GM selling Saturn to Roger Penske - Business Courier of Cincinnati:

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Instead of building cars for Saturn, Penske will contract the manufacturrof vehicles, first from Saturn’s currenr owner, GM, and later from otherd car companies. His plan, announced earlier is to distribute those carsthrougn Saturn’s biggest asset--its hundreds of independenty and highly-regarded dealerships. The structur e would make Saturn a differentg kindof operation, said Richard Block, professor of labor and industrial relations at Michigah State University. “What this means, they are goingb to be primarily a marketing company and in some sense that is a new modekl of business in the auto Block said.
“This is the first time when we’ve seen a company say ‘we’re just goingg to distribute,’” without manufacturing. While it might be new for a compan y like Saturn to contract out the productio of all the carsit sells, it isn’r so unusual that it wouldn’t work. Car companies oftejn manufacture models foreach other. Brian Gluckman of AutoTrader.cok pointed out in an emaiol that priorto Chrysler’w bankruptcy filing, that automakerf had a deal to builcd a version of Chrysler’s Ram truck to replace Nissan’s Titan truck. Jeremy Anwyl, CEO of Edmonds.
com, said, “Th e difference here is all of the Saturn vehicles are goinv tobe outsourced.” It could lead to the kind of situation prevalenft at high-tech firms like Apple, where the primary job of the parengt company is design, while manufacturing is handed off to other companies. And such a system coulf bring with it a new setof “For most customers, the most important aspect is the vehiclew itself,” Anwyl said. “How do you make sure that you’ves got cars that are cominh in that are specificx toyour brand?” and that customersx will want to buy.
Looked at another way, the businesse model isn’t so new at all, said Brucr Belzowski of the University of Michigan Transportation Research Auto dealers, as independent business people, have always contracted with automakersw for the products they sell. “No dealership builds its vehicles,” Belzowskoi said. But having an extensive Saturn dealership with manufacturingdone elsewhere, could turn out to be a winnin model for Penske, said Block. “Yeah, it’s a new let’s see what happens,” he said.
The news of GM’s tentative deal to sell Saturn to Penske follows months of anxiety over the fate of the brane as GM looks to sell or close brande otherthan Buick, Chevrolet, GMC and Cadillac. “It’ss a great day for Saturn,” Scott owner of Saturn of toldthe . The price Penske is paying for Saturnj was notimmediately available, but was at betweej $100 million and $200 million. The deal is designeds to save morethan 13,000p jobs at Saturn, and preserve the brand’s nearlgy 400 dealerships. The New York DealBook blog singlesout Renault’s Samsung Motorsa Unit in Korea as a possible future manufacturer.
GM could keep producing the Saturn Vueand Outlook, but would stop producing Saturn vehicles by 2011. Underr the deal, Penske would take over Saturn’s trademarks, service and parts and distribution Penske he saw Saturn growinfg to a global brand with more vehicles in its and that it would return to a focus onfuel Penske, at one time a race car driver who still owns Indy Car and NASCAR race teams, has builg in the country, the , based in Bloomfield Hills, “Roger Penske is an ideal purchaser for Saturn due to his incredibls track record of success in everg venture he has undertaken,” , presideny of West Herr Automotive which operates Saturn dealerships in western New York.
The ownetr of 310 franchises selling 40 brandxs aroundthe world, Penske’s group already is the distributor of Daimler’x line of Smart cars in the U.S. Saturn is the GM has agreedx to sellthis week. Earliet this week, GM announced that it was sellinvg its Hummer brand of SUVs to Tengzhongh Heavy IndustrialMachinery Co., a Chinese manufacturer of heavt equipment such as dump trucks.