PREOS Global Office Real... (TG:PAG)
Historical Stock Chart

From Nov 2019 to Nov 2024

Each of General Motors Corp.'s (GMGMQ) 350 U.S. Saturn dealerships will receive offers to continue selling the vehicles under a tentative deal announced Friday to sell the brand to mega dealer Roger Penske.

Penske, who runs the Penske Automotive Group (PAG) chain of dealers, will take over the brands, trademarks, service and parts operations and distribution operations related to the Saturn.

"We will have a completely independent company, and it will be lean," Penske said in a conference call with reporters Friday.

GM filed for bankruptcy Monday, and as part of its restructuring plan hoped to sell the lineup it launched in 1984 as "a different kind of car company" to battle foreign-based rivals such as Toyota Motor Corp. (TM).

In addition to taking over the retail network, Penske will strike deals with various auto makers, including GM and Renault SA (RNO.FR), allowing him to buy vehicles from those auto makers' factories to fill out the Saturn vehicle portfolio.

GM and Penske have a memorandum of understanding signed, and the deal is considered tentative at this point. Penske declined to disclose the price tag of the Saturn deal. He said the sale is expected to preserve around 13,000 jobs. Penske already has an exclusive deal with Daimler AG (DAI) allowing him to distribute Smart mini cars in the U.S. He essentially serves as the U.S. sales and marketing arm of Smart, and works to provide a network of dealers with Smart cars. Penske said Friday he has no plans to join Saturn with Smart dealerships.

Penske will initially buy Saturn vehicles from GM that are already part of the Saturn lineup, but eventually branch out to purchase vehicles from Renault and its Korean Samsung Motors unit. Other auto makers could also be part of the arrangement.

Saturn, he said, would eventually grow to a global brand with more vehicles in its lineup. Short-term plans call for keeping the Outlook crossover, Aura sedan and Vue SUV. The Saturn Sky roadster won't continue.

The brand's dealer network had been widely lauded for its good customer service, which introduced a "no haggle" approach to auto sales. It dealerships are more modern than the average GM-brand dealership, and they tend to be stationed in more desirable locales.

Despite the advantages, the company never delivered what GM hoped for and has lost money since its inception.

The Saturn deal represents the second preliminary sale GM has reached this week in relation to its U.S. brands. Earlier this week, Tengzhong Heavy Industrial Machinery Co., based in China, agreed to a preliminary deal to buy Hummer. That deal is subject to regulatory clearances in China, and is not expected to be finalized until the third quarter.

GM began pursuing strategic options for Saturn earlier in the year and hired longtime auto analyst and United Auto Workers advisor Steve Girsky to explore a sale of the brand after it became apparent the company no longer had enough money to fund its eight U.S. brands. Girsky worked with hundreds of Saturn dealers around the nation to find the appropriate buyer in a relatively short period of time. The auto maker is still working to sell its Saab operation in Sweden, and is in a tentative deal to sell a stake in German Opel division to Magna International Inc. (MG.A.T)

-By Sharon Terlep and John Stoll, Dow Jones Newswires; 248-204-5532; sharon.terlep@dowjones.com