Business

Dealers refuse to let sun set on Saturn

Posted October 1, 2009 7:37 a.m. EDT
Updated October 1, 2009 6:35 p.m. EDT

— Once billed as a different kind of car company, Saturn appears as dead as Pontiac and Oldsmobile, but dealers said Thursday that they will fight to stay open in some fashion.

The brand's 350 remaining dealers around the country had high hopes that a deal would be announced Wednesday for General Motors Corp. to sell the brand to former race car driver and auto industry magnate Roger Penske. Instead, Penske Automotive Group Inc. said it was walking away from the deal, unable to find a manufacturer to make Saturn cars when GM stops producing models sometime after the end of 2011.

GM then announced it would stop making Saturns and soon would close down the brand, just like it did with Oldsmobile in 2004 and soon will do with Pontiac.

Dave Brown, general manager of Saturn of Fayetteville, said he was stunned by the sudden turn of events. The dealership was set for a "grand reopening" to celebrate Saturn's change of ownership, he said.

"We were on the (2-yard) line. Everything was good to go," Brown said.

The Saturn brand was set up in 1990 to fight growing Japanese imports. The brand featured the iconic tag-line "a different kind of car company," and consumers were attracted by its low-key showrooms and no-haggle pricing.

GM's hope was that Saturn, with its dent-free plastic panels, would attract younger buyers with smaller, hipper cars. It built a new plant in Spring Hill, Tenn., devoted to Saturn vehicles.

Despite a cult-like following that drew thousands to annual reunions in Spring Hill, the brand never made money, although the company has never disclosed how much it invested or lost.

GM and Penske reached a tentative agreement to sell the brand in June, and GM had agreed to keep building three Saturn models beyond 2011. After that, Penske had to come up with its own products made by another manufacturer.

Penske, who could not be reached for comment, said in a June interview that foreign automakers would be key to making Saturn succeed, but they would have to match GM's quality standards before Saturn's dealer network would distribute their products.

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, he 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.

GM will stop making Saturns as soon as possible, but no layoffs are expected, said spokeswoman Sherrie Childers Arb. Saturns are made at plants in Kansas City, Kan.; Delta Township, Mich., near Lansing and Ramos Arizpe, Mexico.

"Those plants produce products for other brands, and we think we can increase volume on those products that will meet market demand," Childers Arb said.

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

"We're just going to continue to move ahead and continue to sell and service our vehicles," Brown said.

Sales of new cars at Saturn of Fayetteville are down 45 percent this year, while used car sales are up 15 percent, he said.

GM hasn't given dealers a timetable for winding down production and sales, but Brown said he plans to keep the dealership open and hopes his 28 employees will stick with him.

"As long as I have this team in place, we'll do fine," he said. "They're dedicated. They're dedicated to their customers and dedicated to the success of this facility."

North Carolina has 12 Saturn dealerships, employing a total of about 330 people. Other owners said they also plan to forge ahead without Saturn.

"We have the capability to service anything. We can obviously sell anything. We just need product," Brown said.