General Motors Tells Saturn Dealers to wait Another Sixty-Days

With General Motors’ announcement of focusing on its core brands and making Pontiac a niche brand, that leaves Saturn, Saab, and Hummer up for grabs. Information has been coming and going about all three brands, but more has surfaced about the potential Saturn spin-off.

GM is asking Saturn dealers to hold off on any course of action for the next sixty-days while GM executives, a task force of Saturn dealers, and outside consultants seek to spin-off Saturn Distribution Corp. Saturn Distribution Corp. is the entity that holds the franchise agreement with dealers. GM told Saturn dealers not to close and not to pursue legal action until a potential spin-off agreement has been reached as a shrinking dealer network or a dual with the parent company will make the spin-off less attractive.

As we reported earlier (http://rumors.automobilemag.com/6477120/news/saturns-rumored-spin-off-could-it-sell-other-companies-cars/index.html), Saturn may become an independent brand that would serve as a “vendor” to sell rebadged vehicles. John Pitre, general manager of Saturn of Bakersfield in California, calls this the “Costco approach.” “Saturn could be the Costco of the auto industry in that they get one product from Hyundai, one product from China and then brand it Saturn,” said Pitre. “Costco does that and brands it ‘Kirkland.’”

Unless Saturn is sold off and able to create a product lineup, the brand is done after its current product lifecycles as GM’s commitment to build Saturn products ends after the 2012 model year. GM executives added a new caveat on February 18 that allows GM to close Saturn earlier if market conditions prove unfavorable. Saturn spokesman, Steve Janisse, confirmed GM might shut Saturn before 2012.

The last option for the brand is an independent bankruptcy. An independent bankruptcy of Saturn is possible because Saturn Distribution Corp. is an indirect subsidiary of GM. If Saturn goes the bankruptcy route, it likely means liquidation as GM has announced its end game for Saturn and there is no guarantee of a future product lineup. “Saturn’s already pretty much announced the end game,” said dealer lawyer Mike Charapp of Charapp & Weiss in McLean, Va. “There isn’t much sense going through a reorganization.”

Source: Automotive News

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