Penske purchase of Saturn will put screws to American autoworkers

Detroit auto icon Roger Penske will save huge overhead costs with the Saturn brand he is buying from GM by concentrating on sales and distribution instead of manufacturing, industry experts said. And by returning the brand to its independent roots, Penske can establish a new Saturn and focus on selling and marketing instead of spreading resources among multiple brands, as was the case at GM.

Penske has signed a memo of understanding to acquire Saturn and its dealer network, with a due diligence period of 60-90 days.

The deal will preserve 13,000 jobs, but only for 2 years. Penske said GM will supply the Saturn Aura sedan and the Vue and Outlook SUVs on a contract basis for at least two years, after which he envisions importing vehicles. He could form a venture with Nissan Motor Co., the Japanese affiliate of Renault SA, according to a source familiar with the talks.

Automotive News, an industry trade publication, has reported that Penske plans to import vehicles made in South Korea by Renault Samsung Motors and sell them through the Saturn dealership network.

With Saturns eventually being made by foreign automakers, Penske will put all the American workers on the unemployment line. Ultimately, Penske says he wants to build Saturn vehicles in the United States but he probably never will as long as he can get them much cheaper overseas.

It is unclear what will happen to the plants that assemble Saturn's three models. The Aura is built at GM's plant in Fairfax, Kan., while the Vue is built in Mexico. The Outlook is assembled at the Delta Township plant near Lansing, where GM is moving the production of the Chevrolet Traverse crossover SUV.

Saturn General Manager Jill Lajdziak will be offered a role in the new company, and Penske wants to offer a job to former Chrysler LLC Vice Chairman and President Tom LaSorda, a lean manufacturing expert who served as a consultant to Penske on the Saturn deal.

Penske expects to offer Saturn's U.S. dealers a new franchise agreement and said it was a priority to determine how many Canadian dealers would be part of the new company.

Penske said he was attracted by Saturn's strong network of dealers and pool of 3.5 million customers.

"We need to sustain that and reach out and get repeat referral business," Penske said. "At this time in the world, to be a part of the reorganization of General Motors is a great honor for me."

Penske is the head of Bloomfield Hills-based Penske Automotive Group Inc., which operates 310 franchises in the United States and internationally, selling 40 brands. Penske also distributes the Smart car, made by Daimler AG.

The Smart car and Saturn vehicles will be sold in separate dealerships, Penske said.