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Roger Penske - The Man Who Should Run GM - Will Buy Saturn

Posted Today 08:45 AM by Todd Lassa

Filed under: Car News, Motor City Blogman, Saturn



DETROIT - General Motors says it's in the early stages of exclusive negotiations (a memorandum of understanding, or MOU) to sell Saturn division to Penske Automotive Group. The man whose team won the Indianapolis 500 this year, Roger Penske, will sign franchise agreements with any of the 353 Saturn dealers that want to remain in the business of selling new cars.


GM will build Auras, Vues and Outlooks for Penske for the short-term. Penske is reportedly talking to several automobile manufacturers about U.S. production early in the next decade. This assumes GM and Penske will be able to complete the deal. Word is, though, that Penske's people made sharp, top-notch presentations to GM management. No surprise there.


As I've written here earlier, Nissan, with its unused capacity able to build various vehicles in the U.S., would be a prime candidate for reskinned compact or midsize cars bearing the Saturn badge around 2012 or '13. There's plenty of room in Nissan's North American facilities to avoid having to source them from Renault's Samsung plants in South Korea, as some have reported. And Chrysler Group LLC's Jim Press might want to place a call to Penske as well. Even with Alfa Romeos and rebadged Fiats coming into Mopar factories in the near future, Press has plenty of excess capacity.


One thing Penske's Saturn will need most is a replacement for the Belgian-built Astra compact, which isn't part of the deal.


In the deal, I'm told, Penske Automotive Group will get Saturn's parts distribution facility in Spring Hill, Tennessee. This facility was never integrated into GM's Service Parts Organization (SPO). Spring Hill also is the site for one of three assembly plants that GM has identified as candidates to build the Chevy Aveo replacement and Orlando about the '12 model year. (The other two are Orion Township, Michigan, and Janesville, Wisconsin.)


GM's press release quotes Saturn general manager Jill Lajdziak, identified with the brand for many years and a candidate to continue on at top-level with Penske's organization. The deal "if completed" would save, potentially, those 363 dealers and 13,000 jobs at Saturn.


There's a good chance you'll see several of the Saturn dealers that have closed in recent months reopening to take advantage of the Penske deal. Unlike other GM brands, the Saturn dealership network is far from saturated throughout the United States. Toyota has about 3.5 times as many U.S. dealers, for example. GM set up the network in the late '80s so that franchisees generally control two or more dealers in a specific region. That means there are probably 100 to 150 dealers who own those 363, plus more than a few that already have closed. Even at its peak, though, Saturn had fewer than 500 dealerships in the U.S.


So what does Penske get out of it? The businessman-car guy known for running an extremely tight ship becomes an automaker. As I wrote in my interview with him for Motor Trend, there were rumors Penske, now in his early 70s, could have taken control of GM more than 20 years ago, when he bought Detroit Diesel from the automaker.


He's smart, tough, and he's getting a dealership network known for its customer satisfaction. Even if Penske's Saturn starts out as the modern answer to American Motors in Detroit, it can only improve under his leadership.


Speaking of smart, his agreement with Daimler AG to distribute the small cars in the U.S. probably won't let him dual up the brand with his Saturn dealers, though it wouldn't be a bad idea. Smart did well launching in our market just as gas prices were reaching record highs. Now it's running at a rate of less than 15,000 per year, though that's not bad considering the target was about 20,000 before the bottom fell out of the automobile market.


The biggest surprise is that GM was able to snag a deal to sell the Saturn brand. Although the division was launched as a subsidiary for the 1991 model year, and though it has a model parts and distribution system, as a division, it seemed too integrated into the GM culture to be sold off separately. Wonder if GM is having second thoughts about what to do with Pontiac? Nah.


From here:Motor Trend

Edited by Blackdog
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