GM to close Saturn brand

• Source: Global Times
• [01:26 October 02 2009]
• Comments

General Motors will close its Saturn brand and wind down its dealership network after a deal to sell the faltering brand to Penske Automotive Group collapsed, the automaker said Wednesday.

The breakdown of a deal that had been widely expected to close this week will force some 350 Saturn dealerships to close and could cut 13,000 US jobs that would have been preserved under a plan by auto magnate Roger Penske.

Penske had been negotiating with Renault to acquire vehicles for the Saturn brand once a production agreement with GM had expired. Those talks collapsed, scuttling the Saturn acquisition by Penske.

"Mr Penske is clearly a very clever man," said Paul Melville, a partner at Grant Thornton corporate advisory and restructuring services. "If he had pursued a deal with Renault and if it's too difficult to make that happen, it's dead."

Penske Automotive shares were down about 8 percent in aftermarket trading. The breakdown of the deal was announced after the New York Stock Exchange closed.

Renault acknowledged that it had been in talks with Penske to supply cars, parts and technology for Saturn, which had not been profitable for GM.

"The conditions for an agreement have not been found," Renault said in a statement.

GM said it would immediately begin shutting down production at a plant in Michigan that builds the Outlook SUV and a plant in Mexico that builds the Vue small SUV.

The automaker also has halted plans to resume production of the Aura sedan at a Kansas plant.

Production was scheduled to resume in mid-October.

Agencies