Recently a news was flashed everywhere in the automobile industry that GM’S Saturn and Penske deal is off, the reason being no conditions for an agreement between the two can be found. The news was reported by David Bailey and Bernie Woodall, who writes for Reuters.
GM has asked 350 Saturn dealers to close down their dealership resulting in 13000 US job cuts, which could have been avoided under the deal of Roger Penske.
Auto magnate Roger Penske had been in negotiation with South African Automobile Renault to acquire vehicles for the brand Saturn upon the expiry of GM’s production agreement. Those negotiations were down, ruining the Saturn acquisition by Penske.
Paul Melville, Partner at Grant Thornton corporate advisory and restructuring services, commented that Roger Penske is a very clear and clever man, if the deal with Renault was pursued and was difficult to happen, then the deal was dead.
Penske Automotive lost 8% share trade aftermarket, when the deal broke off news hit the New York Stock Exchange.
Renault confirmed the news that they had been in discussion with Penske Automotive for supplying cars, parts and technology for Saturn, which had not been profitable for GM. Adding further Renault stated that the deal was off, as the conditions for an agreement could not be found.
GM said that the shutting down of production in Michigan is already commenced for the Outlook SUV and in Mexico for the Vue small SUV.
A very disappointing news; GM stated that it will wind out the Saturn business by October 2010, and had already got an agreement signed by the dealers for the approval. It is really a great disappointment for all those employees and dealers who had worked hard to make Saturn a reality.
It is believed that Saturn deal was a pilot plan by GM to give away with their niche brands and focus more on the growing brands like GMC, Chevrolet, Cadillac and Buick variants. The company is already in the process of giving out their stakes in the European Opel brand, Saab and Hummer brands.
Penske had been negotiating for Saturn deal, a contract which ends until 2011, where GM supplying vehicles to Penske and after the contract period expires, leaving it free to tie up with other manufacturers.
In a statement, Penske said that without an agreement, the company cannot determine the risks and uncertainties regarding the availability of future products, and limiting the movement of the company.
This sudden announcement surprised everyone, the Saturn customers as well as dealers.