GM Launches Saturn On A 13-Month Death Spiral

October 2, 2009
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And now comes the unpleasantness: in the aftermath of its failed sale of Saturn to Roger Penske, General Motors has begun winding down the Saturn network. The brand will close for good just over a year from now.

GM executives held a conference call with Saturn dealers yesterday to talk through the shutdown process. Each of Saturn's 350 dealerships will be offered between $100,000 and $1 million to remain open and sell down inventory. That could take very little time, considering that there are only 12,000 vehicles on Saturn lots at the moment, or roughly a four-month supply. If sales continue as they have -- which is not entirely likely, since the public may be wary of buying vehicles from a dying brand -- many dealerships could close their doors by the end of January 2010. All Saturn dealerships will be shuttered by the end of October 2010 .

Fortunately for General Motors, the company had a backup plan, just in case the sale of Saturn fell through. Back in September, the company sent notices to Saturn dealers, extending their retailer agreements until November 30, 2009; at heart, that was meant to ensure network stability in the event of a botched sale and give GM two more months to work out arrangements with another buyer. However, since no other buyer has stepped forward, it appears that GM has to go with Plan C. (Yes, they even had a Plan C.) Anticipating the possibility that no buyer for Saturn would be found, GM had Saturn dealers sign agreements earlier this year that provided for a lawful and orderly shutdown of the brand instead of sending everything to bankruptcy court. And that's where we find ourselves today.

Things might've worked out differently if Penske had had a Plan C, or even a Plan B. As it was, however, Renault's 11th-hour decision not to produce vehicles for the Saturn network left Penske completely in the lurch.

This is obviously terrible news for Saturn employees, dealers, and fans. However, since we hate to leave you on such a down note on a Friday, we'd like to point out that there is a silver lining: without Saturn, there's one less competitor for GM.


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