Saturn Seeking Orbit
GM first made Saturn’s “strategic review” official in the bailout-begging, condition-floating context, although Lutz swears Ol’ Man Wagoner was on it months ago. Anyway, now that the industry has processed the news, there’s a rash of post-Saturn plans flying around. Our man in China seems fairly convinced that Chinese firm SAIC could make a bid for Saturn and its conveniently independent dealer net of over 400 stores. Another possibility that might be more palatable for GM comes from Automotive News‘ [sub] Richard Truett, who reckons the General could kill two birds with one stone, by “handing the keys to the Saturn brand to GM’s German affiliate, Opel.”
Of the many arguments Truett raises (kill the brand not the dealers, make Chevy dealers happy), perhaps the most necessary is offering up Saturn’s Spring Hill Tennessee plant to sweeten the deal. Unfortunately, Opel isn’t going to have cash to give GM, so it would “only” rid GM of a brand it doesn’t want. But guess what? GM doesn’t have to lift a finger to save its Saturn store owners, a fact I was dead wrong about on the very day this story came out. Ouch. Bad blogger. Automotive News [sub] quotes Mark Johnson of MD Johnson as saying the Saturn agreement “required dealers to sign the Federal Trade Commission’s Franchise Disclosure document.”
According to Johnson, “nobody at any car store since the beginning of time has ever signed one of those except Saturn dealers. The whole document tells you how you could potentially lose all of your investment through debt and losses through this franchise.” Saturn confirms this, with spokesfolks saying “everything was done differently with Saturn, and this was one of those things.” So, potentially no state-by-state franchise law battle for the dealer-driven brand. Still, the Chinese have cash. That’s fairly important to the GMs of the world right now.
Our Ken Elias clarifies: The Saturn franchise agreement is different as it was written under Franchise Disclosure rules and hence is a “disclosure” document which has lots of nasty language in it – kind of like an offering statement. It doesn’t negate state franchise law protections however – and Saturn dealers have the same rights as other dealers of other brands. Also, the Spring Hill plant produces Chevy Traverses. Saturn has no dedicated manufacturing. The idea of selling to Opel is absurd.
What is different apparently is that Saturn is set up as its own corporation – and it’s possible GM could just bankrupt that and thus terminate the franchise agreements. Dealers would have little to stand on as suing a bankrupt corporation with little or no assets gets too far. Of course, the suits would be broadened to include GM as well – and they’d have to pierce the corporate veil to get attachment to GM’s assets. We also don’t know if Saturn’s assets are pledged as collateral anywhere – as bankrupting Saturn could cause defaults to occur. Lots of unknowns.
More by Edward Niedermeyer
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GM "could" (if indeed Saturn Corporation still exists as an entity) sell Saturn off as-is to whomever it pleased, and the dealers would essentially simply be part of the deal since the sold corporation would actually hold the rights to the Saturn brand and automotive sales to all Saturn dealers. I was under the impression that the wholly owned Saturn Corporation had been re-absorbed back into the GM mother ship, borg style. But there is essentially no reason it could not be hived off back into a separate Saturn Corporation entity and sold (for a song and dance). The MOST logical buyer as far as I can see, would be SAIC, GM's "partner" in China. Reason? SAIC co-owns GMDaewoo with GM and Suzuki. SAIC also has a controlling interest in Ssangyong (also of South Korea). South Korea has a new free trade automotive agreement with the US. SAIC also just bought Nanking, which owns the MG brand and both SAIC and Nanking have rights to ex-Rover and MG cars. Can anyone else see Saturn car's line-up being essentially new from the ground up within 18 months? Saturn "could" have a full line-up. Any number of these cars: GMDaewoo have an A-class car (800cc or 1000cc) the Matiz; a B-class car (1600cc) the Kalos (Chevrolet Aveo); a C-class car (1800cc) the new Lacetti (Cruze); a D-class six cylinder car (2500cc) the Tosca; and an SUV (essentially the Vue). Ssangyong have a rear wheel drive luxury car (3600cc V6), the Chairman; a small crossover, the Kyron; and a slightly larger SUV, the Rexton. SAIC/Roewe + Nanking/MG have a 550 front wheel drive car (C/D class, 1800cc) and 750 front wheel drive car (D class, 1800cc and 2500cc V6) both based on the old Rover 75. IF GM also sold their Mexican plant to SAIC, the Vue SUV production would simply continue on as-is without interruption, and kits from China could be brought in for assembly, meaning the cars would be "built in North America" and eligible for sale in the US and Canada without tariffs. SAIC could even purchase the Pontiac "brand" and dealers, and offer two lines of separate vehicles. There's enough overlap from the companies which SAIC currently owns portions of or controlling interests in, to do two separate brands, even. Perhaps SAIC could simply take over Buick as well, since the SAIC-GM, Chinese market Buicks are so far and away nicer than the US units anyway! Plus most Pontiac dealers are now Buick dealers, too and vice versa. So why not even sell GMC to SAIC; GM could simply supply GMC with GM built pickup trucks to be sold alongside Ssangyong based Rexton SUV's (with ex-Mercedes 3.2 litre inline sixes). (Wouldn't that be ironic?!) Actually, the "old" Chairman is still in production (with said 3.2 litre inline six). Have a look. http://www.smotor.com/en/events/catalog.jsp And yes, it is based on Mercedes technology (as may clearly be seen) - properly licensed, unlike some Chinese companies which simply steal whoops I mean "permanently borrow" designs. Here are the Daewoo cars. http://www.gmdaewoo.co.kr/kor/index.jsp
Saturn was absorbed back in to GM. It stopped being a wholly owned subsidiary several years ago. If GM can palm it off on SAIC/Nanjing the way Daimler did Chrysler they could be done with it. It sort of makes sense in a way, given the GM/Asian joint ventures there. Having followed the absorption and revamp of Saturn over on Saturn Fans for 5 or 6 years now, it really appears there is nothing that isn't a derivative of some other GM model offered by the brand.Untangling the GM DNA from Saturn would be a nightmare. Just not much there to be sold. Even the VUE is slated to be used as the base for a Cadillac model IIRC. I guess if Hyundai can get it's legs selling old Mitsubishi models and Daewoo Opel designs under license, the same could be done with Saturn and SAIC/Nanjing. It could be the start of something really different. But they seem to have their hands full with MG, sorting out their own merger and relaunching in the UK. Adding Saturn would seem to be GM style bloat. And: how many of the Korean and Chinese cars would meet US emissions and safety standards in 18 months? Sort of the Chinese version of GM revamp played over on GMI : GM can survive and keep all it's brands just by doing this and this and this. If Saturn exists in any form after the current product cycle I would be surprised.