Penske Pulls Plug on Saturn Deal, GM Will Fold the Division
What appeared to be a solid survival plan took a sudden and unexpected fatal twist as the Penske Automotive Group withdrew its offer to buy General Motors troubled Saturn division. The Penske pull out came as the direct result of what it said was the inability to secure new vehicles following the end-of-2010 window when GM would cease building the current Aura, Outlook and Vue models as part of a division-shedding effort outlined in its bankruptcy reorganization plan. In June, Penske had begun what appeared to be very promising negotiations with GM to buy the Saturn brand, with the intent of finding another source of vehicles for the long term. While Penske's statement on the matter declined to name the specific automaker it had been negotiating with, Renault has confirmed it was the party involved in these talks. But on the eve of GM giving its final approval to the sale of the Saturn brand, Renault's board of directors refused to greenlight terms of the equally critical supply side of the deal to save Saturn. According to Penske Automotive, which currently owns some 310 dealers in the U.S. "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." Given the complexities of product, pricing and timing, Penske said there was simply no viable back-up plan.
This latest development leaves 350 Saturn dealers across the country with little hope. Instead of ending production in October of next year, General Motors Treasurer Walter Borst told a group of industry analysts that the company plans to "move quickly to wind down Saturn so we can get on with the four core-brand strategy." Production for all three Saturn models had already been suspended, and Borst's statement raises serious questions as to whether any more will ever be built. While Chief Executive Fritz Henderson calls the developments "very disappointing news," the automaker has confirmed that Saturn owners will be able to have all warranty and service work on their vehicles done at GM dealers, although specific details of that plan have yet to be released.