Back in the 1950s, Roger Penske not only raced cars, but he also sold them. And, when he retired in 1965, he focused on his business interests, creating an empire. Now, there is Penske Auto (NYSE: PAG), which operates a chain of auto dealers, a truck leasing operation, and a high-performance car operation.
Well, this week the empire got even bigger; that is, Penske agreed to purchase the Saturn unit from General Motors. Terms of the deal were not disclosed.
All in all, it's a good fit as Penske has a long history of high quality and customer service. At the same time, Saturn dealers should be upbeat as well.
Also, in the deal, GM will agree to continue manufacturing Saturn cars until 2011, at which point Penske will need to come up with an alternative. This should not be difficult, in light of the global excess capacity in the auto market.
But there are definitely challenges, especially with the overall slump in auto sales. For example, Saturn revenues plunged 58% so far this year (also keep in mind that the brand has never generated a profit during its 19-year history). Yet, Penske has a couple advantages: he's buying at a low-point (presumably at a good valuation) and he understands that over the long run the auto market will make a comeback.
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Reader Comments (Page 1 of 1)
6-07-2009 @ 5:36PM
GARPO said...
Good for all. Thanx Penske for keeping this in USA?, I hope. The trend seems to be to declare bankruptcy, (destroying the pensions of the workers), while building plants in China and elsewhere. I have a Saturn (198,000 miles so far) and am very pleased with it.
6-10-2009 @ 6:19AM
Broke said...
Penske Automotive Group is part of a large conglomerate that encapsulates numerous businesses, most of which bear the Penske moniker. Penske Automotive Group comprises a number of companies and auto dealerships, some of the largest in the world, and they now will include Saturn Automotive in its entirety. Penske reached a deal with GM to purchase the automaker, which was due to shut down by 2010, for some cheap loans, and Saturn Penske will continue to receive the GM made vehicles until 2010, and they are looking for a new manufacturer to make the cars. It means expansion for Penske Automotive Group and debt relief for Saturn. Visit http://personalmoneystore.com/moneyblog/2009/06/05/saturn-penske-automotive-group-reach-deal-gm-agrees-sell/ for more info.