Time to dump those Saturns.

G.M. to Close Saturn After Deal Fails

Published: September 30, 2009
DETROIT — General Motors said Wednesday that it would shut down its Saturn division by next year after Roger Penske abruptly cut off talks to acquire the brand.

Paul Sancya/Associated Press
Roger Penske pulled his company's bid to buy G.M.'s Saturn division.

The Penske Automotive Group said it could not proceed with the deal because another auto manufacturer, which it did not identify, said it would not build vehicles to be distributed under the Saturn brand name.

The decision by Penske Automotive stunned G.M. and Saturn dealers, who had hailed Mr. Penske, who has built a track record of successful turnarounds, as the savior of the brand that G.M. was forced to sell as part of its government-financed bankruptcy reorganization.

“Today’s disappointing news comes at a time when we’d hoped for a successful launch of the Saturn brand into a new chapter,” G.M.’s chief executive, Fritz Henderson, said in a statement. “We will be working closely with our dealers to ensure Saturn customers are cared for as we transition them to other G.M. dealers in the months ahead.”

There were no indications that the negotiations — first announced in June — were faltering.

But Penske Automotive said that an agreement with a potential manufacturer of future Saturn products had been rejected by that company’s board. Penske Automotive declined to name the company, but people familiar with the transaction said that the Renault-Nissan alliance had been involved in discussions.

G.M. had agreed, under its proposed deal with Penske, to continue supplying Saturn with three vehicles through 2011. Penske Automotive said that it could not acquire Saturn without a deal in place for the supply of future models.

“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. Thomas Pyden, a G.M. spokesman, said there were no plans by the automaker to seek other buyers for the Saturn division, which was created in 1985 to compete against the tide of small, fuel-efficient Japanese sedans that had become popular with American consumers.

Saturn’s 350 dealerships across the United States will close because of the development. The Saturn stores are known for their no-haggle, low-pressure sales approach and focus on customer service. None of the stores sells vehicles made by another G.M. brand.

Saturn dealers said Wednesday that they were blindsided by the news of Penske Automotive’s reversal.

“We’re all stunned,” said Mary McHugh, an executive with Saturn of Schaumberg near Chicago. “We didn’t get any communication from Saturn. We just heard it on the news.”

Under the proposed deal with Penske Automotive, the dealers were to continue selling three vehicles: the Aura sedan, Outlook crossover vehicle and Vue sport utility vehicle. Two models, the Astra compact car and Sky convertible, were being discontinued. Penske Automotive had already sent the dealerships new two-year franchise agreements to sign.

G.M., with the Penske deal now off the table, said it planned to stop building all Saturn models at the end of the 2009 model year, meaning almost immediately. Sales of the brand were down 58 percent this year, through August.

Penske Automotive, which owns a chain of dealerships and already distributes Daimler’s Smart car brand in the United States, had been in exclusive talks with G.M. for Saturn since June, beating out proposals from several other bidders, including a private equity firm tied to a Saturn dealer in Oklahoma.

Auto analysts had predicted that Penske Automotive could succeed in selling Saturns where G.M. had failed, mostly because of Mr. Penske’s reputation. The 72-year-old former race car driver is considered one of the savviest businessmen in the industry, and a specialist in turning around troubled automotive operations.

But Mr. Penske’s plans for Saturn depended on attracting another manufacturer to supply vehicles after G.M. cut off production.

“I don’t think he could find anybody who could give Saturn a competitive product line within two years,” said Joseph Phillippi, a principal in the firm Auto Trends Consulting. “It’s not surprising that a foreign automaker would not want to be entering the U.S. market now.”

G.M. said it would honor the warranties of all Saturn vehicles through other G.M. dealerships.

Saturn is one of four brands that G.M., which spent about six weeks in Chapter 11 bankruptcy protection this year, plans to eliminate in the United States.

It is shutting down Pontiac by the end of the year, recently sold Saab to a company in Sweden and has a deal to sell Hummer to a Chinese manufacturer.

G.M. also has agreed to sell a majority of its European brand, Opel, to a group led by Magna International, a parts maker, and the Russian bank Sberbank.

doesn't surprise me. GM killed Saturn years ago and made it a cookie-cutter GM company. I wouldn't want to buy that epic failure either. At one time, it was one of GM's most profitable companies where customers were actually happy... then they decided to make every one of their cars on GM platforms and the satisfaction tanked.

First Pontiac and now Saturn!? So there will only be 3 models in GMs lineup now!?

penske is a brilliant businessman. saturn made no sense without reneault. needs to be put out of it's misery, as does gm.

I don't see the bg deal

there are a hundred defunct car companies that couldn't make it

Packard

Stuedebaker

Edsel

American Motors


just to name a couple

if a car isn't profitable and not enough people buy it then why build it?

and remember american motors was a final effort to save multiple car companies if i recall correctly like nash and willy (which i think became rambler and jeep)

as the ceo of toyota-america once said, "there are no financial ills within the auto industry that a good car won't cure." i love how "buy american" has taken on a whole new meaning. there are more american made parts in a tundra than in an f150. toyota employs more americans than any other car company and build more cars in america than any other. and don't come back with "but all their profits go to japan". toyota's largest shareholder groups are made up of american citizens and investment institutions. and where do you think the capital required to build all those factories here came from? and how many american companies derive profit from doing business with toyota? then ask yourself how many companies are lining up to do business with gm?