GM will close Saturn and wind down its dealership network after a proposed deal to sell the brand to Penske Automotive Group collapsed.
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The deal had been expected to close this week, but Penske has terminated its discussions with GM due to ‘concerns directly related to the future supply of vehicles beyond the supply period it had negotiated with GM’.
Penske was negotiating with Renault for future product, but those discussions failed to reach agreement, scuttling the Saturn acquisition plan.
Penske said in a statement that it had ‘negotiated the terms and conditions of an agreement with another manufacturer; however, that agreement was rejected by that manufacturer’s board of directors’.
The absence of a deal will force some 350 Saturn dealerships to shut down and could cut 13,000 US jobs that would have been preserved under the Penske acquisition plan.
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By GlobalDataRenault acknowledged that it had been in talks with Penske to supply cars, parts and technology for Saturn. “The conditions for an agreement have not been found,” Renault said in a statement.
GM said that a result of Penske’s decision it will be winding down the Saturn brand and dealership network, in accordance with the wind-down agreements that Saturn dealers recently signed with GM.
GM CEO Fritz Henderson said: “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 said it would immediately begin the process of shutting down production at a plant in Michigan that builds the Outlook SUV and a plant in Mexico that builds the Vue small SUV.
The automaker also has halted plans to resume production of the Aura sedan at a Kansas plant. Production was scheduled to resume in mid-October.
GM said it would wind down Saturn by October 2010, under an agreement already approved by its dealers. Saturn dealers were to have signed a new agreement with Penske and many were expected to close in the weeks ahead.
Analysts at IHS Global Insight maintain that for Renault to use use European models to flesh out the Saturn brand in the US market would have been self-defeating, putting it in competition with Alliance partner Nissan.
It would also have required some investment from Renault in order to either sufficiently ‘Saturnise’ existing Nissan models that are already federalised, or potentially just as much to federalise Renault or Samsung models that are not currently available in the market.
Either way, GI says the investment required in order to gain what would not be particularly large volumes from a damaged brand in one of the most highly competitive markets in the world ‘must not have seemed like a good idea’.
It would have been baffling for an automaker’s board to agree to such expenditure when similar investment could help expand efforts in China and other markets set for explosive growth, GI said.
“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.”
