BLOOMFIELD HILLS, Mich. (WXYZ) - The Penske Automotive Group has announced that it has terminated talks with GM on acquiring the Saturn brand.
Penske says negotiations with GM regarding the future supply of vehicles caused the breakdown in talks. The sticking point involved disagreements on who would build the Saturn cars after 2010, when GM's agreement would have run out.
Negotiations broke down with manufacturers from China, Japan and a European company on who would build the cars. Without an agreement, Penske determined their was too much risk and uncertainty over where future Saturn vehicles would be built.
In a statement issued by General Motors, the company is very disappointed about Penske's decision to back out. This will ultimately mean the end for the Saturn brand as GM prepares to phase out production and the entire dealership network.
Saturn has 350 dealers. The Penske deal to acquire the brand would have saved approximately 13,000 jobs.
STATEMENT FROM GENERAL MOTORS:Today we learned that Penske Automotive Group (PAG) has decided to terminate discussions with General Motors to acquire Saturn. 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. PAG’s announcement explained that their decision was not based on interactions with GM or Saturn retailers; rather it was because of the inability to source new products beyond what it had asked GM to build on contract.
As a result of PAG’s decision, we will be winding down the Saturn brand and dealership network, in accordance with the wind-down agreements that Saturn dealers recently signed with GM. Pursuant to the terms of those agreements, the wind down process will be determined and communicated shortly.
Saturn customers and owners will continue to be able to purchase and have their vehicles serviced at Saturn retailers during this process. Once the wind down is complete, Saturn owners will still be able to have their vehicles serviced at other GM dealerships. We will be communicating with our customers very soon to explain the next steps in this process.
Today’s disappointing news comes at a time when we’d hoped for a successful launch of the Saturn brand into a new chapter. We will be working closely with our dealers to ensure Saturn customers are cared for as we transition them to other GM dealers in the months ahead. I’d also like to thank every GM employee and Saturn retailer who worked so hard to try to make this new beginning happen for Saturn.
STATEMENT FROM PENSKE AUTOMOTIVE:Penske Automotive Group, Inc. (NYSE: PAG) n international automotive retailer, today announced that it has terminated its discussions with General Motors Company ("GM") to acquire the Saturn brand, citing concerns directly related to the future supply of vehicles beyond the supply period it had negotiated with GM.
Since announcing its discussions with GM on June 5, 2009, the company has been in the due diligence process to determine the feasibility of developing an independent distribution model for Saturn-branded products and service parts in the United States, including the sourcing of vehicles from GM and other potential suppliers. The company had negotiated a definitive agreement with GM to source vehicles on a contract-manufactured basis for a period of time. After this period, the company would have been required to source vehicles from another third party under a similar contract-manufacturing agreement.
Penske Automotive Group negotiated the terms and conditions of an agreement with another manufacturer; however, that agreement was rejected by that manufacturer's board of directors. 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.
