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!