GM, Penske Make a Deal for Saturn; Hummer, Opel Deals Floundering
June 05, 2009
By Michelle Krebs
DETROIT -- General Motors confirmed Friday morning that it has a deal to sell its Saturn brand to the Penske Automotive Group. 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, GM said in a statement.
At the same time, GM's agreement to sell Hummer to a Chinese company is hitting a roadblock with China's government, and Magna's proposed partnership with Opel looks to be floundering.
Saturn to Penske
Under the terms in the memorandum of understanding, Penske would obtain the rights to the brand as well as certain other Saturn assets. In the short term. GM would continue production, on a contract basis, of the Saturn Aura sedan, compact Vue sport utility and Outlook crossover. The Saturn Sky is being discontinued.
GM said it expects to close the deal in the third quarter, pending customary closing conditions and regulatory approvals. Financial terms of the agreement were not disclosed though media reports said Penske is paying GM between $100 million and $200 million for the brand.
"There has been a groundswell of support for Saturn, with our retailers and owners urging us to save the brand," said Saturn General Manager Jill Lajdziak. "We heard their call loud and clear, and it inspired us as we worked to secure Saturn's future...GM had the vision to create Saturn and has the desire to see it succeed in the future."
Saturn was born in the mid-1980s under Roger Smith's chairmanship as a GM division to take on the imports. It 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 consistently scores at the top for customer satisfaction.
However, the company has not lived up to expectations and has seen a dramatic sales slide in the past year or more, despite a complete revamp of its product line.
Penske Group Chairman Roger Penske told reporters in a conference call Friday that Saturn will contract with GM and other manufacturers to sell vehicles from around the globe through Saturn. French automaker Renault, which has long been looking for a way and the right time to return to the U.S. market, will supply the Penske-owned Saturn with vehicles from Renault as well as its South Korean subsidiary, Renault Samsung Motors Co. Vehicles from other automakers could be added as well, Penske said.
The Penske Group is the nation's No. 2 retailer of vehicles and also has dealership in the U.K. In addition, Penske holds the license from Daimler AG to sell Smart cars in the U.S. However, Smart cars will not be sold through Saturn dealers, Penske confirmed.
Other Penske auto businesses include Penske Corp. and Penske Truck Leasing Corp. A former racecar driver, the 72-year-old Roger Penske also established Penske Racing Inc. and Penske Racing South Inc. A huge Detroit supporter, Penske chaired the city's NFL Super Bowl committee and revived Grand Prix racing in Detroit.
"Saturn has a passionate customer base and outstanding dealer network. For nearly 20 years Saturn has focused on treating the customer right. We share that philosophy, and we want to build on those strengths," Penske said.
Saturn had as many as 16 parties interested in the brand. Of those, the bidders were winnowed to a few. Another confirmed bider was a group of Saturn dealers led by Oklahoma City-based private equity firm Black Oak Partners.
Hummer Deal Hits Chinese Roadblock
Earlier this week, GM anounced the sale of its Hummer SUV division to China's Sichuan Tengzhong Heavy Industrial Machinery Co., a maker of heavy equipment.
Reports from China suggest the government is unlikely to approve the deal as it runs counter to its plans to develop an auto industry that focuses on fuel efficient vehicles. In addition, the Chinese government is looking to consolidate the nation's hundreds of car companies, not add more.
Magna Buy of Opel Floundering
Signs emerged Friday that Magna International, a Canadian-Austrian parts supplier, could face challenges to its deal for Opel as Fiat said it was still interested and German government officials have invited rival bidders to improve their offers, Reuters reported.
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