Behind The Saturn Shutdown: Roger Penske Explains What Happened

[Perian]

Link: http://online.wsj.com/article/BT-CO-...30-716822.html

By Sharon Terlep - Of DOW JONES NEWSWIRES


DETROIT (Dow Jones)--Auto magnate Roger Penske believed he was taking over General Motors Co.'s Saturn brand until the very last moments, when France's Renault SA shocked both Penske and GM by backing out of an agreement to provide vehicles.

Penske addressed the failed deal Friday as he announced Penske Automotive Group Inc.'s quarterly financial results. The company also disclosed it took a $1.9 million third-quarter charge on the Saturn deal.

"We believed we were making substantial progress toward an agreement," Penske said during a conference call with investors. At the last minute, he said, Renault decided the Saturn venture "did not meet their return requirement."

"We as a company could not accept the risk of moving forward without a supply in place," he said.

Under their novel agreement, Penske would have taken over GM's network of Saturn dealers. The auto maker would have continued producing Saturn vehicles for about two years after which time Renault would take over production.

Penske said he considering pairing with a number of vehicle providers but decided Renault was the only viable option.

According to people familiar with the matter, Penske had thought he had an agreement with Carlos Ghosn, Renault's chairman and chief executive, to supply Saturn models after that, but the Renault board balked at the plan.

Penske had not publicly addressed the issue until Friday.

Article continues at link.

[Perian]

Originally Posted by Perian

According to people familiar with the matter, Penske had thought he had an agreement with Carlos Ghosn, Renault's chairman and chief executive, to supply Saturn models after that, but the Renault board balked at the plan.

Imagine where GM would be today if it had the type of Board of Directors that Renault (apparently) does.

What a shame for all involved.

[smith7629]

I'm not sure rebadging Renaults would have been a good thing anyway.

[Slack]

Originally Posted by Perian

Imagine where GM would be today if it had the type of Board of Directors that Renault (apparently) does.

What a shame for all involved.

Are you suggesting that GM could be worse off than nationalized bankruptcy? This seems like a reasonable decision reached by Renault. If Renault thought they could sell their vehicles in the US, they would be doing so already. They already have access to the Nissan dealer network. It would be foolish of them to opt to add another partner to accomplish something they could do anytime they wish already.

[Perian]

Originally Posted by Slack

Are you suggesting that GM could be worse off than nationalized bankruptcy? This seems like a reasonable decision reached by Renault. If Renault thought they could sell their vehicles in the US, they would be doing so already. They already have access to the Nissan dealer network. It would be foolish of them to opt to add another partner to accomplish something they could do anytime they wish already.

My thoughts are with the Saturn dealers and their employees.

[Dr. Show-Me]

I've seen a lot of Renaults lately, and there is nothing special about them. It's unfortunate that Saturn is lost, with all the good people who worked for Saturn having provided a solid product and great buying experience.
To all the Hate-America-Firsters, thank you for not buying American!

[Slack]

Originally Posted by Perian

My thoughts are with the Saturn dealers and their employees.

I feel bad for them, too. There will be a lot of people without jobs soon. The blame rests squarely on the shoulders of GM, though. It isn't Renault's responsibility to pick up GM's tab. That, apparently, is what taxpayers are for.

[Stéphane Dumas]

We could wonder if the same scenario would had happened if Penske eyed Pontiac instead of Saturn?

[Dr. Show-Me]

America's free trade policy meant the foreign car companies could raid our car business without opening up their own countries for our car products. Also America was such a large car market that we didn't buy American to support our car companies. Export-driven nations took advantage, now we are paying for the lack of support we gave to our own nation's auto companies. In the short run or in the long run, a nation must support its own vital industries.

[westtxsky]

Originally Posted by Dr. Show-Me

America's free trade policy meant the foreign car companies could raid our car business without opening up their own countries for our car products. Also America was such a large car market that we didn't buy American to support our car companies. Export-driven nations took advantage, now we are paying for the lack of support we gave to our own nation's auto companies. In the short run or in the long run, a nation must support its own vital industries.

Or they could have used the competition to make their cars better rather than sit on their hands and allow the foreign automakers design and build better cars than them.

[throwback]

This deal never made sense for Renault. Why compete against yourself in the most competitive car market? (I know, GM has been doing it for years) If you want to sell Renaults in the USA why not use Nissan dealers?

[prototype66]

That whole plan stunk from the get go! I still say Seat would have been a perfect Saturn, i mean he already has a franchise agreement with them anyway!. I really feel bad for all the Saturn employees! They got all their hopes up then dumped it right in the river, that really sucks!

[PAULSTS1]

Originally Posted by Perian

Imagine where GM would be today if it had the type of Board of Directors that Renault (apparently) does.

What a shame for all involved.

Just to comment on that statement from a different perspective; Renault’s Board of Directors understood what mix satisfies their business interests and plans. They reviewed what they currently possess also have access to and reviewed the assets offered (SATURN), they declined, even though their CEO Carlos Ghosn saw value in it. This is what sometimes a Board of Directors must do to protect the stakeholders from an emotional and costly acquisition using the corporation business model and market analysis.

However, one can only wonder the outcome if GM Board of Directors had envisioned marketing each of the company’s existing brands--prior to commitment to create Saturn; Oldsmobile probably would have survived and Chevrolet might have benefited from implementation of some Saturn’s innovative marketing concepts. Consequently, the cash burn of the early 2000’s might never have occurred, is it possible to speculate that GM might have still been an financial powerhouse?

[BerettaZ]

Originally Posted by PAULSTS1

Just to comment on that statement from a different perspective; Renault’s Board of Directors understood what mix satisfies their business interests and plans. They reviewed what they currently possess also have access to and reviewed the assets offered (SATURN), they declined, even though their CEO Carlos Ghosn saw value in it. This is what sometimes a Board of Directors must do to protect the stakeholders from an emotional and costly acquisition using the corporation business model and market analysis.

However, one can only wonder the outcome if GM Board of Directors had envisioned marketing each of the company’s existing brands--prior to commitment to create Saturn; Oldsmobile probably would have survived and Chevrolet might have benefited from implementation of some Saturn’s innovative marketing concepts. Consequently, the cash burn of the early 2000’s might never have occurred, is it possible to speculate that GM might have still been an financial powerhouse?

I agree 100%, particularly with your second paragraph.

[Rick 2000]

I am sorry to see Saturn go , glad to see that we don't will have
1 more Import brand .