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GM asks Saturn dealers to wind up

GM had asked all their Saturn dealers to wind up the dealership network and confirmed the news that there is no deal taking place between Penske Automotive.

Penske in his statement cleared that the deal is off as Renault’s board of partner rejected the deal for supplying spare parts for the Saturn car. This could lead to a potential risk and uncertainty as to who will make sure the availability of future products, leaving no room to move ahead.

The Saturn deal was agreed upon by GM and Penske in view of automaker’s bankruptcy filing in the month of June. In July, GM came out with a court protection and stated that the agreement with Penske is aimed at preserving dealerships and avoiding job cuts.

But with the non availability of permission from Renault, the future is not secure for the availability of products, hence the deal is called off by Roger Penske and GM.

GM will continue the process of winding up through October 2010 with an approved agreement between the dealers. The company also informed that customers will be able to buy new cars and service their vehicles at the Saturn dealers until the process is completed. After the process of through, customers can service their Saturn at other dealership agencies.

Saturn the car created by Roger Smith, Chairman, GM to show the Japanese that US can beat them in small car soil. In 1990 Saturn found a strong market and positioned itself in a different small car segment. And in 1994, the sales peaked up heavily.

But with the financial turmoil, Saturn is now losing market and is on the verge of losing its identity.

Roger Penske, 72, had proposed to take up the challenge and keep the brand alive, by asking for retailing rights from GM and later on produce the same at his own setup. Things were moving on track, but with non availability of spare parts and an exclusive agreement of Renault with GM, made it difficult for Penske to keep the balls rolling and the deal comes to an end in a very surprising manner.

GM had agreed Penske to continue their support for 3 Saturn models – Aura, Vue and Outlook for another 2 more years. Then, Penske needs to put together a new portfolio for products.

GM as per their plan had started closing their units in Mexico, Michigan for Vue and Outlook respectively.

Penske is known for his revival strategy and had already rescued GM’s Detroit Diesel Corp 2 decades ago and now its Saturn.

Dealers and employees are hopeful that the deal revives for Saturn and the business takes place. In a comment made by John Pitre, Genera Manager Saturn Bakersfield, “If Penske didn’t think it would work, then it won’t work.

Penske Calls off Saturn deal

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.

Saturn Sky Review

General Motor has never sold such a competitive small car in United States.

The  Saturn Sky drives superbly. The suspension is just excellent. Taken as  a whole, Saturn Sky is the luxury car with all the comforts one can desire for.

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Saturn Astra

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