GM to phase out Saturn
Talks with Penske to buy brand collapse
Last Updated: Wednesday, September 30, 2009 | 6:28 PM ET
CBC News
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General Motors Co. is phasing out its Saturn division and its 340-member dealer network.
Talks to sell the unit to retailer Penske Automotive Group Inc. fell apart after CEO Roger Penske was unable to find a manufacturer to supply vehicles after a contract with GM runs out in 2011.
GM says Saturn owners will be able to go to a certified GM dealer for service once Saturn dealerships are closed.
(CBC) "This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality," GM CEO Fritz Henderson said in a written statement. Penske's announcement "explained that their decision was not based on interactions with GM or Saturn retailers."
GM and Penske reached a tentative deal on June 5 in which GM agreed to keep building the Saturn Aura, Outlook and Vue until the end of 2011. After that, Penske would need another manufacturer.
Penske said it negotiated with another company —which it did not identify— but that firm's board of directors voted the proposal down.
"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," Penske's statement said.
Saturn employs 13,000
The Saturn operation, based in Spring Hill, Tenn., employs 13,000 people.
GM said Saturn vehicle owners can still go to their Saturn dealer for service and would be able to go to a certified GM dealer for service once Saturn dealerships are closed.
Shares of Penske fell more than 10 per cent in after-hours trading, down $1.98 to $19.18 US.
Sales down 59%
Sales of Saturn fell 59 per cent this year after GM said it would shed Saturn along with Hummer, Saab and Pontiac as part of a massive reorganization.
GM emerged from bankruptcy protection July 10 after dropping brands and laying off thousands of employees to focus on Chevrolet, Cadillac, Buick and GMC.
GM established the Saturn brand in 1985 as an initiative to reinvent vehicle retailing and manufacturing. Deliveries peaked in 1994 at 286,003 units.
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