- The Washington Times - Saturday, June 6, 2009

It was a different kind of car. Now, it is being sold to a different kind of company.

Car-racing legend Roger Penske, owner of the second-largest publicly traded auto dealership in the nation, reached a tentative deal to buy the languishing Saturn brand from General Motors Corp. Friday for an undisclosed sum.

Analysts estimate Penske Automotive Group will pay between $100 million and $200 million for the brand. Penske reportedly beat out 15 competing bids, including one from private equity firm Black Oak Partners LLC. GM is selling or discontinuing four of its eight brands as it struggles through bankruptcy - the others are Pontiac, Saab and Hummer.

Mr. Penske, 72, said he expects to maintain Saturn’s well-regarded network of more than 350 dealerships and retain the automaker’s 13,000 employees, at least for now. Saturn’s assembly plants are not part of the deal, although Mr. Penske will get Saturn’s parts warehouse and distribution center in Spring Hill, Tenn.

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

GM will continue manufacturing the Saturn Aura sedan and the Vue and Outlook sport utility vehicles through 2011 on a contract basis. GM said Saturn’s auto-manufacturing jobs would be retained “for the near term.”

Analysts expect Saturn eventually will be a different kind of company in a new way: it won’t make its own cars. Mr. Penske said he is looking for a “worldwide partner” to manufacture Saturn vehicles.

Penske Automotive reportedly is seeking to import Renault Samsung Motors vehicles built in South Korea to be sold in the United States through the Saturn dealer network.

Renault, of France, owns 80 percent of the joint venture. South Korean credit-card issuer Samsung Card Co. Ltd. owns the rest.

The Saturn deal is expected to close in the third quarter. Washington-area Saturn dealers were encouraged by the news.

“The big thing is that Saturn is returning to its roots, that is, as an independent company, and to our hallmark as a brand: customer satisfaction,” said Burke O’Malley, who owns Saturn dealerships in Fairfax, Sterling and Winchester, Va. “We’ve got two iconic brands going forward, Penske and Saturn. We’ll offer more fuel-efficient, great vehicles.”

Analysts agreed.

“[Mr. Penske’s] going to craft it as a small, fuel-efficient car company,” said John Wolkonowicz, senior auto analyst for IHS Global Insight in Lexington, Mass. “Given the new [federal corporate average fuel economy] regulations, the time may have come for that.”

The current federal goal is for 35.5 mpg average fuel economy by 2016.

“I think Saturn could be a successful company, but small cars are not going to be a cakewalk with [American consumers]. But the government is pretty intent on making us buy them.

“Roger Penske has the skills, he has the experience, he has the know-how to make this work,” Mr. Wolkonowicz said.

Former GM Chairman Roger Smith announced the Saturn project in 1983 as a unique concept with cars designed from scratch, independence from GM and cooperative management-labor relations. Its slogan was, “A different kind of car company.” But as its automotive designs became dated for lack of new investment, GM drew Saturn back into the fold and labor relations became more adversarial.

“Saturn wasn’t managed well from the beginning. The original Saturns were very good vehicles,” Mr. Wolkonowicz said.

Jeremy Anwyl, chief executive officer of car-shopping site Edmunds.com, said Saturn never fit with GM.

“Where [GM gets] stuck is trying to allocate resources to smaller-volume brands. [Saturn] really got starved. The culture at GM doesn’t deal with niche brands very well.”

Both Mr. Anwyl and Mr. Wolkonowicz said Saturn production would eventually move overseas. The Astra is already made in Belgium.

“All of the Saturn vehicles are going to be outsourced. You have to go to locations around the world where it is inexpensive to build cars. It’s a natural fit for a global automaker seeking to sell in the U.S. without building their own dealer network,” Mr. Anwyl said.

Penske Automotive owns 310 auto dealerships worldwide, including in Mexico, Britain and Germany. The dealerships focus mostly on high-end brands such as Bentley, Rolls-Royce and Lexus.

Penske Automotive shares rose 5 cents to close at $14.65 Friday after rising as high as $15.48 in early trading.

John P. Krudy contributed to this report.

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