GM deal with Penske off; Saturn brand ends

DETROIT — For those who expected General Motors' once-funky Saturn brand to live on with a new owner, Wednesday brought a surprisingly different fate for what was once billed as a different kind of car company.

At the brand's 350 remaining dealers around the country, there were high hopes that a deal would be announced for GM to sell the brand to former race car driver and auto industry magnate Roger Penske.

Instead, Penske Automotive Group Inc. announced that it would walk away from the deal, unable to find a manufacturer to make Saturn cars when GM stopped producing models sometime after the end of 2011. GM then announced it would stop producing Saturns and soon would close down the brand.

The day's events mean an almost certain end to Saturn, a brand that was set up in 1990 to fight the growing Japanese imports. Instead of celebrating a rebirth, the announcements sent dealers scrambling for ways to stay open and preserve about 13,000 jobs.

Saturn of Wichita owner Scott Davies said he hadn't seen the details and couldn't comment.

"I find this hard to believe," said Carl Galeana, owner of two Saturn dealerships in suburban Detroit. "Everyone's been saying we're right at the goal line."

Although GM and Penske reached a tentative agreement to sell the brand in June, the deal collapsed Wednesday after Penske was told by an unidentified manufacturer that its board had rejected a deal to make cars for the new Saturn.

The Detroit Free Press reported that the manufacturer was Renault-Nissan.

"Renault has been in contact with Penske to supply cars, parts and technology to Saturn through an OEM agreement. The conditions for an agreement have not been found," a Renault spokeswoman, said in a statement.

"It was a stunning turn of events," said GM spokesman Tom Pyden, who added that most of the details between GM and Penske had been worked out and both sides expected to announce this week that the deal had been closed.

GM had agreed to keep building three Saturn models even beyond 2011, but after that, Penske had to come up with its own products made by another manufacturer.

Penske spokesman Anthony Pordon said there is little if any chance that the talks could be reopened. Without another supplier in place before the deal was signed, Penske couldn't run the risk of taking on Saturn, Pordon said.

It takes several years to design new vehicles or engineer foreign vehicles to meet U.S. standards. Penske would risk having no products to sell once the GM contract expired.

Penske's purchase price was never disclosed, and he will not have to pay a termination fee, Pyden said.

GM will stop making Saturns as soon as possible, but no layoffs are expected, said spokeswoman Sherrie Childers Arb.

GM had stopped building the Aura midsize sedan in Kansas City, Kan., and will not resume assembling them. Production of the Outlook large crossover near Lansing, Mich., and the Vue small crossover vehicle in Ramos Arizpe, Mexico, will be phased out as soon as possible, she said.

Saturn owners can still go to Saturn dealers for service. They would also be able to go to a certified GM dealer once Saturn dealerships close, GM said.