GM to end Saturn brand
Penske Automotive Group, which had planned to sell the cars, withdrew from the deal.
General Motors Co. will close Saturn, the brand created 24 years ago to mirror Japanese companies' carmaking, after Penske Automotive Group Inc. said it had broken off discussions to buy the unit.
Penske, operator of 310 auto retailers, backed out because of concern it would not have access to cars and sport-utility vehicles after 2011, when GM stopped supplying vehicles, the Bloomfield Hills, Mich., company said yesterday in a statement.
Board chairman Roger Penske said he got his start in Philadelphia, after graduating from Lehigh University in 1959 with a business degree.
Penske Automotive Group'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. GM 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.
The news spread to Philadelphia-area Saturn dealers late yesterday afternoon, catching them by complete surprise.
"I am shocked," said Fred Beans, whose Doylestown Saturn dealership is among the original 99 in the country. "I felt, and I think other retailers felt, this was a done deal."
Dave Kopew, who manages several local Saturn showrooms including one in Trevose, declined to comment, saying only that he had "just literally found out" about the Penske deal's coming unglued.
There had been high hopes among local Saturn dealers that Penske would keep the brand in business. Beans said he shut his one Saturn dealership in Limerick several months ago and replaced it with Kia after GM announced it would dispose of the car line. He held on to his Doylestown store, though, expecting the Penske deal could turn things around.
Things looked solid before yesterday's surprise announcement. Beans said Saturn dealers had just been invited to a meeting with Penske next week in Newark, N.J., to discuss what would be a promising new chapter for the brand. He had heard nothing from Penske or GM about the failed deal and was anxious to hear more. His immediate concern: the fate of his dealership's 25 employees, he said.
Saturn dealers will have until October 2010 to wind down operations, John McDonald, a GM spokesman, said in an interview. The automaker said in June that 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. Ltd., a South Korean unit of France's Renault S.A. that does not now export to the United States.
Penske said yesterday that it had negotiated an agreement with a manufacturer to supply vehicles, but the company's board rejected the agreement.
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., an 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.
Shares of Penske fell $1.93, or about 10 percent, to $17.25 in after-hours trading. They rose $1.32, or 7.39 percent, to $19.18 in regular trading yesterday.
"Saturn is the brand you wanted to like," said Rebecca Lindland, an analyst at IHS Global Insight Inc. "It is the little brand that could have and should have" been great.