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Penske Automotive Group (PAG)
Penske Scraps Plans to Acquire Saturn
It's been a rough year for General Motors (GM: Charts, News, Offers). The company was forced to file for bankruptcy protection at the beginning of June, following quickly in Chrysler's footsteps. And despite many efforts by the government to help GM and the overall auto industry, with the Cash for Clunkers program and other measures, GM was stuck. The company quickly came to the realization that they needed to sell its Saturn brand, and since June had been in negotiations with Penske Automotive Group to arrange an acquisition. Everything seemed to be on the right track, until and everyone was optimistic for the future of the brand until Penske shockingly announced yesterday that they would not be moving forward with the arrangement.
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The deal was to work like this: Penske was going to purchase the brand, and sell the cars through 2011 as GM continued to make a few select models, and then Penske would coordinate with another auto manufacturer which would take over production of the Saturn brand. Penske would have primarily been the distributor, simply facilitating the details. However, Penske has announced that the manufacturer they were hoping would work with them has backed out of the deal with Penske, leading Penske to do the same thing to GM.
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Until yesterday, the deal had seemed like a sure thing, and was set to close this month. The auto dealers and customers alike were excited about the prospective partnership. But now, with the deal off the table, everyone is scrambling to see what will happen next. Dealers are worried about going out of business, and customers are pondering where to take their vehicles once all the dealerships are closed. General Motors and Saturn are working quickly as well to determine the best way to react. As of now, Saturn dealerships are still operating, but once they close, customers will be able to get their vehicles serviced at any other GM dealership. And instead of continuing production through 2011, GM now plans to halt production of Saturns by the end of the year; yet spokeswoman Sherrie Childers Arb made sure to reassure employees that they do not expect to layoff Saturn plant employees.
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With Penske backing out of the deal, this leaves a rocky road ahead for General Motors. However, despite rumors that Penske would have been getting a great price for the Saturn brand, it is not surprising that Penske would hesitate at moving forward, without the confidence that they had someone lined up to produce the vehicles once General Motors stopped. General Motors had put a lot of hope in Roger Penske, as he has been able to successfully turn around auto companies before, but it seems that Penske did not have as much faith in succeeding in this situation. Nothing lost for Penske, but unfortunately this means it's the end of the road for Saturn.
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Penske & Saturn Commentary:
What really happened? Penske drops Saturn bid; GM says division doomed -A look back at the history of Saturn, the life of Roger Penske, and some thoughts on why the deal didn't go through.
What Went Wrong With Saturn?: Analysis - A closer look at the "experiment" that was the Saturn brand, and how despite offering a "great buying experience," the company was missing one crucial element...
A new model for the industry (Or not) - As the auto industry struggles, many unique plans are being hatched to try to make the best of the situation; but is breaking away from the norm going to lead to success?
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Click here to view a detailed profile of Penske Automotive Group.
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