Thursday, October 1, 2009

Redeux News: Deal to sell Saturn to Penske, falls through

Courtesy: Baltimore Sun photo by Kim Hairston / November 12, 2008

General Motors, a Detroit, Michigan based company's deal to sell Saturn to the Penske Automotive Group, headquartered in Bloomfield Hills, Michigan, has fallen through, forcing the automaker to shutter. Saturn has been know to be one of the most affordable car's for the middle class that didn't hold out on quality and style.

The sale had been expected to be completed as soon as this week. The announcement comes nearly four months after Penske agreed to buy the rights to the 19-year old brand from GM when the automaker was in bankruptcy. According to the Baltimore Sun, although the sales price was never disclosed, Penske was to have gotten Saturn's roughly 350 dealerships and promised to retain 13,000 employees.

"Penske Automotive Group, has decided to terminate discussions with General Motors to acquire Saturn," GM Chief Executive Fritz Henderson said in a statement. Instead of selling Saturn, GM will close the brand altogether. It said Wednesday that its Saturn dealers already had signed a "wind-down agreement." Under terms of a similar agreement signed by some other GM dealers, all new-car sales operations must cease by late 2010.

The news is a blow to both GM and the Detroit economy. GM had made selling three of its brands, along with shutting Pontiac, a key component of its post-bankruptcy restructuring efforts.

According to New York Times Business writers, Nick Bunkley and Bill Vlasic, Penske Automotive had an agreement with a potential manufacturer of future Saturn products but had been rejected by that company’s board. Penske, which currently distributes the SmartCar in the U.S., planned to continue selling GM-made Saturns at dealerships for the next year or two, by which time it planned to have lined up a foreign supplier to provide new cars badged as Saturns. Penske Automotive declined to name the company, but people familiar with the transaction said that the Renault-Nissan alliance had been involved in discussions.

Paul Sancya/Associated Press Photo
Courtesy of New YorkTimes
Roger Penske pulled his company's bid to buy G.M.'s Saturn division.

"Today's disappointing news comes at a time when we'd hoped for a successful launch of the Saturn brand into a new chapter," said GM Chief Executive Fritz Henderson in a statement. "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."

The automaker said Saturn owners will still be able to have their cars serviced at GM dealerships after Saturn is shuttered.
Shares of the auto dealer fell 10% just hours after the announcement.

--Detroit Free Press's Tim Higgins contributed to this story.

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