Saturn, Penske Automotive Group Reach Deal as GM Agrees to Sell

Penske Automotive Group steps up

General Motors will sell Saturn to Penske Automotive Group, according to news reports. The deal is tentative so far, but Roger Penske of Penske Automotive Group has agreed to buy the struggling Saturn brand from bankrupt GM.

GM dealerships across the country are offering historically cheap loans as they are forced to shut down in the wake of the GM bankruptcy. Penske Automotive Group is the United States’ second-largest auto dealership group. Saturn was established as a subsidiary of GM in1985.

Saturn, Penske agreement

According to USA Today:

Penske’s Saturn will continue to receive GM-made vehicles for two years, and is looking for another manufacturer to make vehicles that will bear the Saturn brand, Free Press reporter Tim Higgins writes.

The New York Times reports that the amount Saturn will cost Penske Automotive Group has not been disclosed. The New York Times also says:

The move is the latest by G.M. to sell off assets as it reorganizes itself in bankruptcy. Saturn, which was part of G.M.’s bankruptcy filing on Monday, had drawn 16 bidders over a months long sales process, G.M. said earlier this week.

One more down

The sale of Saturn has been in the works for a while. Wikipedia says:

In US Congressional hearings on December 2, 2008, General Motors announced its intentions to focus on four core brands (Chevrolet, GMC, Buick, Cadillac), with the sale, consolidation, or closure of Saturn and the remaining brands (Pontiac, Hummer, and Saab).

GM has already entered an agreement with Chinese manufacturing company Sichuan Tenzhong regarding sale of the Hummer brand. Saab has been undergoing restructuring for several months and some interested parties have been named as potential buyers. However, GM has not yet reached a deal to sell the Saab brand.

A word from Saturn’s sponsors

The New York Times reports that Penske Automotive Group will acquire the Saturn brand along with the Saturn parts inventory and the right to sell vehicles through the Saturn dealership network.

“We have agreed upon a framework that we believe will build momentum for the Saturn brand,” Mr. Penske said in a statement. “Saturn has a passionate customer base and outstanding dealer network. For nearly 20 years Saturn has focused on treating the customer right. We share that philosophy, and we want to build on those strengths.”

Saturn’s initial cost to GM in the 1980s was about $5 billion.

More on Penske Automotive Group

Penske Automotive Group already represents more than 40 different brands. Wikipedia says:

PAG operates 253 retail automotive franchises, representing 40 different brands, and 40 collision repair centers. PAG is a member of the Fortune 500 and Russell 2000, and has approximately 15,000 employees. PAG has 152 franchises in 19 U.S. states, selling new and previously owned vehicles, finance, insurance products, replacement parts, and offers maintenance and repair services on all brands it represents. Outside the United States it has operations in Puerto Rico, Germany and 110 franchises in the United Kingdom via the Sytner Group.

I haven’t seen any reports on Penske Automotive Group’s current financial situation or changes in its stability because of the economy. In this case, I am assuming that no news is good news.