(Adds details on GM winding down Saturn brand)

 
   DOW JONES NEWSWIRES 
 

General Motors Co. said Wednesday that it would wind down its Saturn brand after the last-minute collapse of plans to sell the niche brand to Penske Automotive Group Inc. (PAG).

Penske, which runs a network of U.S. auto dealers, said a deal to source cars for sale under the Saturn brand after GM ceased production had been rejected by its prospective manufacturing partner, which people familiar with the situation identified as Renault SA.

Roger Penske, the former racing driver who heads the group, had pursued what the industry viewed as a bold experiment in outsourcing manufacturing.

Shares in Penske were recently down 9.7% at $17.33 in after-market trading.

GM did not say when it would wind down Saturn, one of the brands earmarked for closure or disposal in its post-bankruptcy restructuring plan. It said existing Saturn owners would be able to have their vehicles serviced at GM dealers.

The company described the collapse as "disappointing." People familiar with the situation said a deal was due to be announced as soon as Thursday, and Penske had already distributed new franchise agreements to dealers.

The deal called for Penske to initially acquire vehicles from GM but eventually branch out to sell products from Renault SA (RNO.FR) and its Samsung Motors unit, which is based in South Korea. Penske Auto said Wednesday that it negotiated a supply agreement with "another manufacturer," but that company's board rejected the deal.

"Without that agreement, the company has determined that the risks and uncertainties related to the availability of future products prohibit the company from moving forward with this transaction," said Penske Auto.

Saturn has 350 dealers and the Penske deal was seen saving some 13,000 jobs. The dealers had pressed GM to seek a sale after the auto maker initially planned to phase out production.

-By Kevin Kingsbury and Doug Cameron, Dow Jones Newswires