Penske Reportedly Inking Deal for Saturn

A different owner for a "different kind of car company."

by on Jun.05, 2009

Barring a last-minute hitch, racing legend Roger Penske seems certain to become the new owner of GM's Saturn brand.

Barring a last-minute hitch, racing legend Roger Penske seems certain to become the new owner of GM's Saturn brand.

Barring a last-minute hitch Roger Penske will become the new owner of General Motors’ Saturn brand, ending a grand experiment that was meant to give GM a leg up on its Japanese rivals.

Penske, the motor sports legend and mega-entrepreneur, has or will shortly sign a Memo of Understanding, or MOU, that would position him as the all-but-certain buyer of one of four brands that GM is abandoning as part of its bankruptcy-based restructuring.

GM said, late last year, it would phase out Saturn, unless it could find a purchaser, by around the end of 2010.  It now appears that the ailing automaker would provide products for a Penske-owned Saturn through a transition period and after that, the brand would have to find alternative sources of vehicles.

Penske is not expected to produce vehicles on his own, so among the possible partners being considered are the French maker, Renault, which has long been interested in a return to the U.S. market, and some Chinese auto sources, according to well-placed industry insiders.

Subscribe to TheDetroitBureau.comAn announcement could come anytime, though GM officials will only say that negotiations for a Saturn sale are ongoing.  Several different bidders were reportedly in the running.

Too little, too late.  Saturn let its early momentum falter and even a belated flood of products, such as the Astra, shown here, failed to reverse its slide.

Too little, too late. Saturn let its early momentum falter and even a belated flood of products, such as the Astra, shown here, failed to reverse its slide.

It’s almost exactly 25 years since GM’s far-reaching CEO, Roger Smith, announced plans to create what would eventually be billed as “a different kind of car company.”  That set off a flurry of activity, with states across the country competing to see who could come up with the most lucrative incentive package to draw the planned Saturn factory.

It eventually landed in Spring Hill, Tennessee, along with most of the rest of what was intended to be a virtually stand-alone “company-within-a-company.”  Saturn had its own design, engineering and manufacturing centers and even negotiated a separate and more flexible contract with the United Auto Workers Union.

When the first car debuted, in 1989, it received mixed, if generally favorable reviews.  “People expected the car to lift off its wheels and fly,” recalled the late Skip LeFauve, who ran the operation at its launch.  But it turned out that the real revolution was on the retail side, Saturn quickly earning a reputation for customer-friendly sales and service practices that won over the sort of motorists who hated the car buying process.

Initial momentum turned south, however, as infighting among the various GM brands convinced senior management not to approve the much-needed expansion of the Saturn line-up.  By the time they finally authorized a larger car, it was too late.

Asked by TheDetroitBureau.com if GM had essentially strangled the brand, recently-retired Vice Chairman Bob Lutz said, “I wouldn’t be that harsh, but we created a baby that was growing healthily and, when it was still an infant, told it to go out and get a job on its own.”

Even a flood of highly-regarded products, over the last three years, couldn’t revive the brand’s momentum.  Sales were an anemic 188,000 in 2008, a decline of nearly 22%, and volumes have continued plunging this year.

There are 380 Saturn dealers in the U.S., today.  Most or all are likely to stay on with Penske, according to well-placed sources.  The new owner could also look to expand ties between his own retail network, the Penske Auto Group, which is the nation’s second-largest auto retail chain.

Penske, who has revived ventures such as Hertz Truck Leasing and Detroit Diesel Corp., and has been a force to be reckoned with on the motor sports circuit, also serves as the U.S. distributor for Daimler AG’s Smart Car division, which he took on after the German maker failed to come up with a plan to sell the cars on its own in the States.

2 Responses to “Penske Reportedly Inking Deal for Saturn”

  1. Ken Zino says:

    An hour ofter this story was posted:

    General Motors, Penske outline proposed deal for purchase of Saturn

    Detroit — General Motors Corp. and Penske Automotive Group today confirmed details of a proposed transaction under which Penske would acquire the Saturn brand. If completed, the deal would save more than 350 dealerships and 13,000 jobs at Saturn and its retailers in the United States, and would preserve the customer-focused Saturn brand.

    The proposed transaction is part of GM’s rebuilding efforts outlined in the viability plan that was submitted to the U.S. government earlier this year. Under the terms in the memorandum of understanding, Penske would obtain the rights to the brand as well as certain other Saturn assets. GM would continue production, on a contract basis, of the Saturn Aura, Vue and Outlook.

    “This is the combination of two iconic teams: Saturn and Penske,” said Saturn general manager Jill Lajdziak. “GM had the vision to create Saturn and has the desire to see it succeed in the future.”

    “Saturn has a passionate customer base and outstanding dealer network,” said Roger Penske, chairman of Penske Automotive Group. “For nearly 20 years Saturn has focused on treating the customer right. We share that philosophy, and we want to build on those strengths.”

    Saturn began selling cars in 1990 and has sold more than 4 million vehicles. More than 80 percent of those vehicles are still in operation, according to data from R.L. Polk. Saturn has regularly scored among the industry leaders for non-luxury brands in customer satisfaction surveys.

    “There has been a groundswell of support for Saturn, with our retailers and owners urging us to save the brand,” said Lajdziak. “We heard their call loud and clear, and it inspired us as we worked to secure Saturn’s future.”

    The transaction is expected to close in the third quarter of this year and is subject to customary closing conditions and regulatory approvals. Financial terms of the agreement will not be disclosed at this time.

  2. I’m very relieved and thankful to see that Saturn is being purchased by someone, such as Roger Penske, who does seem concerned about the well-being of everyone who represents this great car company.
    I had read some other articles prior to this one, regarding the Astra. It seems as though GM was weighing more on this vehicle than what they equipped it for. When this vehicle first hit the market, I was not impressed at all with the given powerplant, in order to be ‘competitive’. This, is what hurt the sales of this vehicle. Sure, it handles well, has rear disc brakes, and looks great, but a far cry in HP from it’s close competitors. Being an owner of a ’06 Saturn Ion, with the 2.4L, I immediately questioned this. Sure the 2.4L doesn’t push 200 Hp, but wouldn’t it have been a more reasonable ‘performance- oriented’ decision? I think that GM wanted to have the upper hand on fuel economy, but still have somewhat of a ‘sporty’ feel to it…..I guess. I can tell you that the 5spd., 2.4L still provides an average of 26-28 mpg. avg., along with around 175 HP. With this, the Astra would have had much higher sales, and still would have been competitive ALL around. I myself would have traded in the Ion for the Astra, but for only the powerplant letdown stopping me. Thanks again Mr.Penske.

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