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General Motors Co (GM.UL) will close Saturn and wind down its dealership network after Penske calls off Saturn deal.

1 October 2009 No Comment

General Motors Co (GM.UL) will close Saturn and wind down its dealership network after a deal to sell the faltering brand to Penske Automotive Group (PAG.N) collapsed, the automaker said on Wednesday.

The breakdown of a deal that had been widely expected to close this week will force some 350 Saturn dealerships to shut down and could cut 13,000 U.S. jobs that would have been preserved under a plan by auto magnate Roger Penske.

GM said it would wind down Saturn by October 2010, under an agreement already approved by its dealers. Saturn dealers were to have signed a new agreement with Penske and many were expected to close in the weeks ahead.

“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,” GM Chief Executive Fritz Henderson said in a statement.

The Saturn transaction was to have been part of an orchestrated plan by GM to shed niche brands and focus on its Chevrolet, GMC, Buick and Cadillac lineups.

GM is in the process of selling a controlling stake in its European Opel brand, as well as its Saab and Hummer brands. It is scrapping Pontiac along with Saturn.

Penske, 72, had been negotiating to buy Saturn under a deal that would have seen GM supply vehicles under contract until the end of 2011, leaving him free to tie up with other manufacturers afterward.

In a statement, Penske said it had negotiated an agreement to source vehicles from another manufacturer after its supply agreement had ended. But it said that deal was rejected by the other automaker’s board of directors.

“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 said.

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