Auto makers sometimes veered into the guardrails of paranoia in the 1990s as they watchedgrow fast by buying up scores of dealerships.
Manufacturers worried that if Wayne Huizenga’s new enterprise got too big, it would start telling them what to do, rather than the traditional other way around for the automotive retail franchise system.
eventually became the country’s No.1 publicly owned dealership chain. But at one point, it was public enemy No.1 as well to many auto executives who feared the worst.
Back then, some troubled industry people with vivid imaginations thought AutoNation would go so far as to brand its own car line for sale at its stores. Sort of like: “Forget about those Chevys and Fords in the back lot, check out our private-stock models here in the showroom.”
Such a U-turn from business as usual didn’t occur. (AutoNation, to this day, says it had no such plans.) Yet something like it is about to take place. But AutoNation won’t be the one making it happen. Another dealership chain,Automotive Group, will do so, with the full cooperation of .
Shedding itself of brands like a molting black mamba, GM is selling its Saturn division to Roger’s dealership chain, the nation’s second largest. The sale is slated to be finalized in late September.
Penske wants Saturn not so much for its vehicles but its 350-store dealership network. During its 19-year GM run, many of Saturn’s vehicles – especially the early ones – got so-so grades. But most of its dealers got straight A’s for treating customers right, one of the brand’s original missions.
Contractually, GM will continue to make three Saturn models for Penske to sell at the dealerships. Then he’ll be free in two years to find a new source of vehicles.
The GM-Penske deal that saves Saturn is considered good news for an industry seeing too much unpleasantness lately, from vehicle sales in a free fall to auto makers in bankruptcy.
But few people realize the full implication of the reprieve. One who does is Jack R. Nerad, Kelly Blue Book’s executive market analyst and editorial director. He calls the arrangement “one of the most significant developments” at a time filled with them.
Here’s why: “The proposed acquisition marks the beginning of a new business model in this industry; a model in which the distribution side of the business controls the brand, and the manufacturing is conducted by one or more sub-contractors,” Nerad says.
He predicts the possibility of Saturn dealers eventually marketing Korean or Chinese-built vehicles, or selling products an international auto maker builds in the U.S.
Whichever, the main part of the “new Saturn” is not who makes the cars but who sells them. Auto makers won’t play the lead role. The dealers will star in this production.
When auto makers feared AutoNation might pull off something like that a decade ago, it was envisioned as a potential horror show. Now, it’s seen as wonderful, lauded by the industry in general and GM in particular.
“There has been a groundswell of support for Saturn, with our retailers and owners urging us to save the brand,” says Jill Lajdziak, GM’s Saturn general manager. “We heard their call loud and clear, and it inspired us as we worked to secure Saturn’s future.”
GM might not feel so moved before long. Second thoughts may kick in after 2011 when, barring a contract renewal, GM will stop supplying autos to Penske and his Saturn dealers.
GM graciously offers good wishes to the reinvented Saturn organization now. But the auto maker may feel less magnanimous when every time a Saturn dealer sells a vehicle, a GM dealer doesn’t.
Saturn debuted in 1990 as “a different kind of car company.” It continues to deliver on that slogan in ways once considered unfathomable.