Penske Backs Out of Saturn Deal; Brand to Wind Down
01 October 2009
Penske Automotive Group, Inc. (PAG) has terminated its discussions with General Motors Company to acquire the Saturn brand, citing concerns directly related to the future supply of vehicles beyond the supply period it had negotiated with GM.
Since announcing its discussions with GM on 5 June 2009 (earlier post), 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.
Penske Automotive Group negotiated the terms and conditions of an agreement with another manufacturer, reportedly Renault-Nissan; however, that agreement was rejected by that manufacturer’s board of directors. Without that agreement, the company has determined that the risks and uncertainties related to the availability of future products prohibit the company from moving forward with this transaction, Penske Automotive said in a statement.
As a result of PAG’s decision, said GM President and CEO Fritz Henderson, GM will be winding down the Saturn brand and dealership network, in accordance with the wind-down agreements that Saturn dealers recently signed with GM. Pursuant to the terms of those agreements, the wind down process will be determined and communicated shortly.
This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality. PAG’s announcement explained that their decision was not based on interactions with GM or Saturn retailers; rather it was because of the inability to source new products beyond what it had asked GM to build on contract.
Today’s 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.
—Fritz Henderson
Will more GM loans be in the next federal budget?
Posted by: kelly | 01 October 2009 at 05:49 AM
Economists have been saying that the world needed to shutter 4 or 5 car companies because of overcapacity. Saturn didn't have much of their own tech. It was mostly GM and Opel tech. Even though I owned one new in 1992, I'm pretty sanguine with them going away. If they had stayed more independent from GM a decade ago, perhaps we'd be driving interesting Saturns today...but, they didn't.
Posted by: HealthyBreeze | 01 October 2009 at 09:06 AM
I saw a new Saturn VUE the other day and it looked really nice. It is a heavier Opel based design, but they sure got the styling right.
Posted by: SJC | 01 October 2009 at 09:45 AM
Which one is next?
Posted by: HarveyD | 01 October 2009 at 02:11 PM
I wonder why Saturn did not survive and much of GM wind down.
Maybe it will. It's sad either way.
I understand that GM makes money on big cars, not small ones - but still.
Posted by: ToppaTom | 01 October 2009 at 07:02 PM
Apparently Renault did not want to get involved with the new Gov't GM (Renault was to provide the production?).
Posted by: ToppaTom | 03 October 2009 at 07:54 AM