Saturn dealers plot a future without GM — again

Saturn dealers plot a future without GM — again

Options include shutting down, selling imports

Chrissie Thompson
and Jamie LaReau

Automotive News | October 1, 2009 – 12:01 am EST


Some Saturn dealers say they will look for other franchises now that Penske Automotive has canceled its plans to buy Saturn from GM, while others say they’ll wait and see whether Penske revives the deal.

“I guess I’ll be selling the competition,” said George Nahas, who owns Saturn stores in Alabama and Florida. Some import brands want him to carry their products, he said.

Nahas has experienced shutdown traumas before. He owned an Oldsmobile dealership in 2000 when GM killed the brand. He says this latest news is disappointing, but at least provides clarity for his future.

“We’ve been in limbo since December 2," when General Motors Co. first said it might abandon Saturn, Nahas said. “At least now we know what it is, and we know what our destiny is, right? We can act accordingly.”

GM said Wednesday it would wind down the Saturn brands and its 350-franchise dealer network through a process to be spelled out in the near future. Penske failed to secure a source of vehicles to keep the brand afloat.

Deal with Renault falls apart

Penske had been negotiating with France’s Renault SA to acquire autos for Saturn once a production agreement with GM had expired. Those talks collapsed, scuttling the Saturn acquisition by the dealership group and its CEO, Roger Penske.

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

Renault acknowledged that it had been in talks with Penske to supply cars, parts and technology for Saturn. "The conditions for an agreement have not been found," Renault said in a statement.

The collapsed deal puts Saturn in the same camp as Pontiac — brands that GM plans to phase out over the next 13 months.

“We will be winding down the Saturn brand and dealership network,” GM said in a statement Wednesday.

Holding out hope

But Tobin Oberhoulser, sales manager at a Saturn store in Lafayette, Ind., says he will conduct business as usual while he holds out hope that Penske Automotive Group Inc. and CEO Roger Penske will still complete the deal somehow.

“I stay confident in Roger Penske,” he said. “He’s a guy that’s got unlimited resources, and I have a feeling that once everything settles down, since we’ve pushed it back so far anyway, I think it will end up being worked out.”

If Penske Automotive, the nation’s second-largest auto retailer, doesn’t reconsider its decision to drop its pursuit of the brand, Oberhoulser says he hopes one of Saturn’s previous bidders will renew interest. Until his store gets information that he views as final, he says, he doesn’t plan to mention the failed deal in his advertising.

John Pitre, general manager of a Saturn store in Bakersfield, Calif., says his dealership will now have to reassess its next move.

When GM “announced they were going to close it or sell it, we had developed a business model,” Pitre said. “Then we heard of the Penske deal, and we figured we’d let Saturn run. Now we have to look for other franchises. There are a couple of possibilities.”

Real estate for sale

Lou Sobh, whose multifranchise dealership group includes five Saturn stores in Chicago and Los Angeles, says he’ll start winding down his locations.

“There’s $12 million in (Chicago) real estate that’s available for sale if anybody wants it,” he said.

Sobh says he received a letter Monday from Saturn brand executive Jill Lajdziak saying the Penske deal needed another 60 days to complete. That only deepened his doubts that the deal would go through, he says.

“I know Mr. Penske is a genius,” Sobh said. “I just knew he had a very tall order, a very tall task.”

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