GM will shut down Saturn after Penske deal falls apart

2009 Saturn Sky X09ST_SK015

This news is disappointing. Saturn has some nice vehicles and a solid dealer network. Hopefully something can be salvaged here.

  

Penske will purchase Saturn from GM

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This is good news for the Saturn employee and dealers.

Less than a week after officially filing for chapter 11 bankruptcy, General Motors has announced the pending sale of the Saturn brand to Penske Automotive. The transaction, if completed, would shift the rights of Saturn to Penske, and would continue the sale of the Aura, Vue, and Outlook vehicles under a contract basis with GM.

Although the deal could save more than 350 dealerships and 13,000 jobs, according to GM, it won’t save the slow-selling Saturn Astra hatchback or low-volume Sky roadster. Penske does intend to preserve the customer-focused mentality upon which Saturn was founded in 1990. “Saturn has a passionate customer base and outstanding dealer network,” said Roger Penske, chairman of Penske Automotive Group. “For nearly 20 years, Saturn has focused on treating the customer right. We share that philosophy, and we want to build on those strengths.”

Jon Yanca of Car and Driver goes on to point out that this is a pretty good fit. Saturn might flourish as part of a smaller, more nimble company like Penske as opposed to the bloated “old GM.”

As Newsweek detailed in an excellent article, Saturn was supposed to save GM, but GM ended up crushing Saturn.

Saturn was hardly a panacea. But its fall to earth, more than $5 billion in GM money later, is about far more than the flameout of one brand. In the eyes of some automotive analysts, Saturn represents a major missed opportunity for Detroit to place a sustained bet on fuel-efficient cars that would compete with the Japanese—and to recalibrate the bitter business-labor relationship in ways that could have had far-reaching implications for the entire industry. Saturn was never able to surpass the Japanese in technology, as Smith had hoped. But the competitive knives Saturn faced within GM did far more damage than any threat from overseas: execs who felt the auto giant already had too many brands and factories; dealers resentful of Saturn’s product-development dollars; and a labor union whose leadership came to regard the brand’s workplace innovations as collaborations with the enemy. It did not help matters that from the mid-1990s until just recently, Americans turned away from small cars in favor of trucks and SUVs.

The story is tragic in many ways, as Chairman Roger B. Smith had grand plans for the first new GM brand in 70 years. Unfortunately, Smith’s bold plans at Saturn were not matched by bold reforms at the other brands. Just imagine of someone like Jack Welch had been named CEO of GM back then.

It’s a shame, but now Saturn and GM both get a new beginning, and both have a real chance of prospering in the future.

  

Saturn may bite the dust

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The GM restructuring plan is now expected to be rather bold, and many are predicting that the Saturn brand will not survive.

“I haven’t heard about what is in General Motors’ plan in detail, but it looks like it will be more maximum than minimum. In other words, it will be quite aggressive, and I don’t know whether this will include plant closings or elimination of brands,” said David Cole, head of the Institute for Automotive Research in Ann Arbor, Mich.

Meanwhile, Bob Lutz, who is slated to retire as GM’s vice president of product development, told the Automotive News that Saturn likely would not survive the restructuring plan.

“My personal favorite would be to see Saturn survive and prosper. But frankly, the reality is that that is probably not going to be the outcome,” Mr. Lutz said. Neither he, nor other GM officials could be reached for comment on Saturn’s future.

“We spent a huge bundle of money in giving Saturn an absolutely no-excuses product lineup, top to bottom. They had a better and fresher lineup than any GM division, and the sales just never materialized. So we have to act on that. It’s our duty,” Mr. Lutz told Automotive News.

Working against the idea of axing Saturn is the enormous amount of money that would have to be spent to settle with dealers and the potential lawsuits from them that would probably follow. That happened with Oldsmobile.

Rob Cochran of No. 1 Cochran in Monroeville and Robinson said he held out hope that Saturn would continue as a brand.

“I know that Saturn is … exploring a lot of options. The dealers met last month in New Orleans and there were three or four options on the table,” Mr. Cochran said. “We are waiting to see what those alternatives are.”

He added, “Mr. Lutz is famous — or depending on your viewpoint, infamous — for just winging it. He’s a great product person, but a challenge from a PR standpoint.”

Saab is expected to survive, as the Swedish government will likely invest billions to make sure Saab and Volvo remain viable, though details are not yet clear.

  

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