Friday brought news, reported on
The Deal Pipeline (subscription required) and elsewhere, that Penske Automotive Group (NYSE:PAG) will buy the Saturn brand from bankrupt General Motors Corp.
For anyone pondering the future of the global auto industry, this is a far more important development than the sale of GM's oddball Hummer brand to a Chinese company that has never made cars (and may not be
allowed to complete the deal anyway). So it's worthwhile catching up with weekend stories in which Roger Penske, the 72-year-old racing-team leader and entrepreneur behind PAG, talks about what he has in mind for Saturn. Running a company that had $10.6 billion in sales last year from 304 auto franchises in the U.S. and the U.K., Penske knows something about selling cars.
Penske will own the Saturn brand and look for manufacturers to supply a network of 350 independently owned Saturn dealerships with products. In a Q&A with USA Today, he recaps the
basic plan: rely on GM for cars until 2011, but get to work immediately on finding a foreign manufacturer. Over time, that manufacturer will start making the cars in the U.S. Previous reports have named South Korea's Renault Samsung Motors as a
leading contender for the role.
As a Saturday Associated Press report pointed out, this arrangement, like the pending deal handing Chrysler LLC to Fiat SpA, has
important implications for an industry burdened with global overcapacity. The near-term effect will be to preserve capacity that the industry as a whole would be better off without. Indeed, in a New York Times piece Monday morning on
debates within the Obama administration's economic team, we learned that one of the arguments in favor of allowing Chrysler to go into liquidation was concern that GM will have to fight it (and its new partner) for U.S. market share.
But the medium-term effects could be even more significant. As the industry consolidates into a small number of global giants (Fiat's Sergio Marchionne puts the number at six), there are some contenders who still lack a vital U.S. presence. Detroit's woes are giving them a chance to acquire one and ratchet up the competition that will drive the consolidation all over the world.
Penske already distributes Daimler AG's Smart car in the U.S. for Daimler. He's no doubt well aware of what the Saturn channel could mean to a foreign manufacturer with an eye on the industry end-game. -
Kenneth Klee
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