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Is It The End Of The Road For Saturn?

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On: Wed, Sep 30, 2009 at 6:43PM | By: Drew Christy


Is It The End Of The Road For Saturn?

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.

According to a press report released by Penske (available after the jump), the deal's demise was caused by difficulty in securing a supply of product beyond the end of 2010. As part of the deal, GM would have continued supplying Penske with the Outlook, Aura, and Vue models until the end of next year.

Since Penske is an auto distributor and not a manufacturer, a new supplier agreement needed to be secured. The company had negotiated the terms and conditions of an agreement with an unnamed *cough* Renault-Samsung Motors *cough* 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," the company said in a statement.

As a result of Penske’s decision, GM announced that it would wind down Saturn and close all roughly 350 dealerships. Penske's deal with GM, which was expected to be completed in October, would have saved more than 13,000 jobs at Saturn's dealerships. After Saturn dealerships close, Saturn owners will be able to get service from other GM dealers.

"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. "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."

UPDATE:
For those sending emails… The guy in the photo is Jim Smith from the “Saturn Total Confidence” commercials.

PRESS RELEASES

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.


General Motors Media Statement Attributed President & CEO Fritz Henderson

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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