn retailers; rather it was because of the inability to source new products beyond what it had asked GM to build on contract.

According to Penske, "Since announcing its discussions with GM on June 5, 2009, the company has been in the due diligence process to determine the feasibility of developing an independent distribution model for Saturn-branded products and service parts in the United States, including the sourcing of vehicles from GM and other potential suppliers. The company had negotiated a definitive agreement with GM to source vehicles on a contract-manufactured basis for a period of time. After this period, the company would have been required to source vehicles from another third party under a similar contract-manufacturing agreement."

That manufacturer was Renault-Nissan, the Detroit Free Press reported, quoting a statement from a Renault spokeswoman who said  "Renault has been in contact with Penske to supply cars, parts, and technology to Saturn through an OEM agreement. The conditions for an agreement have not been found."

The announcement is a tragic blow to the industry. According to a report at autoMedia.com, "Penske the man and organization is held in high regard, and this deal was considered the best chance for the future of the brand. The plan had been for General Motors to continue to supply vehicles through 2011, after which time Penske would source products from another automaker. This arrangement promised to shake up the century-old business model and provide unique opportunities. For instance, a Penske-run Saturn could have potentially drawn vehicles from multiple automakers, thereby giving Saturn great market flexibility, while limiting the potential liabilities associated with manufacturing that nearly toppled GM and Chrysler."

In a press release issued by General Motors yesterday, company President & CEO Fritz Henderson said this "disappointing news comes at a time when we'd hoped for a successful launch of the Saturn brand into a new chapter. We will be working closely with our dealers to ensure Saturn customers are cared for as we transition them to other GM dealers in the months ahead. I'd also like to thank every GM employee and Saturn retailer who worked so hard to try to make this new beginning happen for Saturn."

Terms of the wind-down process will be determined and communicated shortly. Saturn customers and owners will continue to be able to purchase and have their vehicles serviced at Saturn retailers during this process, and once the wind-down is complete, Saturn owners will still be able to have their vehicles serviced at other General Motors dealerships. According to the Detroit Free Press, the end of the Saturn brand could cost as many as 13,000 jobs at dealerships nationwide and General Motors.

Saturn was founded nearly 30 years ago by General Motors, and was promoted as a "different kind of car company," known at first for its bouncy, dentless plastic door panels and then better known for its hassle-free 'no haggle' pricing. Owners of the vehicles have proven to be quite loyal to their brand, as evidenced by their vocal community at IMSaturn.com

I'm sad to see this automotive brand go.


Jody DeVere, AskPatty CEO and PresidentJody DeVere
President and CEO
http://www.askpatty.com
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