No, there ain't no damned Yugo.
Auto dealer terminates agreement with General Motors, citing
concerns about supplies of the vehicle after GM stops producing
NEW YORK (CNNMoney.com) -- Car dealership operator Penske
Automotive Group announced on Wednesday that it has cancelled
plans to acquire General Motors' Saturn unit. As a result, GM
said it will wind down the brand and dealer network, potentially
putting 13,000 Saturn dealership jobs at risk.
The announcement comes nearly four months after Penske agreed to
buy the rights to the 19-year old brand from GM when the
automaker was in bankruptcy.
As part of the deal, GM would have continued making Saturn's
three best-selling models -- the Aura sedan, as well as the Vue
and Outlook cross-over SUVs -- for the rest of this year and
next. Penske, which is an auto distributor and not a
manufacturer, would have sold the cars on behalf of GM. Penske
said it would find another third-party manufacturer to make new
Saturns in 2011.
But negotiations with another, unnamed manufacturer fell through
after an agreement was rejected by that manufacturer's board,
according to Penske. According to a report in the Wall Street
Journal, the manufacturer in question is Renault.
"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," the company said in a statement.
End of a brand
As a result, GM said it would begin to wind down the brand and
its roughly 350 dealerships nationwide. Penske's deal with GM
was expected to be completed in October.
"Today's disappointing news comes at a time when we'd hoped for
a successful launch of the Saturn brand into a new chapter,"
said GM Chief Executive Fritz Henderson in a statement. "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
A spokesman for GM said the broken negotiations with Penske
would have "no anticipated impact" on plant closures or job
GM makes Saturns at plants in Fairfax, Kan., Lansing Mich. and
Ramos, Mexico, all of which also make other GM brands, so GM
doesn't expect that Saturn's closure will affect employment
levels at those plants.
"In all three cases where [Saturn] products are produced, there
are other products, and GM will shift resources to those," said
the company spokesman.
The automaker said Saturn owners will still be able to have
their cars serviced at GM dealerships after Saturn is shuttered.
A tough job
Some experts were skeptical about the risks inherent to Penske's
deal with GM when it was first announced back in June. They
argued that Saturn had led the auto industry with customer
satisfaction, but that the brand sold poorly because the
underlying car wasn't great.
As a result, auto industry experts said Penske had its work cut
out for it in finding a manufacturer who could make a great car
for the Saturn brand.
"The Saturn dealership network represented a unique opportunity
for Penske," said Jeremy Anwyl, CEO of Edmunds.com. "The risk
was sourcing product and that proved to be too much to overcome
to complete the deal."
Penske (PAG, Fortune 500) is owned by former race car driver
Roger Penske, who owns NASCAR and IndyCar racing teams and
distributes Daimler AG's Smart cars in the United States.
Shares of the auto dealer fell 10% after hours.