GM Sells Saturn Unit To Penske As Part Of Bankruptcy Plan

General Motors Corp. (GM), racing to jettison unwanted assets as part of its bankruptcy filing, sold its Saturn unit on Friday to retailer Penske Automotive Group Inc. (PAG).

GM earlier this week announced that it plans to sell Hummer to China’s Sichuan Tengzhong Heavy Industrial Machinery Co., is offloading its European Opel operations to Magna International Inc. (MGA), and is discontinuing its Pontiac unit.

GM spent billions to open the Saturn unit in 1990 after gearing up with 5 years of design work and factory retooling.  The brand reached its high-point in 1994 when it sold 286,003 cars Bloomberg News reported, citing data from Autodata Corp. However, sales for 2009 had fallen by 58% through May.

The sale of Saturn will preserve 13,000 jobs and 350 dealers “in the near term,” GM said in a statement.  The price will be $100 million to $200 million, according to Bloomberg. Most of the U.S. dealers are standalone, GM said.

Penske, run by legendary racing icon Roger Penske, will receive the rights to the Saturn brands, trademarks, service and parts and distribution operations.  GM will continue to make and sell vehicles under a contract with Penske that runs through 2011.

After that, it will rely on new deals for manufacturing and parts, possibly with South Korea’s Renault Samsung Motors Co. Those deals will probably include provisions for introducing new models to flesh out the Saturn vehicle portfolio, according to the Wall Street Journal.

GM’s announcement got widespread positive reviews from analysts in the auto business.

“Penske is incredibly well-respected in the business,” Stephanie Brinley, an auto analyst at consulting firm AutoPacific Inc. in Troy, Michigan told Bloomberg. “It should help Saturn maintain the reputation it has for reaching the consumers.”

For GM, getting a buyer that is capable of managing a dealer network and selling cars “is like finally finding your puppy a good home,” Jack Nerad, an auto analyst at car-pricing service Kelley Blue Book told Bloomberg.

Penske recruited retired Chrysler LLC President Tom LaSorda to consult on the deal and he will also take an unspecified role in the new business. Penske indicated the sale will close next quarter, and Saturn will become a wholly owned subsidiary.

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Comment by DavidLye

2009-08-10 19:33:02

To try and keep the Australian arm of GM (Holden) afloat, the government have just offered a $200m line of credit (as well as around $150m, earlier to promote ‘green car’ development). But is this just buying time?

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