Relieved Dealers Praise Penske-Saturn Deal

Two dealers with a vital interest in the survival of the Saturn brand are elated that megadealer Roger Penske’s firm plans to buy the division from a downsizing General Motors Corp. “We’re thrilled,” says Todd Ingersoll, owner of Saturn of Danbury in Danbury, CT, a new facility that opened in July, months before GM announced plans to shed itself of Saturn. At the time, the new store was called “a vote of confidence in the division’s future.”

“I’d be more than pleased to be in the Roger Penske distribution network,” says George Nahas, owner of two Saturn stores in Florida. “It’s better than being killed off, that’s for sure.”

Nahas has been there, done that. He originally was a single-point Oldsmobile dealer. When GM killed off that division, Nahas received Saturn franchises in return. “The only thing I have left is Saturn,” he says.

Saturn of Danbury opened in July, months before GM announced plans to shed Saturn.

GM and Penske today confirm details of the proposed transaction. It is expected to close in the year’s third quarter. Financial terms have yet to be announced.

Under a memorandum of understanding, Penske would obtain the rights to the brand as well as other Saturn assets, such as service and parts-distribution operations.

GM would continue production, on a contract basis, of the Saturn Aura midsize sedan, Vue midsize cross/utility vehicle and Outlook large CUV. Penske would sell those vehicles through more than 350 Saturn dealerships.

“Saturn has a passionate customer base and an outstanding dealer network,” says Penske, chairman of the Penske Automotive Group in Bloomfield Hills, MI, a 149-store dealership chain, ranked No.2 on the Ward’s Megadealer 100.

He also owns dealerships in Europe, and is sole distributor of Daimler AG’s Smart cars in the U.S.

Penske initially would buy Saturn vehicles from GM at least through 2011, says auto analyst Rich Kwas, basing that knowledge on conversations with Penske management.

“Beyond that, Penske is negotiating with several auto makers to build products under the Saturn brand once the contract assembly agreement with GM expires,” he says.

One prediction has Penske buying cars from Renault SA, through its Renault Samsung Motors Inc. in South Korea. On April 20, Ward’s reported a potential Saturn-Renault hook-up.

“Relative to the company’s arrangement with Daimler to distribute Smart, we believe the vehicle-distribution arrangement with GM and a foreign manufacturing partner will be more complex and likely less profitable,” says Kwas, of Wachovia Capital Markets LLC’s automotive sector.

Still, Saturn dealers who faced the dire prospect of being retailers without a product, are breathing easier.

“This is the day we hoped and prayed for,” Ingersoll says. “It is a best-case scenario to be partnered with someone with a vision, like Roger Penske. And it’s saving 13,000 jobs.”

Billed as “a different kind of car company,” Saturn began selling cars in 1990 through model dealerships that strove to be customer friendly. It has sold more than 4 million vehicles since then, not enough to be considered essential to GM.

“There has been a groundswell of support for Saturn, with our retailers and owners urging us to save the brand,” says Jill Lajdziak, Saturn general manager. “We heard their call loud and clear, and it inspired us as we worked to secure Saturn’s future.”

Lajdziak may ultimately become a manager in the Penske operation, according to Penske. Another potential manager is Tom LaSorda, former Chrysler LLC co-president, who served as a Penske consultant in the bid to buy Saturn.

GM, now in bankruptcy, is divesting itself of other brands as well, such as Hummer, Saab and Opel in Europe.

The auto maker also is eliminating thousands of dealers. This week, it informed surviving dealers of more stringent sales and performance requirements.

“It’s ironic,” says Nahas. “We Saturn guys had been on the outside looking in for months.”

He notes now that GM is in bankruptcy court, 1,500 of its dealers are being cut and the ones that aren’t are getting tough-sounding letters unilaterally stating company demands.

“All of sudden, being a Saturn dealer doesn’t seem so bad after all,” he says.

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