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GM To Close Saturn After Talks With Penske Fail

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GM To Close Saturn After Talks With Penske Fail

Business

GM To Close Saturn After Talks With Penske Fail

GM To Close Saturn After Talks With Penske Fail

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Automaker General Motors on Wednesday announced it would close its Saturn division after a deal to sell it to Penske Automotive Group Inc. fell apart. Penske was unable to find a manufacturer to supply vehicles after a contract with GM runs out in 2011.

ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, host:

And I'm Melissa Block.

General Motors announced today that it is shutting down Saturn. The decision comes after auto retailer Roger Penske ended talks to buy the brand. Frank Langfitt, who covers the auto industry for NPR, joins me now.

And Frank, Penske had been talking to GM for months. A lot of people thought this deal was in the bag. What happened?

FRANK LANGFITT: Well, Penske's plan fell apart. Now, here's what he was trying to do. He wanted to buy a brand and a distribution system. He wanted to get another foreign manufacturer to actually build the cars and put them under what they called the Saturn badge. Well, today, Penske came out and he said the manufacturers' board of directors voted it down. Now, he didn't actually name the company. But he found himself in this position where he was trying to just buy a distribution network, but he didn't have anything to distribute. So, he just walked away.

BLOCK: Now, GM said in a statement that it's going to wind down Saturn. What's going to happen?

LANGFITT: Well, GM isn't really giving a timetable. But obviously, it's going to be shutting down manufacturing lines for the Saturn vehicles. It has agreements with hundreds of Saturn dealers. They're going to get some compensation for this, I'm sure, but it's not going to be anything like the money that they sank into the land and the buildings in the beginning, a lot of them in the 1990s.

Obviously, a lot of dealers - a lot of those employees are going to lose their jobs, the people who work at the dealerships. And the dealers, really, they had hoped Penske was going to save them and they're really kind of the big losers in what happened today. GM did say it will continue to service Saturn vehicles and continue to provide parts.

BLOCK: And so for the Saturn cars left on those dealers' lots, what happens there?

LANGFITT: Well, they haven't been selling really well anyway. You know, the brand has been under a cloud for a while. And so, I suspect the prices are just going to keep falling until they can sell them all.

BLOCK: Now, getting rid of Saturn was part of a massive restructuring of GM that included bankruptcy last summer, Frank. How did jettisoning Saturn fit into that plan?

LANGFITT: Well, what GM was trying to do is really slim down. It was a company that was way too big. It had too many divisions, too many brands. It was confusing to customers, and it cost the company a lot of money. What the United States government essentially did is force them to make these changes that they couldn't do on their own, and with, of course, 50 billion of our tax dollars. So getting rid of Saturn - they got rid of Hummer. Pontiac has been - is being shut down. So this was one more brand to make them, sort of a much slimmer, more competitive company.

BLOCK: But here's the funny thing, Frank. I thought Saturn was the brand that customers loved. When it came on the scene in the '90s, it was a sensation. It was designed to save GM. What happened?

LANGFITT: Well, you know, you remember they built that plant in Spring Hill, Tennessee. They had those really cute commercials. They had a family, you know, barbecue picnic that people came back for. And in the beginning, they put out these reliable sedans to compete with Toyota and Nissan and Honda. And they had this no-haggle policy, customers really liked it. And for a while, it was working.

But there were other problems. It did cost billions of dollars to fund this. A lot of people who analyze Saturn think it may have never actually made much money. Then GM got strained with the financial crisis in the '90s, didn't give any new product to Saturn. And so, over time, the brand kind of lost luster, customers and really, in a sense, it never recovered. And so, what they had was a brand that really wasn't helping them and basically kind of lost its way.

BLOCK: Okay. That's NPR's Frank Langfitt. Thanks so much.

LANGFITT: Happy to do it.

BLOCK: Frank with the news that General Motors announced today that it is shutting down Saturn.

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