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  1. #1
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    Saturn snagged up by Penske

    I own two Saturns and, overall, have been very happy with them. I had planned on buying another when the time came so I can say that I'm happy to hear this story.


    Detroit businessman Roger Penske's move to acquire General Motors' troubled Saturn brand and dealer network could be pioneering -- the start of a new strategy for selling cars and trucks in the United States, experts said Friday.
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    On Friday, GM announced a tentative deal for Penske Automotive Group to purchase Saturn, a transaction that the companies said should be finalized this fall.

    The Detroit automaker will continue to assemble Saturn vehicles for two years, and Penske is talking with other manufacturers about building vehicles that the dealer network would sell.

    Jack Nerad of Kelley Blue Book heralded the Penske-Saturn deal as "one of the most significant developments in a month that has been full of significant developments."

    "The proposed acquisition marks the beginning of a new business model in this industry," he wrote, "a model in which the distribution side of the business controls the brand, and manufacturing is conducted by one or more sub-contractors."
    http://www.freep.com/article/2009060...SS01/906060412



    I just hope he can keep it all in the US.


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  2. #2
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    That move is probably saving a shitload of jobs.
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  3. #3
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    Quote Originally Posted by DrRoebuck
    That move is probably saving a shitload of jobs.
    But for how long? It still has to be profitable.

  4. #4
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    Quote Originally Posted by Snakebit
    But for how long? It still has to be profitable.

    As I understand it, GM Corporate did a lot to torpedo Saturn. It'll be interesting to see if they can float on their own. I hope so but if they can't then they can't.


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  5. #5
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    Quote Originally Posted by KenB
    As I understand it, GM Corporate did a lot to torpedo Saturn. It'll be interesting to see if they can float on their own. I hope so but if they can't then they can't.

    Well Saturn was actually done in by both GM and to a lesser extent the UAW leadership. When the company was first dreamed it was a direct response to the Japanese "Invasion". In order to make it work Roger Smith and the GM UAW head Don Ephlin had to come to an agreement. GM's contract with the UAW had something like 200 job classifications and rules stating a person classified as 159 could NOT do 161's job. They got rid of these classifications and broke down the barriers between them. They also made seperate rules regarding more extensive automation in the factories being permitted.

    Smith pushing this also made the division heads of Pontiac, Chevy and GMC VERY jealous. According to Newsweek it was almost like kids ganging up on who they saw as the Teacher's Pet in the meeting rooms, "if you are so special why do you need to borrow our engineers" etc.

    1989 sees Ephlin gone and Smith is gone in 1990. 'Roger and Me" comes out making Smith look like a blithering idiot and GM starts to distance themselves from his baby, Saturn. In 1991 Saturn said they wanted to design an SUV and the response from the new Board was "if the people want an SUV they can buy a Chevy instead." This coincided with Jack Smith completely slashing the R&D budget so saturn by the end of the decade was selling cars with 10 year old tech, while Honda and Toyota, the smaller cars of whom Saturn was designed to compete with had new tech. Smith also had issues with the "democratic" labor model that existed in the Sprin Hill plant, complaining that the workers could decide not to work, more than a little be of an exaggeration, but this attitude, the pressure from the other departments in GM, and even pressure from the Non-Staurn dealer network who felt that the Saturn marketing campaign was actively attacking them, all eventually conspired against the company from the Management side.

    Now onto how labor messed with it too. Stephen Yorkich, Ephlin's successor starts flexing his muscles at UAW. He was NEVER a big fan of the agreement that was struck regarding the Labor model at Saturn seeing it as a type of "collaboration with the enemy", even though oddly enough the labor force had more freedom than others being able to decide their own work shifts and assembly line group make ups, however it appears that he felt the egalitarian outlook at Saturn didn't suit the rest of the UAW at GM because of the precedents it set regarding the job classifications and their lack of importance. This seems to be a case of a combination of innertia AND a little bit of paranoia in that "if management wanted it it by definition MUST be bad for the workers, regardless of how it looks." He convinced GM to have other plants start building Saturns to stop them from closing, but this created a couple issues. Saturns stopped being "different" for the most part because they had to be redesigned to be built in other plants (cheaper to retool Spring Hill than the other GM facilities) and so were being built on nearely identical platforms as other cars. Additionally the main thing that made their no haggle pricing work, the unique labor contract and labor set up (more automation etc) at Spring Hill, was pretty much shot because while some cars were made in the unique Spring Hill Plant the others were made in "conventional" UAW plants. This in turn made the Spring Hill employees eventually go to the standard UAW-GM contract because Yorkich basically made it clear that he would sacrifice them and watch their plant get closed while "real" UAW members kept their jobs in the other plants making Saturns.

    Its almost like the story of the Tucker, BUT this one got off the ground for a time because for a brief moment two people with power actually gave a dream a chance.

    here's hoping Pensky goes back to that dream. It would be nice to see it give a REAL chance.
    Far better is it to dare mighty things, to win glorius triumphs, even though checkered by failure... than to rank with those poor spirits who neither enjoy nor suffer much, because they live in a gray twilight that knows not victory nor defeat.

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  6. #6
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    Quote Originally Posted by badge118
    ....Its almost like the story of the Tucker, BUT this one got off the ground for a time because for a brief moment two people with power actually gave a dream a chance.

    here's hoping Pensky goes back to that dream. It would be nice to see it give a REAL chance.

    Yep, that's pretty much how I understand it.


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    Badge 118, way to go...

    I had my whole analysis-of-Saturn's-problems ready to go before it occurred to me to read all the other posts, and you nailed it. I really think if GM had stayed with the original plan and avoided the infighting (characteristic of the company, by the way), Saturn could have been a serious challenger to Toyota and Honda. Instead we got the Ion, a car so bad that when I rented one in Hawaii a couple of years ago, I took it back because I thought something was wrong with it. They gave me another one, and it was exactly the same. Every time I turned a knob or flipped a switch, I was afraid it was going to break off..
    Be interesting to see if Penske can make this work. I wouldn't be surprised if he does--I covered the SCCA TransAm back in the '70s when he ran the Camaro and then AMC teams with Mark Donohue driving, and he's a scary-smart organizational genius. He wouldn't have done this without a very carefully thought-out plan.

  8. #8
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    Quote Originally Posted by KenB
    I just hope he can keep it all in the US.

    Not likely. I'd bet it's very likely Chinese car manufacturers want a big piece of this and they will get it.

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    Quote Originally Posted by rocco
    Not likely. I'd bet it's very likely Chinese car manufacturers want a big piece of this and they will get it.
    I think it would be VERY possible. Likely due to the Bankruptcy nature of the sale the UAW contract in existence is toast. One of the things that started to hurt Saturn's profitability, beyond all of the "Old Boys" network inside GM management was the labyrinthine UAW contract that was later imposed. The Company's entire identity, from how it made cars to how it made money was based on an entirely different contract, and going to the UAW contact stopped Saturn from being Saturn. Once this contract was tossed it was impossible to sustain due the compunded effect of GM in general turning its back on the division.

    If they returned to the original ideas, more automation, less stratification and complexity to work force structure etc. they would probably easily reach the hour per labor cost that GM itself says it now needs to be competitive, $48.00 an hour. When your costs are $73.00 an hour AND you are the red headed bastard step child of corporate you are pretty much ensured defeat.

    Part of the appeal of the vehicle was after all "made in the USA" I think only the glass was made elsewhere at the companies inception and that was in Canada. I could perhaps see an elimination of the GM-UAW's points system that gave Union Shops a better chance of providing parts and MAYBE a little more branching out, sourcing some parts to Mexico. All that being said what made Saturn go from selling tens of thousands to like hundreds of thousand cars in a few short years was the "made in USA" and "we are different". If you want to resurrect the brand I suspect they will, at least at first, try to resurrect these key selling points.
    Far better is it to dare mighty things, to win glorius triumphs, even though checkered by failure... than to rank with those poor spirits who neither enjoy nor suffer much, because they live in a gray twilight that knows not victory nor defeat.

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  10. #10
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    Truly excellent info. Thanks for that, Badge.

    And I do hope the brand under Penske makes it. But maybe not so much if all they're gonna do is import Chinese or Indian-made contract cars (a significant possibility, I'd assume).
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  11. #11
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    Quote Originally Posted by SystemShock
    Truly excellent info. Thanks for that, Badge.

    And I do hope the brand under Penske makes it. But maybe not so much if all they're gonna do is import Chinese or Indian-made contract cars (a significant possibility, I'd assume).
    .

    My understanding from the NPR report I heard yesterday is that the agreement between Penske and GM only continues production with GM for 2 more years and it's not known (at least to NPR) what Penske will do after that. The report indicated that there are Chinese manufacturers interested in access to the US market through the existing Saturn dealerships. There wasn't much detail in the report beyond that but it suggested enough to image a variety of possible scenarios. Maybe Penske and a Chinese manufacturer could for a strategic partnership that provides Penske with source of manufacturing and in turn sell the Chinese manufacturer's own brand would be sold in the US through Penske's dealerships? Perhaps more likely they merger? Maybe Penske stabilizes and improves the Saturn brand over the next 2 years and sells it outright to a Chinese investor for a significant profit later?

  12. #12
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    Quote Originally Posted by badge118
    I think it would be VERY possible. Likely due to the Bankruptcy nature of the sale the UAW contract in existence is toast. One of the things that started to hurt Saturn's profitability, beyond all of the "Old Boys" network inside GM management was the labyrinthine UAW contract that was later imposed. The Company's entire identity, from how it made cars to how it made money was based on an entirely different contract, and going to the UAW contact stopped Saturn from being Saturn. Once this contract was tossed it was impossible to sustain due the compunded effect of GM in general turning its back on the division.

    If they returned to the original ideas, more automation, less stratification and complexity to work force structure etc. they would probably easily reach the hour per labor cost that GM itself says it now needs to be competitive, $48.00 an hour. When your costs are $73.00 an hour AND you are the red headed bastard step child of corporate you are pretty much ensured defeat.

    Part of the appeal of the vehicle was after all "made in the USA" I think only the glass was made elsewhere at the companies inception and that was in Canada. I could perhaps see an elimination of the GM-UAW's points system that gave Union Shops a better chance of providing parts and MAYBE a little more branching out, sourcing some parts to Mexico. All that being said what made Saturn go from selling tens of thousands to like hundreds of thousand cars in a few short years was the "made in USA" and "we are different". If you want to resurrect the brand I suspect they will, at least at first, try to resurrect these key selling points.

    Did you notice that Penske isn't taking over GM's Saturn Plant?

  13. #13
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    Quote Originally Posted by badge118
    All that being said what made Saturn go from selling tens of thousands to like hundreds of thousand cars in a few short years was the "made in USA" and "we are different". If you want to resurrect the brand I suspect they will, at least at first, try to resurrect these key selling points.
    What made the original Saturn models attractive to consumers was its no-haggle dealership sales policy. This honest approach contrasted with the slick bargaining games consumers expected to encounter when they shopped for cars. At a Saturn dealer, the salesperson was more of a facilitator than a high pressure slimeball. This helped Saturn gain an image of being trustworthy and an honest value, which for an American brand was rare at the time.

    I'm glad to see the brand go to Penske, but I don't hold much hope that the original operational blueprint for Saturn will reappear.
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  14. #14
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    Quote Originally Posted by Starliner
    What made the original Saturn models attractive to consumers was its no-haggle dealership sales policy. This honest approach contrasted with the slick bargaining games consumers expected to encounter when they shopped for cars. At a Saturn dealer, the salesperson was more of a facilitator than a high pressure slimeball. This helped Saturn gain an image of being trustworthy and an honest value, which for an American brand was rare at the time.

    I'm glad to see the brand go to Penske, but I don't hold much hope that the original operational blueprint for Saturn will reappear.


    There was that and there was the Made in the USA component. I'm doubtful as well but who knows what the next two years will bring.


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  15. #15
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    Quote Originally Posted by KenB
    There was that and there was the Made in the USA component. I'm doubtful as well but who knows what the next two years will bring.
    The Made in USA component was a clincher, but not the carrot. There were plenty of Made in USA cars available - Fords, Chevys, Dodges, etc. Saturn needed to set themselves apart from them and to somehow stand out in a positive way.

    The car itself was pretty much standard fare, but it did have one unique, interesting feature - ding resistant plastic body panels. Hmmm..... smart. Maybe it's worth checking out.

    Those who did go to a Saturn dealer were treated to a very straightforward purchasing experience - the no-haggle sales approach, which was very well received by car buyers. And Saturn's customers returned the favor by putting it high up on customer satisfaction surveys.
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    Quote Originally Posted by rocco
    My understanding from the NPR report I heard yesterday is that the agreement between Penske and GM only continues production with GM for 2 more years and it's not known (at least to NPR) what Penske will do after that. The report indicated that there are Chinese manufacturers interested in access to the US market through the existing Saturn dealerships. There wasn't much detail in the report beyond that but it suggested enough to image a variety of possible scenarios. Maybe Penske and a Chinese manufacturer could for a strategic partnership that provides Penske with source of manufacturing and in turn sell the Chinese manufacturer's own brand would be sold in the US through Penske's dealerships? Perhaps more likely they merger? Maybe Penske stabilizes and improves the Saturn brand over the next 2 years and sells it outright to a Chinese investor for a significant profit later?
    I heard the same thing as well, regarding the fact that GM would handle production for the next 2 years. As for the rest you are right, it is kinda up in the air. Right now Pensky is like the #2 dealer in the nation for GM, so this could either be a vested interest in keeping GM happy (read keep it domestic and not under cut GM through using a lot of Chinese sourcing) or he could leverage it by saying "don't mess with me because how many other people sell your cars as I do?" Can't wait to see what happens over the next year or two, it should be interesting.
    Far better is it to dare mighty things, to win glorius triumphs, even though checkered by failure... than to rank with those poor spirits who neither enjoy nor suffer much, because they live in a gray twilight that knows not victory nor defeat.

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    Quote Originally Posted by SystemShock
    Truly excellent info. Thanks for that, Badge.

    And I do hope the brand under Penske makes it. But maybe not so much if all they're gonna do is import Chinese or Indian-made contract cars (a significant possibility, I'd assume).
    .
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    I'd have purchased a Saturn

    long before I'd have purchased a Chevy
    I hope it succeeds, I hope they can turn it around and actualize the original plan
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  19. #19
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    Quote Originally Posted by rocco
    Did you notice that Penske isn't taking over GM's Saturn Plant?

    Well we really don't know how thats going to wash out since GM is making the cars for the next 2 years. We'll see won't we.
    Far better is it to dare mighty things, to win glorius triumphs, even though checkered by failure... than to rank with those poor spirits who neither enjoy nor suffer much, because they live in a gray twilight that knows not victory nor defeat.

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  20. #20
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    Quote Originally Posted by badge118
    Well we really don't know how thats going to wash out since GM is making the cars for the next 2 years. We'll see won't we.

    All reports indicate that Penske gets the Saturn name, the parts warehouse and distribution center in Spring Hill, 2 years of continued production from GM but not the GM assembly plant. Penske is expecting to offer all the dealers new franchise agreements and to retain all 13,000 Saturn employees for the time being. It's not clear how much if any of those 13,000 employees are designers and engineers or whether Penske gets GM's Saturn specific tooling for production. There are so many details.... Penske/Saturn is going to have a hell of lot of work to do to make the transition. They need to design and engineer new vehicle models and update some existing ones. Plus while that's all happening they have to prepare and ramp up production somewhere else. That will be a enormous feat to pull off in just two years. To me that screams a situation where Penske must partner with, merge with or sell to a company with all of the necessary manufacturing capabilities very soon.

  21. #21
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    Quote Originally Posted by rocco
    All reports indicate that Penske gets the Saturn name, the parts warehouse and distribution center in Spring Hill, 2 years of continued production from GM but not the GM assembly plant. Penske is expecting to offer all the dealers new franchise agreements and to retain all 13,000 Saturn employees for the time being. It's not clear how much if any of those 13,000 employees are designers and engineers or whether Penske gets GM's Saturn specific tooling for production. There are so many details.... Penske/Saturn is going to have a hell of lot of work to do to make the transition. They need to design and engineer new vehicle models and update some existing ones. Plus while that's all happening they have to prepare and ramp up production somewhere else. That will be a enormous feat to pull off in just two years. To me that screams a situation where Penske must partner with, merge with or sell to a company with all of the necessary manufacturing capabilities very soon.
    On no doubt BUT Penske is an organization genius, if anyone can pull it off its him. He currently says that his initial plans are to have a "world-wide" partner come in with the eventual goal of being continued US domestic production.

    With that in mind, while going with a Chinese company is possible I find that unlikely. With most Chinese auto manufactures have a large portion of State ownership these companies would have a hard time getting things ironed out to build production centers in the US. To my thoughts, if he keeps the company under his control, I could see him striking deals with say Mercedes or Porsche. He already has a good relationship with Mercedes due to his distribution deal for the Smart car and with Porsche since he almost single handedly brought Porsche back into the limelight in US motor car racing.

    I could see him realistically trying to strike up a deal with either company, either directly through Mercedes or with Porsche through their ownership stake with VW and have a situation akin to what Daimler Chrysler SHOULD have been. What killed Daimler Chrysler was the manufacturing headaches in the US Plants owned by Chrysler. Daimler engineers were over here A LOT trying to fix the issues taking away from their time on Mercedes products which were actually making money.

    In this case IF Penske can have well engineered cars in the 2 year period, the issue with screwed up US production would not become the issue it was with Chrysler, because there are already plants in North America and that's where they would be made. I think it would benefit Volkswagen greatly to be honest. They are going to have a plant going on line in Tennessee come 2011 (coincidence?) where they plant to build a midsized Sedan to compete with the Camry and the Accord in the US market. Since they have 5 years of straight losses in the Market, coming to a Strategic partnership with a Brand that at least has the "Real American car" reputation it could help them in that regard and also in terms of some positive cash flow while they are putting the new car into the market with models that have potentially had 2 years to get into the consciousness of American Buyers.

    Pure speculation on my part, but its the type of thing I would LIKE to see happen at least.
    Far better is it to dare mighty things, to win glorius triumphs, even though checkered by failure... than to rank with those poor spirits who neither enjoy nor suffer much, because they live in a gray twilight that knows not victory nor defeat.

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    Why does Penske have to tool up to build new cars? It is pretty likely that he will strive to continue the Opel/Magna relationship (which is not a bad lineup of vehicles).

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    Quote Originally Posted by dave2pvd
    Why does Penske have to tool up to build new cars? It is pretty likely that he will strive to continue the Opel/Magna relationship (which is not a bad lineup of vehicles).
    Maybe I missed something but I didn't realize that his buying Saturn had anything to do with GM's relationship with Opel. His purchase is exclusively regading Sature n, for the brand and the technology...NOt any manufacturing facilities, after 2011 someone has to actually make the cars and I if GM is out then so is Opel I would think. According to the deal with the new Opel, GM is still going to maintain a 35% minority stake in the company AND this companies issue is that it has too many manufacturing facilties in Western Europe anywho. If not for the German gov't brokering this deal Opel would be on the choppoing block with the other GM pieces they are trying to unload at a discount.
    Last edited by badge118; 06-07-2009 at 06:33 PM.
    Far better is it to dare mighty things, to win glorius triumphs, even though checkered by failure... than to rank with those poor spirits who neither enjoy nor suffer much, because they live in a gray twilight that knows not victory nor defeat.

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