Justice Sirikah

General Motors to Throw Saturn into Abyss; 13,000 Jobs Put on Edge

by Justice Sirikah October 2, 2009
8gm_logo.jpgThe intended transition of the faltering Saturn trademark from General Motors (GM), also known as Motors Liquidation Company (PinkSheets: MTLQQ), to Penske Automotive Group, Inc. (NYSE: PAG), which would have been a done deal this week appears damned. Talks came to a grinding halt on Wednesday with Penske, which would have acquired the brand as a distributor, citing uncertainty of future supply, as its own production talks with Renault SA also hit a snag.

  In a statement, the car dealership chain had this to explain: “Penske Automotive Group negotiated the terms and conditions of an agreement with another manufacturer ...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”.

  According to a definitive deal that the two companies signed in June, GM had agreed to continue manufacturing the 19 year-old brand until the end of 2010, after which another carmaker would take over. But as a result of these new developments, GM is now gearing up to wind down Saturn, along with its dealership network of 350, which would leave about 13,000 jobs countrywide near the chopping block. However, the automaker assured owners of the auto brand that measures will be put in place for them to have their cars serviced at GM dealerships after the manufacturing unit is retired.

  In a bid to accomplish funding from Congress to keep itself afloat, GM had named Saturn, alongside Pontiac, Saab and HUMMER, on its list of unwanted nameplates, while it was in bankruptcy. It had decided to continue with Chevrolet, Cadillac, Buick and GMC. The carmaker has been downsizing its range since 2004. From 63 models at that time, it is currently looking to 40 models by 2012.

  At the time of writing on Friday, MTLQQ stock was quoted at 69 cents, down slightly from the previous session’s closing price of 71 cents. At the same time PAG shares were down 11.14 percent since the release of the news, trading at $15.86.

  Reference:
http://www.gm.com/

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