Friday, June 5, 2009

GM Sells Saturn Dealer Network to Penske


General Motors (GM) has signed a memorandum of understanding that would sell the Saturn dealership network of 350 dealers to the Penske Automotive Group (Penske), which is owned by Roger Penske. It is anticipated that Penske will offer all the dealers new franchise agreements and will retain all 13,000 employees for the interim. This is an excellent choice for GM since Roger Penske has a substantial business and automotive background.


Penske is the owner of 252 dealerships.....with 151 based in the U.S. He also owner the Penske Racing and a number of other businesses. He is also a corporate director at General Electric and Chairman of the Super Bowl XL.

Penske anticipates that they should be profitable initially since none of the manufacturing facilities are included in the deal. This deal is strictly for the dealership network and a parts manufacturing facility at Spring Hill, Tennessee.

GM will be manufacturing the Saturn Aura....a four door midsize sedan, the Vue....a small SUV, and Outlook...which is a full size SUV...in addition to other GM models. Saturn will discontinue the Saturn Sky, which is a convertible roadster and the Astra model, which is a small two door coupe imported from Europe. Penske also anticipates selling other models manufactured by other manufacturers outside the U.S.

Yet industry experts are sceptical that the mergers and alliances will work any better than the failed marriages of the past. It is difficult to put together companies with different philosophies and approaches to the automobile. Due to the difficult financial situation, it may be a necessity to survive.



Summary:

I have always been impressed with Roger Penske's business acumen! He will make the Saturn brand a successful enterprise. I am of the opinion that he should have been selected as the CEO of General Motors in 2005. GM would be in much better financial shape today!

It appears that we are experiencing is the expansion of the number of brands in the world. Current thought in the automobile world is that bigger is better since it is a capital intensive industry and large companies can get better deals from part suppliers.

Porsche is the most profitable automobile company based on the profit per car....but Porsche is a small manufacturer. The current automobile market is very fragmented. What works here may not work in Europe or Asia and vice versa!








10 comments:

  1. Hi Pete .. if I was a dealer .. I'd be jolly pleased with this arrangement .. at least it'd give me a business to continue with - and time to rethink a new strategy if I was of that mindset ..

    again - I like the red sports car .. not sure its manufacturer ..

    The Astra is one of our most successful cars by Vauxhall here in the UK .. a good standard basic, and used by fleets .. as well as personal owners - it doesn't seem to fit in the American mould.

    Go well - have a good weekend -
    Hilary Melton-Butcher
    Positive Letters

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  2. Hi Hilary,

    Your correct...the dealers are very pleased with this announcement! It is the best case scenario for them!

    The red convertible is sold in Europe as the Opel GT....it is manufactured in the U.S. at a Deleware plant. It is sold in the U.S. as the Pontiac Solstice or the Saturn Sky.

    Unfortunately, those models will be discontinued after the 2009 model year.

    I liked the Astra model....it appeared to be a well made small car! I think that the Astra would have sold well here in the U.S. had it been marketed properly.

    Thanks for the comment!

    Pete Baca
    The Car Enthusiast Online

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  3. Pete,
    Thats very true. I like the comment that what might work here might not work in Europe or Asia. Great Point. Thanks for the info.

    Dr. Bob Moulas

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  4. Hi Dr. Bob,

    It appears that smaller companies are able to move more rapidly to the satify the local market. It is interesting to note that the auto universe is getting fragmented among more smaller manufacturers...with a number of new start-ups.

    Toyota had a 7.7 billion dollar loss for the first quarter of 2009. Thanks for your comment!

    Pete Baca
    The Car Enthusiast Online

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  5. Peter, that is great news for the dealers. GM still keeps the production of the cars, is that right? This is just the dealerships not the production side of things. Is this a line that might be sold to someone else?
    Dan and Deanna "Marketing Unscrambled"

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  6. Hi Dan & Deanna,

    Yes...GM will continue to manufacture the cars for the Saturn brand and dealers. Penske will not get involved in the making the cars...he just wants to sell them.

    It is a very smart move on his part....GM spent a ton of money building the Saturn brand....now he walks away with the Saturn brand and the dealer network for pennies on the dollar.

    The Saturn brand was in effect sold to Penske so it cannot be resold. He is expanding his dealer network substantially.....I predict he will be very successful!

    Thanks for your comment!

    Pete Baca

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  7. Peter, that is good to know. Thank you for the answer. He will do very well. As long as GM can stay in good working order.
    Dan and Deanna "Marketing Unscrambled"

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  8. Hi Dan & Deanna,

    I am of the opinion that once GM comes out of the bankruptcy they will be in much better shape. The bankrupcy will shake the corporation to it's knees....they will start thinking about what happened and what they can do to survive.

    You will see some good GM cars in the future!

    Thanks for your comment!

    Pete Baca
    The Car Enthusiast Online

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  9. Peter, we can hope for the best for our auto industry. We all hope that they have learned some lessons here. Lets hope that it is good changes not worse ones. Dan and Deanna "Marketing Unscrambled"

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  10. Hi Dan & Deanna,

    I agree with you completely! Hopefully, they have learned some major lessons!

    Obama is pushing them in the right direction! So, I am hoping for the best!

    Thanks for your comment!

    Pete Baca
    The Car Enthusiast Online

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