Penske Will Not Buy Saturn, GM Says Brand Will Be Shut Down

An abrupt end to Saturn’s salvation

By Brendan Moore

09.30.2009

Saturn logo smallIn an announcement that has taken everyone by surprise, Penske Automotive Group has stated that it is ending its effort to buy Saturn, citing problems with lining up a supplier for future vehicles after its initial agreement with GM regarding vehicle purchases ends in 2011.

Penske said they had reached an initial agreement with a manufacturer, widely believed to be Renault and its affiliate Samsung Motors, to sell cars produced by them, but that agreement was subsequently not approved by the manufacturer’s board.

“Without that agreement,” Penske said in the statement, “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.”

The news was immediately followed by a statement from GM that they would shutter the Saturn brand.

“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 president and CEO, 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. I’d also like to thank every G.M. employee and Saturn retailer who worked so hard to try to make this new beginning happen for Saturn.”

Saturn has 350 dealers in the US, and approximately 13,000 jobs in parts, service and retail entities are dependent on Saturn’s existence.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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17 Comments

  1. Well, ain’t that a kick in the nads.

    Where was the downside for Renault? Unless they’re planning on coming back to the U.S. under their own name?

  2. Renault was probably being asked to assume a significant amount of the financial risk (e.g. Penske would order X units but only guarantee payment for Y of them, with payment for the remaining units dependent on if/when the cars actually sold). At least, that’d be my guess.

  3. And thus ends the Saturn experiment once and for all. The whole thing is really a shame, from the immense resources that were plowed into that brand for the past quarter century (at the expense of other GM products that could have used the extra development money), the dealers and dealership employees who are losing so much, to the customers who suddenly own orphan cars. Bad news all around. Many have said that if Roger Penske couldn’t make this work, nobody could; I guess that’s unfortunately been proven today.

  4. The Saturns that are now on the lot are going to get a lot cheaper by the time those dealerships shut down. Could be a good buying opportunity since they’re the same as the Chevrolets.

  5. Jimbo:

    That’s an interesting answer. I hadn’t really thought about Penske asking Renault to have some skin in the game like you describe, but now that I think about it, it seems like something Penske might do.

    But I’m surprised that the guys at Renault would agree to that in the first place (even if the board did turn it down).

    Then again, maybe they thought that risk was well worth it to get their cars back in the North American market since any lossess would still be far less than the money they would have to spend to come back to the U.S. You know, there would be the cost of setting up a dealer network, parts network, service network, the marketing required to introduce the brand and sell the cars, etc.

    I don’t know, but you make a very good point as what might have happened.

  6. This was Roger Smith’s (of Michael Moore’s “Roger and Me” fame) brainchild.

    To have a division of GM some how become “separate and distinct” from the parent corporation when every cent of capital used to build and operate this one model company, with sedan, coupe and wagon variants (SL and SC), came from GM.

    You couldn’t negotiate the price of a car?? Well if consumers sure can negotiate the price of diamonds, real estate and the very homes which they live, all of which increase in value, why shouldn’t they be able to negotiate the price of a lousy mass produced car?

    The touted Saturn advantage of composite bodies that wouldn’t corrode (ala Corvette) didn’t fly, and there was a reversion to steel panels.

    Hyundai, which entered the US market about 5 years earlier than did Saturn with doubtful products, has since blown Saturn out of the water.

    If zeniths of the automotive annals like Packard and Studebaker couldn’t be saved when their final day came, why on earth should Saturn get another chance?

  7. good points, george

  8. Renault’s refusal still doesn’t seem to make sense as far as I’m concerned. Hell, just selling the Logan by itself would have probably equaled all of Saturn’s sales this year.

  9. You have to think the Nissan portion of Renault had something to do with this. Taking Saturn into the Alliance would merely create an in-house competitor to Nissan in the US market.

  10. Saturn should never have happened in the first place. Once it did happen, it wasn’t done right.

    GM has just been like a rat eating it’s own tail.

  11. Luke:

    I absolutely agree.

  12. Penske went after the wrong French car company.

    Peugeot and Citroen have better cars and no partner that’s selling cars in the United States. I bet they would gone for it, too.

  13. I don’t think Penske talked with anyone except Renault. He and Ghosn, the CEO of Renault Nissan, are friends.

  14. dflat, I didn’t know then Penske and Ghosn are friends, thanks for the tip.

    Come to think of it, I wonder if Ghosn might decide to step ahead once the economic conjuncture is more positive and decide to step in once again to search for the 3rd partner again and menage to win when he failed when he was approached in 2006 by Kirk Kerkorian during his brief stint at GM? This time, Ghosn might have the bigger part of the stick. Maybe he eyes on a more bigger cake then Saturn and he might will have the help of Penske to achieve his goal.

  15. It seems there is no time left now to pursue another partner. Too bad for Saturn.

  16. GM says there were around 16,000 vehicles on the ground when this news hit, and production of Saturn vehicles stopped the very next day, so that number should be pretty accurate. Hard to say how long it will take the Saturn dealers still in business to sell those vehicles and even harder to guess at how much discounting there will be on those cars as time goes by.

  17. I THINK PENSKE IS AN IDIOT FOR NOT TAKING SATURN AND WHAT FOR THEM TO SHUT DOWN. THE CONSUMERS WANT THE LINE BACK THERE NEEDS TO BE A WOMAN TO OWN THE COMPANY AND BE THE PRESIDENT OF SATURN SO THAT THEY WILL GROW . THE CAR LINE WAS SO SMALL THERE NEEDS TO BE MORE OPTIONS TO BUY THAN JUST SUV’S , CARS , AND SPORTS CARS. NO WONDER SATURN FAILED NOBODY HAD THE IDEAS BEHIND THEM TO KEEP THE DOORS OPENED. I WOULD LIKE TO SEE THEM COME BACK STRONGER THAN EVER AND GIVE GM A RUN FOR THEIR MONEY

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