Penske, the Man and His Dream

How is it that with General Motors you always get the cruelest possible outcome? Rather than being allowed to die with some shred of violated-in-every-orifice, burned-beyond-recognition dignity, the Saturn brand will be kept alive beyond its two-year death sentence.

Roger Penske, a Michigan-based businessman with interests in auto racing, truck leasing, and most importantly manufacturing and auto dealerships (Penske Automotive Group is the second-largest dealership chain in the United States), has signed a memorandum of understanding with GM that would allow Penske to "obtain the rights to the Saturn brand, acquire certain assets including the Saturn parts inventory, and have the right to distribute vehicles and parts through the Saturn Dealership network."

Penske press release here. Green Bay Press Gazette article here, which says Penske's best claim to Saturn is that his dealerships market Daimler's 8'8" Smart (or smart) cars. Smart cars are getting blown off the highway like so many, um, Smart cars getting passed by an 18-wheel fuel truck on an interstate. Fewer than 30,000 Smart units move per year at 75 dealerships, while Saturn sells a rapidly declining 188,000 vehicles per year at 380 locations. Penske Automotive already deals Cadillac and other GM brands, so it's possible he wants to buy Saturn for the dealerships.

Penske has lines in parts manufacturing, and GM will stop building the Saturn in two years. Penske claims to be looking for somebody to come in and take over production. Assuming the deal goes through, best of luck to Penske in managing a brand GM could have made something out of but ended up finding too girly and greenish for its refined taste.

Comments

[teet]

what an idiot!

[Anon]

*wistfully looks at his Saturn car*

[Shannon Love]

I don't see why Saturn couldn't be turned into a profitable company. IIRC, it is out from under the crushing union obligations that GM suffers from. This is not my area of expertise but I have read several knowledgeable sources who feel that GM repeatedly sabotaged Saturn out of fear of competition with the GM label or in deference to unions. If that is true, Saturn could make a go of it as an independent company if it got the right management.

[Tulpa]

Ah, Saturn. Also known as "tall guy torture device" (seriously, I have no trouble fitting inside my ECHO but am nearly choked by my knees inside my mom's SL2).

My question is, if Penske or someone else besides GM starts manufacturing Saturns, is the UAW going to claim that it must employ only UAW workers due to the preexisting labor contract with GM?

[James Anderson Merritt]

I have read of some good EV conversions of Saturn vehicles (for example, the AMP: http://www.ampmotorworks.com/index.html). Perhaps Penske has designs to "do a Tesla."

[caheidelberger]

"blown off the highway"? Um, the article you link says Smart cars took just 28 days to sell in February, as opposed to the industry's average 95 days to move a car off the lot. Are the lower sales figures any different from what we've seen from all automakers?

[not the real jb]

Fewer than 30,000 Smart units move per year at 75 dealerships, while Saturn sells a rapidly declining 188,000 vehicles per year at 380 locations.

30,000 / 75 = 400 cars per dealer per year
188,000 / 380 = 490 cars per dealer per year

[Lepus]

I liked my Saturn and it still runs great after 100,000 miles. Dang it.

[Elemenope]

Ah, Saturn. Also known as "tall guy torture device" (seriously, I have no trouble fitting inside my ECHO but am nearly choked by my knees inside my mom's SL2).

But that's only because Toyota used technology stolen from demons to access extra dimensions in order to make the Echo larger on the inside than it is on the outside.

If you would like to eschew demonic technologies (which may or may not open a portal to hell in the near future), you are going to have to deal with cramped spaces.

[P Brooks]

Don't underestimate Penske. Saturn could be selling more cars than Chevrolet in five years. And, unlike those useless pussies at the new! improved! GM, he won't hesitate to import cars made in places like China or Latvia to slide under a Saturn nameplate.

My guess is he intentionally declined to take on any of Saturn's manufacturing facilities specifically to avoid dealing with the UAW.

[petty boozswha]

Saturn was GM's last gasp at real competition with the Japanese, that's why the UAW and GM management at other divisions insisted on strangling the infant in the cradle. When the brand started in Spring Hill TN quality was within striking distance of Toyota, so Rick Wagner, in one of his first moves, insisted production be moved to the Wilmington, DE plant -- a plant with probably the worst morale problems and pitiful product quality.

[kinnath]

has signed a memorandum of understanding with GM that would allow Penske to "obtain the rights to the Saturn brand, acquire certain assets including the Saturn parts inventory, and have the right to distribute vehicles and parts through the Saturn Dealership network."

Dealers break even, at best, on new car sales. They turn a profit on their service departments and the sale of used cars (i.e., the trade-ins).

Penske bought the brand, the parts inventory, and the dealer network (i.e., he bought the profits). I'm sure he'll subcontract out production to the far east as soon as the two year production run at GM ends -- that should be just enough time to get a line operational in China.

[NAL]

Ironically, back in 1990, GM was on its way to being the greenest car maker in the world with the Geo (Metro, Storm, Tracker and Prizm) and the Saturn (S-series). Trouble was that that was right when the SUV-craze was beginning.

The Saturn composite body panels was an innovative idea and, handled right, it could have propelled GM to greatness again.

I like GM cars, but now that Obama's the CEO, I don't think I'll buy another. Maybe if Penske can bring back the Saturn brand, that will be my new brand.

[SIV]

Ironically, back in 1990, GM was on its way to being the greenest car maker in the world with the Geo (Metro, Storm, Tracker and Prizm)

Geos were "foreign" cars made for GM by:

Metro=Suzuki (Cultus)

Storm=Isuzu (Impulse)

Tracker=Suzuki (Sidekick)

Prizm=Toyota (Corolla)

The Impulse/Storm was a great sport compact.

Saturn,while an American car, was marketed in a decidedly un-American way with the "no-haggle" pricing.

[Marshall Gill]

But that's only because Toyota used technology stolen from demons to access extra dimensions in order to make the Echo larger on the inside than it is on the outside.

If you would like to eschew demonic technologies (which may or may not open a portal to hell in the near future), you are going to have to deal with cramped spaces.

Some people always having to be your mother! Those cigarettes will kill you. Don't run with scissors. Always look before you cross. Don't open interdimensional doorways into hell!

[Tulpa]

At this point, I'm already possessed by the trans-dimensional demons, so I might as well be comfortable. The ECHO stays.

Saturn,while an American car, was marketed in a decidedly un-American way with the "no-haggle" pricing.

Americans don't haggle for pretty much anything except cars and houses these days. Go to a street market in Abu Dhabi or Beijing where they really haggle. Saturn's strategy was just to bring car-buying in line with how Americans purchase everything else.

[HeadTater]

I am not trying to detract from Penske or anything, but independent manufactures don't have good luck in the US unless they are making some kind of ultra-premium car.

I just think this sale is only going to prolong the death of Saturn.

[EJM]

I might as well ask: Is anyone going to end up with GM Daewoo and/or Holden?

[Eddy]

"Saturn's strategy was just to bring car-buying in line with how Americans purchase everything else."

So what you are saying is that buying a normal american car, like a chevy or ford, is un-american but buying GM's attempt at an un-american car would be a totally american thing to do. Aw fuck it, I'm sticking with honda.

[Gary Imhoff]

Cavanaugh apparently doesn't know much about smart cars. In truth the sales figures for smart cars are much higher than they were projected to be. Daimler intended to manufacture only about 20,000 cars for the US; then it raised the figure to 24,000; getting close to 30,000 a year means that it overshot its first mark by nearly 50 percent. (The real limitation on sales is set by the capacity of the single factory that makes smart cars for all countries.) And Penske did that with absolutely no advertising campaign; the company didn't pay a dollar for newspaper, magazine, radio, television, or billboard promotion.

More importantly, Penske has an innovative sales program for smarts. Like Saturn, its dealers have a fixed-price, no haggling model. Almost all sales are made by Internet ordering, in which the buyer reserves a car with an $99 refundable deposit and customizes it to order. This resulted in the US in a months-long waiting list for the cars to be manufactured. Dealers only deliver the cars; they actually "sell" only the "orphans," the cars that buyers decide they don't want by the time they are delivered. Even with the recession and a fall in gas prices (which made smart car's good mileage less of a selling point) the percentage of orphans never rose above a quarter, and orphans sell quickly, relative to other car brands.

Sounds like Penske knows something about selling cars. (By the way, smart cars are very stable on the road, even in a high breeze and when driving next to an eighteen-wheeler.)

[EJM]

I might as well ask: Is anyone going to end up with GM Daewoo and/or Holden?

This apparently answers my question...

Holden issued a statement saying that it will continue normal operations in Australia and New Zealand, and that it expects to be an important part of New GM.

[...]

The future of the GM Daewoo operation in Korea is something on which analysts will be keeping a close eye. GM Daewoo has been in negotiations with the Korea Development Bank (KDB) for several months over a huge emergency loan. KDB is understood to be holding off on any loan agreement until assurances have been given over the future role of GM Daewoo in the New GM. GM Daewoo has stated that it will be part of the New GM, but GM itself has remained surprisingly quiet on the specific future of GM Daewoo. It will be interesting to see how this plays out in the coming weeks and months.

(Just in case, more specifically concerning Holden is here.)

[BeesInTheBrain]

Also don't forget what he did with Detroit Diesel.

[Enyap]

I'm trying to figure out why the hell anybody would ever buy a smart car. My Elantra cost nearly the same and gets almost the same mpg, with the added benefit of actually having storage space and not looking like a homo.

[The Winter Soldier]

Never liked Saturn. Buying an '09 Nissan Cube this weekend to replace my clapped out '95 Dodge Caravan.

[Tim Cavanaugh]

Well played, Gary Imhoff! I think the orphan car stuff is a overplayed: You can get a smart car quickly if you want one, and its per-screen average, as not the real jb notes above, is not substantially different from Saturn's -- and Saturn is nobody's idea of an incredibly well managed or successful brand.

There's also an issue around just how good smart's mileage is relative to that of the Prius and other vehicles that are actual cars. So when you multiply the looking-like-a-schmuck factor by the not-useful-as-a-car factor, and add in the not-that-environmental factor, I say the smart car is a so-so proposition. But I still wish them luck with the thing.

And I wasn't being sarcastic in wishing Penske luck with the Saturn. I think the brand has been hopelessly diminished by the male pathology of which GM is (outside the Muslim world) the most perfect exemplar, but if Penske can still make it work, that will just add to his glory.

Maybe we can agree on one thing: Every second that goes by provides a thousand new reasons to despise GM and wish nothing but cancer on everybody involved with GM. The fucking up of Saturn is just one of those reasons.

[The Winter Soldier]

For the record, you can put a full size hockey bag (fully loaded, smart-ass) in the back of a Smart Car, along with your skates and a couple of sticks. They are a revelation, if you faggots would do some research.

[NAL]

Geos were "foreign" cars made for GM by:

Metro=Suzuki (Cultus)

Storm=Isuzu (Impulse)

Tracker=Suzuki (Sidekick)

Prizm=Toyota (Corolla)

The Impulse/Storm was a great sport compact.

True (except that a Geo Metro was a Suzuki Swift for most of its life), but GM was able to bring all those brands together under one "green" emblem before it was cool to do so (which was part of the problem...nobody was thinking "green" back then). In fact, Geo's emblem was a globe of the earth. With the exception of Toyota all those brands were relatively new with not much of a following in the US back then. Of course it wasn't all for good Karma, the Geo cars were also loss-leaders and a counter-balance for their larger cars for CAFE.

In the case of the Prizm, it and the Toyota Corolla were made at the NUMMI plant in CA which is a joint venture between GM and Toyota.
The same is true today of the the Pontiac Vibe and the modern Toyota Corolla. They're all made at the same plant by the same workers with the same drivetrains and (mostly) the same other parts.

[Shawn]

My first Saturn, purchased in 92 IIRC, was good. My second, purchased in 99, not so much.

My last car purchasing experience involved being jerked around by Toyota dealerships and then buying a Honda without the features I wanted just to avoid Toyota.

If Penske can crank up the quality to somewhere in the neighborhood of the Japanese cars and keep the good buying experience, he will have a HUGE business. The quicker he can get away from GM, the more optimistic I am that that will happen.

Every second that goes by provides a thousand new reasons to despise GM and wish nothing but cancer on everybody involved with GM.
That's would be a terrible thing to say if it weren't so correct.

[SIV]

With the exception of Toyota all those brands were relatively new with not much of a following in the US back then.

No.I worked for an Isuzu dealership (in GA!) almost 10 years before Geos were marketed by GM."Not much of a following" is relative.The Isuzu Impulse is borderline legendary while the Suzuki Sidekick was wildly popular in the 80s (particularly among young ladies) as a smaller,cheaper Jeep CJ/Wrangler type vehicle despite it's death trap rollover reputation.

The Swift is a Cultus.They were sold by Suzuki here as Swifts

Of course it wasn't all for good Karma, the Geo cars were also loss-leaders and a counter-balance for their larger cars for CAFE.

The small cars were for good karma as mandated by CAFE standards.Fuck CAFE, that is what lead to the "SUV craze" as you put it.The government is as bad (or worse) as unions and management when it comes to fucking up autos and their makers.

[SIV]

I think the brand has been hopelessly diminished by the male pathology of which GM is (outside the Muslim world) the most perfect exemplar

I had to double-check to make sure this post wasn't written by Kerry Holey.

FWIW, Saturns aren't as effeminate of rides as Audis or VeeDubs.

[thoreau]

Saturn left a sour taste in my mouth. Service was always fine, but when my car hit 8 years I started having to replace various parts, for about $1000+ per year. Then when it hit 10 years the transmission died in the middle of a cross-country move. The repairs were more than the Blue Book value of the car and we were on a tight schedule, so we sold it to the mechanic for $100.

I suspect that if it had not died at the very worst possible moment I'd have a better opinion of Saturn, but the repairs in the couple years before didn't help.

[Warmongering Lunatic]

You can successfully build cars in the U.S. as long as you avoid the UAW. The transplants proved that . . . as did Saturn's Spring Hill, first one way and then the other.

Of course, the Big Three couldn't open a non-union plant. Aside from all the legal and contractual barriers, if they tried, there would suddenly have been a dozen "health and safety" strikes at their unionized plants.

However, there's no obvious reason Penske couldn't open a non-union plants in the South to build Saturns. They'd probably be welcomed with massive tax abatements.

[Art-P.O.G.]

written by Kerry Holey

Sexist?

[Kelso\'s Nuts]

Everything about the "recovery plan" has been fucked, and it all comes down to the same kind of fucking. The rules of seniority in corporate finance do not apply to this administration. Where in the capitalist world do senior secured lenders and workers' pensions rank below equityholders and THE GOVERNMENT in a company in bankruptcy, receivership, or other work-out?

All of these complaints about Chavez this and Chavez that, but nationalization doesn't and didn't mean expropriation. The stakeholders, bond-holders and finally equity holders had to get taken care of in the proper order and there was no chance of the government overruling a directors' vote. Not Banesco. Not Banco Mercantil.

I'm not saying Chavez is great free-marketeer although he is more fiscally conservative and monetarily neutral than Obama is.

I'm saying that all of the rules have been thrown away under Obama to benefit the wealthiest 1000 Americans and the Department Of The Treasury is now the country's largest auto-maker and for-profit landlord.

With regard to the latter, there was a very fine free-market proposal by Ron Paul and Barney Frank to establish an international two-way market, screen-based, on the London ICE for all of the CDOs. This way any one who wanted to speculate, could, any one who wanted to get out from under a bad position could. There were plenty of European nations including England that were prepared to give a line of credit to ensure 2-way action and markets that clear.

Nope. That was brushed away immediated by Obama and Bush.

The US has gotten so crazy that the ideas of Goldwater, Reagan, Posner, Becker, Friedman, Buckley, Kozinski and Coase sound like Marxism compared to the expropriative plutocratic BushBama state.

[P Brooks]

I'm watching that incompetent lying sack of shit Fritz Henderson on Bloomberg.

"Fifty billion should get us over the hump."

Eat shit and die, Fritz.

[sugatbaby2009]

--==* Sugarbabymeet.C'om *==-- It's where Sugarbaby (women who are mature, rich and experienced) and men who like them can meet.

[BakedPenguin]

"Fifty billion should get us over the hump."

Sounds like Fritz needs a Sugarbaby. Someone email him the link.

[Malto Dextrin]

I liked my Saturn and it still runs great after 100,000 miles. Dang it.

That's my experience also with my '99 SL2. I'm quite happy with the car's reliability (NO major expenses in over 100,000 miles). It's good basic transportation that I bought new with absolutely no hassle for $20.8K total sticker price. I was going to buy another one in the next couple years.

[Malto Dextrin]

Where in the capitalist world do senior secured lenders and workers' pensions rank below equityholders and THE GOVERNMENT in a company in bankruptcy, receivership, or other work-out?

The US is not part of the capitalist world (which is now led by China). We are instead a socio-fascist banana republic welfare-warfare state.

[butternut]

Penske is picking up the brand with the least baggage. GM and Chrysler will be gone in 5 years. Saturn will be Ford's only domestic competition.

It may seem one hell of a gamble, I think it is a no-brainer. A no-brainer that will make Penske a pile-o-money.

[Tim Cavanaugh]

Thoreau, that sounds like an adequate performance for an automobile on Planet Earth in the 20 century. Seven problem-free years, and no full breakdown until it's already Blue Book junkable. (I'm guesstimating $1,500-3,000 for a new tranny?) Most people don't get 10 years out of their marriages -- which also tend to break down at the worst possible time.

[thoreau]

$1500-$3000 for a tranny? You can get them a lot cheaper than that in Thailand.

Seriously, yeah, it was something like that. I forget the exact number. But putting $1500/year or more into repairing something in grad school is pain, and then having it die when you are heading across the continent just totally warps the perspective.

If this had happened on a different schedule, I'd probably have a different opinion. My brother has a Saturn and it's been treating him fine.

[kinnath]

Thoreau, that sounds like an adequate performance for an automobile on Planet Earth in the 20 century. Seven problem-free years, and no full breakdown until it's already Blue Book junkable. (I'm guesstimating $1,500-3,000 for a new tranny?)

My eight-year-old Nissan 200sx with 135,000 miles was running flawlessly when I hit two deer on the freeway at 50+ miles per hour. It cashed out in excess of $4k.

My seven-year-old Nissan Exterra has over 130K miles and I fully expect to drive it another 60K to 100K miles. The salt and snow in Iowa will rust it out before the drive train fails.

The real difference in quality between foreign-badged cars (built in the US or elsewhere) and US-badged cars (built in the US or elsewhere) is not at the time it rolls off the lot brand new. The real quality difference starts to show up at 80 to 100K miles.

The US-badged cars just plain fucking were out to soon.

[John Thomas]

Hey, it cant hurt to have dreams right? Makes sense to me dude!

RT
http://www.online-privacy.vze.com

[bt6]

My 2000 Crown Victoria Police Interceptor got its first 116K miles as a Highway Patrol radio car.

It now has 205K miles and still going strong.

It may still be going after GM and Chrysler have their going-out-of-business sales.

[Omegis13]

God I really hope Pinske can salvage Saturn. That car line had so much potential before GM decided to treat it like a red-headed stepchild when the SUV craze started.

[Alan]

Why is it considered great when the tiny little Smart Car gets 36 mpg, when I had a considerably larger 1997 Ford Escort that got 35 mpg?

For that much sacrifice in size, I would expect more than 1 mpg improvement.

But the fact that no American companies are selling reasonably priced cars that get 35 mpg . . . that's the real problem.

[rus]

"My Elantra cost nearly the same and gets almost the same mpg, with the added benefit of actually having storage space and not looking like a homo."

Agree with most of that, but hate to tell you... you probably look like a homo in that thing.

[Invisible Finger]

My last car purchasing experience involved being jerked around by Toyota dealerships and then buying a Honda without the features I wanted just to avoid Toyota.

Interesting. My last car buying experience was jsut the opposite. When I said I was paying cash, EVERY salesman except the Toyota salesman literally walked away from me.

The make has nothing to do with the behavior of the dealership. Could be the reason GM and Chrysler want to dump dealerships - the ones with the most complaints, anyway.

[Pro Libertate]

My 1995 Accord is approaching 200K and shows no signs of dying anytime soon. I fully expect to drive it another two years before I break down and buy a replacement.

I just bought a newish Sienna (2007 with 9,600 miles) for my wife. I was surprised at the B.S. we had to deal with in the haggling, because when I bought my Accord, the Honda dealer was bizarrely easy to buy from. Then again, that dealer was located near the Marysville, Ohio Honda plant, so frequent visits by their Japanese overlords may have had something to do with it.

[Art-P.O.G.]

I'm guesstimating $1,500-3,000 for a new tranny?

Wow, no jokes about this? I'm proud (or is that ashamed?) of you all.

[thoreau]

Ahem:

$1500-$3000 for a tranny? You can get them a lot cheaper than that in Thailand.

[Citizen Nothing]

Buying ANY new car at ANY time is for suckers.
Laugh if you want, but I give credit for my relatively good financial situation to the fact that I haven't had a car payment in 25 years. (That, and having a job.)

[R C Dean]

Buying ANY new car at ANY time is for suckers.

On a cost-per-mile basis, you can actually do pretty well rolling over your new car into another new car at about 40,000 miles. You've still got some real trade-in value at that point, and won't have spent a nickel on repairs. Assuming, of course, that you are paying cash each time, as well.

Once the trade-in value nose-dives after 40,000 miles, its a sucker's game, unless you have bought quality (*cough* Japanese *cough*) and can drive it for 150,000 miles without much in repair costs.

[P Brooks]

Buying ANY new car at ANY time is for suckers.

This is why I don't bother proclaiming my intention to boycott Governemt Motors; I have never bought a new car from a dealer, and I never will.

[kinnath]

Buying ANY new car at ANY time is for suckers.

I don't agree. Buy new, pay 3% interest through the Nissan dealer. Drive it till it rusts out 5+ years after the loan is paid off.

Do all the scheduled maintenance and you never have to worry at the damn thing breaking down on you when you really need it {like in the middle of an Iowa blizzard at fifteen below with 6+ inches of snow on the ground}.