GM Axes Saturn Brand, Could HUMMER be Next?

Wed, Sep 30, 2009

Hummer News

GM Axes Saturn Brand, Could HUMMER be Next?

GM announced today that it could not come to an agreement with Penske Automotive Group to unload their Saturn brand, and without an agreement, the Saturn brand will be shut down.

Since Penske doesn’t have a manufacturing background, after short-term manufacturing contract with GM expired they would have to find another 3rd part to produce Saturn models and parts. They had negotiated with one party, but apparently those negotiations came to an end when it was rejected by the manufacturer’s board of directors.

Without the guarantee of manufacturing capability, it just wasn’t feasible for Penske to move forward, saying “The risks and uncertainties related to the availability of future products prohibit the company from moving forward with this transaction.”

GM had bet it all with Penske, and will now begin “winding down the Saturn brand and dealership network, in accordance with the wind-down agreements that Saturn dealers recently signed with GM.”

While the actual winding down of Saturn won’t affect the HUMMER deal, it doesn’t set a very good precedent for GM’s ability to sell brands. With that said, Saturn hasn’t been nearly as profitable as HUMMER when the brands are looked at individually.

Another positive sign is that Tengzhong does have experience in manufacturing. Albeit in heavy machinery and not production models, manufacturing HUMMERs would be a much smaller learning curve for Tengzhong than Penske’s would be for long-term manufacturing of Saturns.

At this point, the HUMMER sale is still on track for successful completion.

See our “Three Reasons the Chinese will Support the HUMMER Deal” post.

Complete Release on Saturn after the break.

Penske Automotive Terminates Discussions with General Motors to Acquire Saturn

BLOOMFIELD HILLS, Mich.—(BUSINESS WIRE)—Penske Automotive Group, Inc. (NYSE: PAG) an international automotive retailer, today announced that it has terminated its discussions with General Motors Company (“GM”) to acquire the Saturn brand, citing concerns directly related to the future supply of vehicles beyond the supply period it had negotiated with GM.

Since announcing its discussions with GM on June 5, 2009, the company has been in the due diligence process to determine the feasibility of developing an independent distribution model for Saturn-branded products and service parts in the United States, including the sourcing of vehicles from GM and other potential suppliers. The company had negotiated a definitive agreement with GM to source vehicles on a contract-manufactured basis for a period of time. After this period, the company would have been required to source vehicles from another third party under a similar contract-manufacturing agreement.

Penske Automotive Group negotiated the terms and conditions of an agreement with another manufacturer; however, that agreement was rejected by that manufacturer’s board of directors. 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.
About Penske Automotive

Penske Automotive Group, Inc. (www.penskeautomotive.com) headquartered in Bloomfield Hills, Michigan, operates 310 retail automotive franchises, representing 40 different brands and 25 collision repair centers. Penske Automotive, which sells new and previously owned vehicles, finance and insurance products and replacement parts, and offers maintenance and repair services on all brands it represents, has 160 franchises in 17 states and Puerto Rico and 150 franchises located outside the United States, primarily in the United Kingdom. Penske Automotive is also the exclusive distributor of the smart fortwo through its wholly owned subsidiary smart USA Distributor LLC. smart USA supports 78 smart retail centers in the United States. Penske Automotive is a member of the Fortune 500 and Russell 1000 and has approximately 14,000 employees. smart and fortwo are registered trademarks of Daimler AG.

GM’s Official Statement on Saturn Brand

Today we learned that Penske Automotive Group (PAG) has decided to terminate discussions with General Motors to acquire Saturn. This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality. PAG’s announcement explained that their decision was not based on interactions with GM or Saturn retailers; rather it was because of the inability to source new products beyond what it had asked GM to build on contract.

As a result of PAG’s decision, we will be winding down the Saturn brand and dealership network, in accordance with the wind-down agreements that Saturn dealers recently signed with GM. Pursuant to the terms of those agreements, the wind down process will be determined and communicated shortly.

Saturn customers and owners will continue to be able to purchase and have their vehicles serviced at Saturn retailers during this process. Once the wind down is complete, Saturn owners will still be able to have their vehicles serviced at other GM dealerships. We will be communicating with our customers very soon to explain the next steps in this process.

Today’s disappointing news comes at a time when we’d hoped for a successful launch of the Saturn brand into a new chapter. 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. I’d also like to thank every GM employee and Saturn retailer who worked so hard to try to make this new beginning happen for Saturn.

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4 Responses to “GM Axes Saturn Brand, Could HUMMER be Next?”

  1. Hummer Aficionado_VT Says:

    Woah, I didn’t see that coming… So now Saturn and Pontiac are gone. Sad times.

  2. Mark the mechanic Says:

    I know Saturn had twenty years to make them self profitable, but they actually started to make headway in the last 2 years or so. My buddy’s Saturn Sky is a fun car that not only has abundant power but pulls in around 30 mpg. Almost as much as my Girls Corolla. I will miss the Saturn, A car for Americans built by Americans.


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