From the time Roger Penske quit racing cars in 1965 and shifted his energies to, among other things, selling Cadillacs, he was held in the highest esteem at General Motors. Many believed he would someday become a leader for one of its major divisions.
When Lee Iacocca stepped down as CEO of Chrysler in 1992, Penske was sought as a potential successor. Penske, however, turned down the offer, not yet ready to accept a job that would pull him away from his involvement as an owner of a racing team.
Two decades later, though, when Penske had a change of heart and was ready to purchase one of GM's most troubled brands, Saturn, what seemed to be a perfectly aligned marriage fell apart when the final piece to the puzzle -- a foreign automaker to provide a new set of Saturn products -- couldn't be found.
According to several reports, the Penske Automotive Group was believed to have a tentative deal in place with the Renault-Nissan alliance as a major supplier. He also was rumored to be in talks with Korean automaker Renault Samsung, which is 80% owned by Nissan partner Renault. Selling Samsung cars in the U.S. would have created a low-cost competitor for Nissan, creating a conflict between the companies. Renault-Nissan is believed to have walked away.
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Penske believed he had unearthed a potential jewel from the scrap left from GM's bankruptcy. With his keen sense for the automotive business, along with a highly successful business structure in place with his automotive group, Penske believed his could reinvent the Saturn brand as an independent chain of dealerships that would sell a new line of cars manufactured from overseas.
"Although GM was going to be filling in the initial supply, so much of the deal hinged on finding another automaker and Penske had to have that supply within two years," says Rebecca Lindland, an automotive research director at IHS Global Insight. "And two years away is nothing in our industry."
The incomplete deal marks only the latest, most bitter twist to the tragic tale of Saturn, which began with so much promise in 1985 as "a different kind of car company", one which sought to inject an entrepreneurial spirit and personable sensibility in the lower end, smaller class of cars. Instead, Saturn never made money in any year of its existence.
Its sales are down 60% this year -- a rate even worse than most other brands in today's troubled economy. At the current pace, fewer than 100,000 Saturns will be sold this year, according to projections by J.D. Power & Associates, with further drops expected in 2010.
"This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality," said GM chief executive Fritz Henderson in a statement.
With the deal now off the table, Saturn's 350 dealerships across the U.S., which were prized by Penske above all else for their quality, will be closed. Known for their no-haggle, low-pressure sales approach, Saturn's dealerships focused instead on customer service. None of the stores sells vehicles made by another G.M. brand.
Saturn now joins Oldsmobile and Pontiac as brands that perished as part of GM's bankruptcy reorganization.
"It really is a shame because Saturn was a brand that was very approachable," said IHS Global Insight's Lindland. "Customers loved the way they did business. It had such a great story and it had such potential when it started. It's just a shame that it came to this."
As for Penske, it marks the rare instance in which his touch didn't lead to gold.
Penske's career has long been led by his love of challenges. As a teenager in high school, he excelled at rebuilding used cars. Years later, after a highly successful career as a race car driver, Penske continued his repairman's craft, albeit on a larger scale, overhauling troubled automotive businesses as an entrepreneur.
When Penske bought Detroit Diesel from GM in 1988, its share in the big-rig engine market sat at 3%. But within several years, after restructuring the company from inside-out, it had taken a 30% share of the market from giants Caterpillar and Cummins.
"To be able to go in there and turn it around, that turns me on," Penske said at the time.
GM had long sought to bring those talents to Saturn. The pieces, however, just didn't align.
