- The Washington Times - Thursday, October 1, 2009

It may have been a different kind of company making a different kind of car, but it is screeching to a familiar halt.

Saturn - one of General Motors’ major attempts to appeal to foreign car buyers - will instead share the ash heap with ghosts of GM’s past such as Oldsmobile and Pontiac, the company said late Wednesday.

GM said it would phase out the 19-year-old brand and its 371 dealerships because Penske Automotive Group pulled out of an agreement to distribute Saturns.

“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,” GM Chief Executive Officer Frederick “Fritz” Henderson said.

GM had said in June the Penske deal would save the jobs of 13,000 workers. But most of them are dealership employees who won’t necessarily be out of work when Saturn is closed. Saturn models are made in GM plants, and spokesman John McDonald said the company does not expect significant job losses at those plants.

The move surprised Saturn dealers and analysts, who expected an agreement to be signed imminently.

“We’re disappointed,” said Tom Tellepsen, general manager of Saturn of Manassas. “They were supposed to have closed the sale tonight or tomorrow morning. We were right there at the end. It all of the sudden kind of fall apart in the eleventh hour. It’s frustrating.

“Today I was selling Saturns, and I just found it out,” he said. The dealership will stay open selling used cars, he said.

“It came as quite a shock,” said Michelle Krebs, an analyst with auto site Edmunds.com.

GM has also said it will sell or discontinue its Saab and Hummer brands.

Mr. Penske, a car-racing legend, had hoped to eventually sell Saturns made by a foreign manufacturer - thought to be France’s Renault - after a temporary manufacturing agreement with GM ended.

But the board of that company rejected the deal, said Penske Automotive Group. The Bloomfield Hills, Mich., company is the second-largest publicly traded auto dealership in the nation with 310 locations. Penske spokesman Anthony Pordon would not identify the foreign manufacturer.

“The Saturn dealership network represented a unique opportunity for Penske,” said Jeremy Anwyl, chief executive officer of Edmunds.com. “The risk was sourcing product and that proved to be too much to overcome to complete the deal.”

Penske had agreed in June to buy the Saturn brand and assume its relationships with its dealers, considered among the best in the business, with the understanding that GM would continue making Saturns until 2011. The price of the transaction was never revealed.

“I think Saturn was a wasted opportunity,” said Ms. Krebs. “In its early days, it was allowed to languish with no product. Then they finally got product, and they didn’t do the marketing right.

“It’s got the best retailers in the country at the best locations, which is why the Penske group found it attractive,” she said.

Penske Automotive Group sales fell $1.93 to $17.25 in after-hours trading after the announcement. The shares had gained $1.32, or 7.4 percent to close at $19.18 in regular trading.

Tim Devaney contributed to this report.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide