Penske Automotive Group has broken off talks with General Motors to buy its Saturn brand. In a statement, Penske said it became concerned about “the future supply of vehicles beyond the supply period it had negotiated with GM” during the due diligence process.
“The company had negotiated a definitive agreement with GM to source vehicles on a contract-manufactured basis for a period of time,” Penske Auto said. “After this period, the company would have been required to source vehicles from another third party under a similar contract-manufacturing agreement…Without that agreement, the company has determined that the risks and uncertainties related to the availability of future products prohibit the company from moving forward with this transaction.”
Penske started talks with GM over acquiring Saturn in early June.
The deal called for Penske to initially acquire vehicles from GM but eventually branch out to sell products from Renault SA and its Samsung Motors affiliate, which is based in South Korea, said WSJ. Penske Auto said it had negotiated a supply agreement with another manufacturer, but that company’s board rejected the deal.
Saturn has 350 dealers and the Penske deal was seen saving some 13,000 jobs. The dealers had pressed GM to seek a sale after the auto maker intially planned to phase out production, said the WSJ story.
RBR-TVBR observation: There are already so many local auto dealers that have been forced to close that it has made local ad sales dismal in most markets. These dealers were often the biggest local ad category for both radio and television stations. Some have been able to find much of those lost dollars elsewhere. Killing off 350 more dealers may not kill an ad category that’s already broken, but it underscores the fact that stations just can’t depend on dealer dollars like they used to.
