GM to Wind Down Saturn Brand After Penske Halts Talks

GM to Wind Down Saturn Brand After Penske Halts Talks

Sept. 30 (Bloomberg) -- General Motors Co. will close Saturn, the brand created 24 years ago to mirror Japan-based companies’ carmaking, after Penske Automotive Group Inc. said it has broken off discussions to buy the unit.

Penske, operator of 310 auto retailers, backed out because of concern it wouldn’t have access to cars and sport-utility vehicles after 2011 when GM stopped supplying vehicles, the Bloomfield Hills, Michigan-based company said in a statement.

Penske’s exit forces GM to adjust its post-bankruptcy plan for cutting its number of U.S. brands in half. It intended to sell the Saturn, Hummer and Saab marques and close Pontiac. The largest U.S. automaker will retain Chevrolet, Cadillac, Buick and GMC.

“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 Fritz Henderson said in a statement on GM’s Web site.

Saturn dealers will have until October 2010 to wind down operations, John McDonald, a GM spokesman, said in an interview. The Detroit-based automaker said in June the sale would save 13,000 jobs and 350 dealerships.

Penske Auto had planned to import vehicles carrying the Saturn label from a maker such as Renault Samsung Motors Co., a South Korean unit of France’s Renault SA that doesn’t now export to the U.S.

Penske said today it had negotiated an agreement with a manufacturer to supply vehicles, but the company’s board rejected the agreement.

New Kind of Company

GM established the Saturn brand in 1985 as an initiative to overhaul the way it built and sold cars. Deliveries peaked in 1994 at 286,003 units, according to Autodata Corp., a Woodcliff Lake, New Jersey-based industry research firm.

Sales have declined 56 percent this year through August from a year earlier.

“It was shocking and disappointing,” said David Fischer, owner of a Detroit-area Saturn dealership. He said he had looked forward to working with Penske, whom he called an “automotive icon.”

Roger Penske, 72, who started his automotive career as a racer and Chevrolet dealer, holds interests including a truck- leasing business the exclusive right to distribute Daimler AG’s two-seat Smart minicar. He has won the Indianapolis 500 a record 15 times as car owner.

Penske fell $1.79, or 9.3 percent, to $17.39 at 5:03 p.m. after regular New York Stock Exchange composite trading. The shares jumped 7.4 percent in regular trading for the biggest one-day advance since July 13.

“Saturn is the brand you wanted to like,” said Rebecca Lindland, an analyst at IHS Global Insight. “It is the little brand that could have and should have” been great.

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