The Wall Street Journal reports that Roger Penske has pulled out of a deal with GM that would have kept the Saturn brand in business. Per the WSJ report:
The deal called for Penske to initially acquire vehicles from GM but eventually branch out to sell products from Renault SA (RNO.FR) and its Samsung Motors unit, which is based in South Korea. Penske Auto said Wednesday that it negotiated a supply agreement with “another manufacturer,” but that company’s board rejected the deal.
“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,” said Penske Auto.
Reuters confirms the story, adding “GM said in a separate statement it would wind down the Saturn brand and its dealership network.”
72 Comments on “Penske Pulls Out Of Saturn Deal...”
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Not terribly surprising really. One of those things that just never made sense to me. I guess the upside is that the remaing Saturn dealers should be anxious to sell off their stock. Although, some of the more recent models might be hard to find parts for. I realize that under the skin it’s a Malibu but any Saturn specific parts could get scarce.
Ouch…
Could be just a negotiating tactic. Get them to sell it to Penske even cheaper than before… like for $1.
Way to go GM! There was a lot of potential with Saturn at one time. But in typical GM style, they pretty much forgot about it because the next big thing kept catching their eye. The Saturns from the 90s weren’t bad. Imagine what could have happened if there was an actual plan to make it compete with Toyota/Honda/Hyundai. Oh well.
Wow. I am not really surprised, but there you go.
I think Penske made the right decision.
One of the reasons Roger does not fail it that he get his ducks in a row before making final commitments. Bad for GM but smart for Penske. GM knew they were not dealing with an amature.
Detroit tv is also reporting that Fritz said that Saturn is now toast. Apparently there were no other offers. 350 dealers and 13000 employees to be phased out. Sen Corker should be blowharding pretty soon.
I kept wondering how Penske was going to make this work. I guess he did too.
I hadn’t realized that this wasn’t a done deal. I am surprised he wasn’t able to find a foreign automaker to supply cars.
I suspect the problem was less finding a foreign automaker to supply product than the dim prospect of finding buyers for the cars.
Looks like the stock market likes Penske’s move as well — the stock is up 7.4%.
So absolutely no one waiting in the wings with a desire to enter the US market? Tata? Geely? Chery? Mahindra? Proton?
Pretty sad. I own two of them. Would have bought another, especially as I was counting on it no longer being a GM product.
Guess it’s time to trade them in and buy a Dodge.
@Gregg: GM is building just the Chevy Traverse in Spring Hill, TN and announced months ago that they’re consolidating Lambda CUV production in Lansing MI. GM Spring Hill closes this Thanksgiving.
Yeah, what foreign manufacturer refused to sell product to Penske? What manufacturer is in a position to refuse to sell product?
Roger Smith must be rolling over in his grave
This proves that once again Penske is the smartest man in Detroit.
Most exec`s could never bring themselves to pull the plug on a deal after it has been announced.
Just ask Ken Lewis how his purchase of Merrill Lynch tastes about now……
@toxicroach: I’m going to guess that Saturn sales have shrunk to the point where the expense of federalizing vehicles for US sales couldn’t be profitable.
They could just give it to the Chrysler bondholders. I’m sure that they could make a fortune from it.
(Yes, I’m being sarcastic.)
It ain’t over till the fat guy from GM sings.
I feel, better . . . not because Saturn employees, dealers and owners are screwed. But because I could never figure out the concept of building an entire OEM’ed car line. Apparently Mr. Penske couldn’t either, and he’s a lot smarter than I.
I don’t recall that sales of vehicles made by company A, but branded as company B’s, ever were very successful. Moreover, in the past, that practice has usually been used to fill a perceived niche in a company’s car line until it develops a similar vehicle of its own — such as the Honda “Passport,” a re-badged Isuzu sold under the Honda brand until the Pilot was introduced.
I realize that, for some time, Saturns have been rebaged products made by other GM division, but at least they were part of the GM family. The notion of an independent Saturn company selling cars manufactured by GM, Renault and God knows who else, just seemed too far out to be credible.
Apparently, it was.
Roger did a classic real estate move. He tied up the “property,” then went around the world looking for a supplier – terrific real estate with newer stores that aren’t overlapping and represented in all major and most midsize markets in the US. So during his “free look” period, no one would agree to a deal with him…afterall, making a full range of products from overseas that are “federalized” for sale here costs lots of money and time.
While it’s rumored he thought it would get Samsung/Renault, Renault’s board killed the deal since they likely figured that they’re already struggling with their Korean subsidiary with cars based off of Renault platforms that don’t meet US spec. Why should they assume all the time and expense only to end up competing with Nissan (44% owned by Renault)? Better to invest in products for Nissan.
The Indians OEMs are a non-starter for the US…and Mahindra’s already signed up its dealers for its still vaporware trucks. Tata (other than JLR), has no vehicles road ready for North America. And Maruti – heck, why bother since Suzuki ain’t making it work in the USA.
The Chinese? Why bother? Their market is growing like a runaway train…no point entering the competitive US market under someone else’s brand when the home front’s got enough potential.
MikeinCanada has it right…Penske knew it was time to walk.
Well, I’ll be looking into buying a mega-depreciated 3-door Astra XR in about three years.
____
Mark LeNeve will be out soon to declare this as yet another GM success.
It appears that there are a few smart people left in this business.
Just “selling cars to Penske” or “getting into the US market” is not that simple, even less so when you are doing it through some undefined umbrella of Penske and Saturn.
What would they be called “Renault by Saturn?” “Penske/Saturn/Tata?” Plus long term parts commitments, training etc?
Roger is the man for doing it right or not doing it at all.
Shame about Saturn, but they had their shot. Only 4 or 5 years ago the Aura won car of the year, and they couldn’t leverage that into sales, reputation or momentum. Zombie company if you ask me.
Interestingly, that dealer in the pic is by me. They at least closed gracefully, as opposed to a few other brands dealers that didn’t. Nice ‘thank you’ banner and take down the sign.
There’s a few BOP (BGP?) dealers out here with signage still up, and even one I know of on Long Island with signage up and a showroom that looks like a showroom, sans cars.
“It’s just a flesh wound.”
- Fritz Henderson
Roger Penske is not as dumb as GM thought he looked.
Any news on the Hummer deal with China?
Does this mean Saturns will be super cheap now?
What happens to replacement parts? Will they continue to be in production for only a few years? I’m clueless what this means in the long run, besides closing dealers and laying off Saturn works. Could someone explain!
This sucks for people who just bought their Saturns, who will see their car depreciate twice as fast as its Chevy/GMC/Buick equivalent.
I’d hate to own an astra right now. Parts are going to be hard to come by in a few years.
Seth L :
September 30th, 2009 at 6:39 pm
I’d hate to own an astra right now. Parts are going to be hard to come by in a few years.
GM sells a gazillion Astra-related products all across the globe, so at least you can look elsewhere to get parts for them. Also, they were barely federalized, so they’re almost identical to the cars being sold abroad.
Think about the Saturn-specific parts on the 1500 Auras, 25 Skies, and 3 Outlooks they sold…
Saturn was a bad idea from the start, and Penske’s plan made no sense. Don’t be in a hurry to pick up bargain basement new Saturns. Orphaned cars only get cheaper and cheaper.
“While it’s rumored he thought it would get Samsung/Renault, Renault’s board killed the deal since they likely figured that they’re already struggling with their Korean subsidiary with cars based off of Renault platforms that don’t meet US spec. Why should they assume all the time and expense only to end up competing with Nissan (44% owned by Renault)? Better to invest in products for Nissan.”
I never understood why Nissan-Renault would want to enable yet another competitor in the US market and one which would be using the same pool of vehicle designs. If Korean built Renaults make sense for the US market, then they should be sold and supported by the existing Nissan distribution network. It seems that Renault’s Board of Directors looks at this the same way.
# Seth L :
September 30th, 2009 at 6:39 pm
I’d hate to own an astra right now. Parts are going to be hard to come by in a few years.
Not only was the Astra sold in huge numbers outside of the US, it shares the GM Delta platform with the Chevrolet Cobalt. http://en.wikipedia.org/wiki/GM_Delta_platform The Saturn Aura shares the Epsilon platform with Chevrolet Malibu. http://en.wikipedia.org/wiki/GM_Epsilon_platform I think of Saturns as somewhat European flavored Chevrolets with a non-negotiable price.
3/11/2009
“Let me tell you what’s going on with Saturn, we’re still here”
Any reason why ANYBODY would trust these jokers??? I’d love to put this commercial up in RenCen on constant loop.
BTW, my linking skills, not so great. And when I go to edit, I get this:
“You do not have permission to edit this comment. – Close”
Thanks TTAC!
That’s awful news, and it’s a shame.
But I’m with the others on this board who had no idea how Penske was going to make this deal work. It made sense in theory, but in practice…?
RIP Saturn…we barely knew ye. Or maybe we did, and that was the problem?
Sell it to the Russians to compete with Opel!!
Quagmire. “Peace with honour” (or it’s equivalent) comes next remember.
Saturn was a HORRIBLE idea from the start. Instead of implimenting a nUMMI based JIT system at their lordstown plant (where the crapalier was made), making the cavalier a decent car then expanding the nummi JIT system to the rest of their plants they wasted billions on a new platform+engine, plant, and dealer network. This resulted in starving the other divisions of funding needed to re-design their models AND making a new brand that stole sales from them!!!
Talk about burning the candle at both ends, classic GM
Merkel reelection. No Opel for you GM.
Now that leaves room for Mr. Penske to import Holden’s. No fancy “Pontiac” only bits, just straight from the factoryand cheaper. Just remove the Holden Badge but leave the name plates “Omega”, “Belina”, “Calais”, “SS”.
Also reading news reports that Holden is trying to sell the Commodore as a Police vehicle to several states, this would give them an independant foothold not beholden to the Spindoctors and marketing guru’s in GM/Pontiac/Chevrolet. Plus the fact that most surviving GM service centres will be able to work on the cars (not being a “foreign” import)
Please help me understand the business logic here.
Current Saturn cars are based on GM Europe car models.
These cars are probably GM’s best “world-class” cars. They are competitive with VW offerings in North America.
These Saturn cars already meets all US and Canadian emissions and safety requirements.
Many consumers, especially on the East and West Coast prefer European-based cars.
Saturn dealers were probably among the best GM dealers in terms of good customer relationships.
Given these factors, why doesn’t GM:
1. Sell these GM Europe based cars as Opels
2. Using these existing Saturn dealers
3. and Address a significant customer segment in the US that would NEVER buy a Chevrolet, Buick, Cadillac or GMC Truck
Given that the key ingredients are for the most part in-place, this strategy seems like a great opportunity for GM!
Please comment on this suggestion.
eThink, the reason that GM doesn’t do that is best summed up by what a former co-worker put on his Facebook page yesterday. He’d taken in his Vue for a radio repair and something else. It was warranty work, and so there was no charge. He posted that he was happy that he’d “bought American” when he bought a Saturn.
We had a lot of co-workers who bought Saturns for that particular reason, plus the non-confrontational sales cycle.
But once you start selling them as “Opels” and as regular cars, then all that gets thrown out the window.
And yes, he now knows his Vue is an Opel.
Good grief, GM’s mistakes from the past continue to blow up on all of us. To think this thing almost was a success, they actually had good sales and a good rep at the start.
Ironic, my local paper had a story on the Cadillac dealer closing today after almost 70 years – I kinda thought so after checking their new inventory yesterday online (thanks to TTAC) and finding ONE car. They said don’t worry, we are still right next door with our Saturn outlet….OUCH.
Strange though, 20 miles north of Boston and the closest Caddy dealer will be 15 miles away, in a less than ideal location.
1. Sell these GM Europe based cars as Opels
Because 99% of the market doesn’t what an Opel is, and Saturn’s target market thinks they are American built.
2. Using these existing Saturn dealers
Because GM has not been able to produce the cars at a profit. With the Euro pushing $1.50, GM likely loses money on each one sold. They cannot compete costwise. VW falls into the same trap but gets a better price on their product.
3. and Address a significant customer segment in the US that would NEVER buy a Chevrolet, Buick, Cadillac or GMC Truck
Bottom line, GM is now owned by the US and Canadian governments and UAW; they call the shots. European built cars were never on the priority list. Saturn has been an afterthought for GM as a whole and has been mismanaged into the ground. They did have one of GM’s better lineups but lost their way when they failed to differentiate themselves from other products. Astra was the only real Euro car they made I beleive (the SUV came from Daewoo)
eThink – EXACTLY. By maintaining parallel dealer networks they end up with products different enough from each other that GM customers never mix with the rest of the GM products not on that lot. In other words GM might have customers that would have preferred an Aura over a Malibu but perhaps those customers would not have traveled 50 miles to a Saturn dealer (our nearest Saturn dealer is over 100 miles from here).
Thus my repeated call for “GM Dealers” that sell ALL the GM products. Plus folks might have learned that they like the Euro-look offered by Saturns if they had found some on Chevy lots. Instead Saabs and Saturns remained unknown products to those customers.
I didn’t understand maintaining the Saturn brand name either. Sell them for what they were – Opels or go through a transition period – Saturn by Opel.
Just like several other products over the years – GM gave an idea a try and then when it wasn’t a best seller moved on to something else letting the previous idea whither. I was ready to buy an Astra but not in it’s first 2-3 years. Not ready for another car at this time. Instead they are killing them off and lost another sale to me.
GM just screws up again and again.
Somebody ELSE should come up with their own brand. It was never gonna be a success with Saturn under the GM roof.
Bye bye, Skyy.
So, Fritz, hows that restructuring plan coming along?
I like the question: “Why doesn’t GM sell [true] Opels in North America?”
I am not surprised that Penske walked. I am surprised that he walked NOW; the media made it sound like a ‘done deal.’ Dumb media.
@ pacificpom2
Now that leaves room for Mr. Penske to import Holden’s.
Interesting idea, but I think the exchange rate $US/$A makes it less and less likely everyday.
Too bad, so sad… which GM brand is next to go?
Parts is parts. I’m hoping that our VUE with the Honda V6, Aisin 5 speed automatic, and plastic body panels will be around for a long time without the need for too many parts.
Saturn, like Pontiac is a “keep it or kill it” brand. It was a dumb idea to sell it (although Saturn is the only 1 of the 4 brands GM shouldn’t have shed…. they should have worked on its profitability).
Why give competitors a complete distribution network that you will have to compete with in a few years?
Thank God GM didn’t try to sell Pontiac and just closed it down. Sad as it is to see Pontiac go…. better to see it (and Saturn) dead than competing against GM.
The only reason why Saab is an OK sell is b/c it is still somewhat its own company, not just another branch of GM like Pontiac/Saturn. That and its a very small-volume, niche brand.
Given these factors, why doesn’t GM:
“1. Sell these GM Europe based cars as Opels”
Since the current Saturns are built in the US, GM could assemble the Opels in US factories by UAW workers.
These cars could feature “Proudly Made in the USA” on the windshield
If these cars are made in the US and/or Canada, then there are no currency problems
“2. Using the existing Saturn dealers”
Yes, “Opel by Saturn” would be a logical transition. Saves money on re-branding Saturn dealers.
“3. Address a significant customer segment in the US that would NEVER buy a Chevrolet, Buick, Cadillac or GMC Truck”
Use a tag line similar to “GM World Class”. These Opel models have gotten some good press in Europe against some of Europe’s and Asia’s best brands.
The concept of “GM World Class” would support a strategy to include Holden-based products like the Pontiac G8.
The Opel version of the Chevrolet Volt would probably appeal to buyers that would NEVER buy a Chevrolet but would buy a Prius.
Please comment on these ideas.