Penkse To Buy Saturn from GM, Wants to Build in US

Now this is more to my liking. The first decent piece of news that I've heard about the sorry saga of bankrupted Chrysler and GM, where private entrepreneurship saves the day. Penske Automotive Group Inc. (stock symbol PAG), the second largest auto retailer in the United States, signed a memorandum of understanding with General Motors to acquire GM's Saturn brand.

According to this article Penske buying Saturn, dealerships; GM to build vehicles for 2 years (6/5/09 Detroit News),

"Penske has signed a memo of understanding to acquire Saturn and its dealer network and the due diligence period will take 60-90 days. The deal will preserve 13,000 jobs and could close in the late third quarter, Penske told reporters this morning. Terms of the deal were not disclosed.

"The deal includes the Saturn brand, the service and parts operation based in Spring Hill, Tenn., and a network of about 350 dealerships.

"Penske said GM will supply the Saturn Aura sedan and Vue and Outlook SUVs on a contract basis for at least two years, after which he envisions importing vehicles."

""Our ultimate goal is to have those vehicles built in the U.S.," he said."

Why Saturn?

Here's the announcement from the company. [emphasis is mine]

""We have agreed upon a framework that we believe will build momentum for the Saturn brand," said Penske Automotive Group Chairman Roger Penske. "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."

Mr. Penske and his company want to buy Saturn because Saturn focused on treating the customer right. How about that, coming from an American company?

"Saturn began selling cars in 1990 and has sold more than 4 million vehicles. More than 80 percent of those vehicles are still in operation, according to data from R.L. Polk. Saturn has regularly scored among the industry leaders for non-luxury brands in customer satisfaction surveys. Commenting on the proposed deal, Saturn general manager Jill Lajdziak said, "This is the combination of two iconic teams: Saturn and Penske. GM had the vision to create Saturn and has the desire to see it succeed in the future.""

Saturn's customers are happy because the car is built well and it lasts! What a concept. Saturn, at one point, even dethroned Lexus in J.D. Power and Associates 2002 Customer Service Index (CSI) Study. (By the way, the link goes to a blog set up by a Saturn enthusiast, called Saturnfans.com. The front page pleads "Save Saturn. Sign the Petition to Help Save Saturn!")

Ms. Jill Lajdziak, Saturn's general manager, will be offered a role in a Penske's new company, according to the Detroit News article. She joined GM in 1980, and has been with Saturn since its inception.

GM indeed had the vision, when it founded Saturn Corporation in 1985 in response to ever-increasing competition from small cars made by Japanese and German auto makers. But the vision hasn't quite turned into a viable business at GM. Now that the administration is pushing for small, fuel-efficient car, GM has to sell Saturn.

Saturn has its own assembly plant in Spring Hill, Tennessee. Why wouldn't Mr. Penske simply by the whole operation and run it? He and Penske Automotive Group would know what kind of car the customer want. As the 2nd largest auto retailer, they would know GM and Saturn that no outsider (like Fiat, for example) could know. They could possibly clean up the manufacturing operation.

I'll refrain from being overly optimistic until the deal is done and more details known. I hope the Auto Task Force and Mr. Rattner the car czar (for cacophony of czars, see my post here) stay out of the deal. (Oh no...don't tell me this is the deal brokered by them... )

As I wrote several posts ago, Toyota is increasing production, both in the US and back in Japan. GM and Chrysler may have been bankrupted at the bottom of the market. Pity. And shame.

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