GM to wind down Saturn as Penske deal falls through
BY TERRY MARTIN | 1st Oct 2009
Established in 1985 in response to the success of Japanese and European brands in North America, Saturn will now wind down in a move that threatens 350 dealerships and 13,000 jobs.
It is understood that dealers will have until October 2010 to wind down operations, although GM is still to provide details of the process, and has not indicated if negotiations have been restarted with previous bidders for Saturn.
Penske Automotive signed an agreement with GM in June to purchase Saturn, with the deal due to have been concluded by the end of last month.
The back-down is now certain to force GM to revise its post-bankruptcy restructuring program, which is dependent on US government rescue loans and includes the closure of Pontiac and the sale of Hummer, Saab and Opel/Vauxhall, the latter providing the basis for a number of Saturn models.
Penske Automotive, which is one of the world’s largest automotive dealer groups and the exclusive US importer of Daimler’s Smart ForTwo, has been in discussions with a number of car manufacturers to sell vehicles under the Saturn brand in the US.
One of these was believed to have been Nissan-Renault’s South Korean affiliate Samsung Motors, which builds the Koleos compact SUV sold in Australia and is also responsible for the forthcoming Fluence sedan.
However, in a statement released overnight, Penske said negotiations with an unidentified car manufacturer had fallen through, which in turn prompted it to terminate the agreement with GM to purchase Saturn.
“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,” Penske Automotive said.
“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 (PAG) negotiated the terms and conditions of an agreement with another manufacturer. 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.”GM president and chief executive Fritz Henderson described Penske’s decision to terminate discussions with GM over the Saturn acquisition as “very disappointing news” that came 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,” Mr Henderson said.
“As a result of PAG’s decision, we 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.
“Saturn customers and owners will continue to be able to purchase and have their vehicles serviced at Saturn retailers during this process. Once the wind down is complete, Saturn owners will still be able to have their vehicles serviced at other GM dealerships. We will be communicating with our customers very soon to explain the next steps in this process.
“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.”Saturn sales were down were down 56 per cent to the end of August, compared to the same period in 2008.
