Patterico's Pontifications

9/30/2009

Saturn Surprise

Filed under: Economics — DRJ @ 4:43 pm

[Guest post by DRJ]

GM’s sale of its Saturn brand to Penske has fallen apart and reportedly won’t be resurrected:

“Detroit tycoon Roger Penske has terminated a deal with General Motors Co. for the Saturn brand after Penske’s prospective provider of new vehicles pulled out.

The deal broke down after the Renault-Nissan Alliance decided Wednesday not to proceed with a deal to supply Penske with future vehicles for Saturn dealers, according to a source familiar with the discussions.

The deal’s unraveling dooms about 340 dealers and the Saturn brand, which appeared to have been rescued this summer when Penske announced he had reached a memorandum of understanding with GM.”

Closing Saturn will put even more people and businesses out of work and further reduce GM’s ability to repay the taxpayers’ bailout funds. The latter is disappointing but the former is the real issue in this economic climate.

— DRJ

23 Responses to “Saturn Surprise”

  1. But, but, but wait! Does this mean that the new Chairman of the Board of Government General Motors is going to throw thousands and thousands of people out of work?

    The economist Dana (474dfc)

  2. I cannot stand those commercials with the new muppet-head CEO of GM talking about how great his cars are. Our bailout(s) sure are helping.

    JD (aa1bf7)

  3. Weren’t we just seeing adds by a Saturn dealer on how wonderful Saturn cars are, how they make cars “that Americans want”.

    MD in Philly (d4f9fa)

  4. Actually, the surprise was that Penske was going to give it a try.

    And, acknowledging that Roger Penske is one real smart guy, it seems backwards to try to build a brand starting with a dealer network and then going out to find a manufacturer to build cars rather than starting with cars that people would buy and then establishing a dealer network to sell them (as was the case with the Mini, to a lesser degree, the Smart car, and in the not too distant future, Alfa Romeo).

    steve sturm (3811cf)

  5. The one time I ever visited a Saturn lot, they treated me like a jerk. Bought a Dodge instead.

    gp (cb5e61)

  6. (as was the case with the Mini, to a lesser degree, the Smart car, and in the not too distant future, Alfa Romeo)

    BMW already had a dealer network in place, they just needed additional (where required) show-rooms.
    Ditto with Penske and the Smart car.
    It remains to be seen whether Ferrari (FIAT) can re-insert ALFA back into the American market,
    but they have an established dealer network that covers the major metro areas where the cars would be popular.
    They’ve already gone through this drill with Maserati.

    AD - RtR/OS! (7148a0)

  7. Economics 101: The end of Saturn…

    So, just who controls GM right now? The federal government owns 60% of GM, the Canadian government 12.5%, a United Auto Workers union health-care fund owns 17.5%, and pre-existing bondholders 10%. The people you trust, the people who have promised th…

    Common Sense Political Thought (73d96f)

  8. GM made the mistake of letting the UAW run Saturn like any other division. Saturn could have been a model of how to build small cars at a profit the way Toyota and Nissan do in American plants.

    Instead, even though it supposedly started out as a more cooperative workplace, it was just a matter of time before the work rules would result in the same bloated costs found in the rest of GM.

    Oh well, another in a long line of mistakes by GM.

    MU789 (fce705)

  9. Hah! The guy in that spot whines like a little kid responding to “Nah aaah!

    Matador (ad4464)

  10. Weren’t we just seeing adds by a Saturn dealer on how wonderful Saturn cars are, how they make cars “that Americans want”.

    Comment by MD in Philly — 9/30/2009 @ 5:09 pm

    Hah! That spot was so pitiful. The guy whines like a little kid responding to “Nah aah”.

    Not exactly a confidence builder.

    Matador (ad4464)

  11. Oops. Doubled up. Sorry.

    Matador (ad4464)

  12. The “cars people want” vs the dealer network to support them are a chicken-and-egg problem. You kind of have to have both, if one lags behind the other you are toast.
    I hadn’t been following the Penske deal, but made the assumption that Renault would be the obvious source of cars as that company could use the new market. PSA Peugeot Citroen I think wouldn’t be flexible enough in production to supply all the dealerships, and their cars haven’t really been planned to meet the stricter safety and emissions standards of the USA, whereas most current Renault platforms have been designed in cooperation with Nissan who had the US market in mind.
    I suspect it was Nissan not wanting the competition in the US market from very similar cars that probably killed the deal.
    There was a mobile-phone selling firm in the UK several years ago wanting to expand nationwide during a pretty good economic time and couldn’t get good shopfronts in prime locations. They found it was cheaper just to buy Radio-Shack in the UK and close it down — that got them all the best locations at lease rates negotiated long before the boom. A pre-existing infrastructure bought cheap can be a great advantage. Saturn also has the advantage of a brand name that retains goodwill and reputation, and even if you scoff at that the name is better in the US than Renault, or Puegeot. Most of us didn’t notice that the “unique” Saturn models were all just re-badged Opels anyway, even when they carried the same model name as their European brothers, so the introduction of new models might have been “an exciting new Saturn” rather than “Oh no, another LeCar…”
    I suspect that if Alfa is reintroduced it will be through Chysler distribution.

    Douglas2 (62fec6)

  13. […] Patterico. The Saturn plant is in Spring Hill, TN, not far from where I live in Knoxville/Maryville. This is […]

    Saturn sale to Penske falls through | Les Jones (dc5d7d)

  14. Comment by Douglas2 — 9/30/2009 @ 6:50 pm

    Yes, using the Chrysler network for ALFA would be the logical move; but, historically, Big-Three dealerships just don’t take well to imports, and the type of atmosphere that you need to attract the import buyer – and an ALFA buyer is a very specialized one, especially at the price levels of the current ALFA lineup.

    AD - RtR/OS! (7148a0)

  15. I had a Saturn, it ran great and had a surprizing amount of power for a small car. It drove well and I was very happy with it. Too bad. There is a special place in hell for GM executives.

    Californio (da22d6)

  16. The one time I ever visited a Saturn lot, they treated me like a jerk. Bought a Dodge instead.

    Comment by gp — 9/30/2009 @ 5:31 pm

    Sorry to hear that. Have had two Saturns in succession that haven’t given me hardly two licks of trouble these last 16 years. Salespeople treated me great, both times, unlike the dipsticks at Honda who thought their poop di’n’t stink.

    Will prolly get a new car w/i 3 yrs and will very much miss the no-haggle, low-cost car and the sturdy dependable ride. *weeps piteously*

    no one you know (1ebbb1)

  17. Government Motors (GM) has no problem with not paying the government back, BHO never intended for them to pay. He wants to own GM lock stock and barrel.
    Sometimes, matter of fact most times, when people are treated as jerks they might want to look in a mirror, they probably are jerks.

    Scrapiron (4e0dda)

  18. NOYK, I really think highly of the last couple of years of Jetta’s production, especially the diesel engines ones. and they get awesome mileage, and they aren’t sissy lil hybrids…

    Scott Jacobs (d027b8)

  19. I suspect the reason GM queered the deal is they didn’t want Penske showing them up. Penske wanted the Saturn dealer network to hit the ground running, but he needed Saturn or other GM products like the Pontiac G8 to keep the deaers solvent while he worked deals with offshore manufacturers. He already has the Daimler made SMART car. The new Opel company (ex GM) products would also be a good fit.

    The last thing GM wants is another dealer network selling against them, run by a competent individual. Their sales are tanking without CfC, which really didn’t help them that much. They had been shut down for a month for the bankruptcy and another 2 weeks for model changeover anddidn’t have a lot of inventory. They probably depleted their inventory in the first two days.

    GM could survive if he ran it and had a free hand to do what needs to be done. But he would be limited to $500,000/year and he would have to put his other operations in blind trust and take a break from racing. Why take all the headaches of GM when he enjoys what he is doing now.

    Corky Boyd (4e8f68)

  20. Scott, stay away from Volkswagon, or at least be very very careful if you go that route. I saw a repair survey that said an 8 year old Toyota was more reliable than a 2 year old VW.

    Their mileage is impressive, and they do pretty good styling, but I’d be cautious. Another problem is that global warming may be a hysterical fear, but acid rain is not. Diesels aren’t good for the environment (they are great for your wallet, though). That’s your personal call.

    NOYK, Honda dealers are the WORST. Because their cars have been good to my family. Luckily, I was able to negotiate my latest by email very easily. My first Saturn was a champ of a car, and my second was extremely unreliable. I later learned GM had basically killed Saturn and just rebadged their crappy Chevies with Saturn logos, which is why I’m not a Honda man.

    But these days, it’s easy to buy a reliable car. Ford, Honda, even Hyundai some say.

    Dustin (0bdb72)

  21. #20: Do tell about the acid rain problems.

    With the new ultra-low sulfur diesel, sulfur oxides are not as much of a concern. This is why diesel has gone up in price; more costly to refine to the new standards.

    Oh, and BTW, ALL rain is acid rain. The pH of water in equilibrium with air is about 5.3, due the dissolved CO2.

    Besides, acid rain is SO 1980s.

    Dr. K (eca563)

  22. I know it’s an old concern Dr K, but yeah, Diesel is still making air dirty.

    This is why global warming hysteria really irritates me. Environmentalism is tainted with lies and overreactions, when it really should be a no brainer that we shouldn’t pollute things. A lot of the measures that make sense without global warming are looking silly because the global warming alarmists took over the environmentalism cause.

    If Scott wants a diesel, that’s cool with me… it’s his personal choice and I respect that. I just wanted to point out one issue with this. There is a reduction, but it’s a problem still. I think gasoline is better than diesel for the environment, because I do not fear man made climate change.

    Just because diesel is cleaner now with ULSD than it was in the 80s doesn’t mean acid rain isn’t a problem anymore. Unlike global warming, you can hypothesize, test, and verify the existence and cause of acid rain as well as many of the other health problems associated with diesels. I used to drive a diesel for work, before the new fuel standards, and I’d do it again if I had to, so I’m not on a high horse. Just talking cars.

    By the way, diesel in the states is generally not very clean even today. Pretending the problem is over is just wrongheaded. If it’s a reaction to Al Gore’s bullshit, then I understand but it’s still wrongheaded.

    Dustin (0bdb72)

  23. It has to be remembered: in their eagerness not to tax “the people,” the federal and many state governments have placed higher taxes on diesel fuel than on gasoline. After all, only commercial truckers use diesel, right?

    The Dana who manages a diesel truck fleet (474dfc)


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