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Old 06-14-2009, 11:55 PM   #1
cam
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Default Penske and Saturn

OK. I understand Penske bought or is about to buy Saturn. I also heard that GM will continue to manufacture some of the cars for Penske over the next couple of years. What I don't comprehend is how in the world does this make any economic sense? GM has to make a profit selling to Penske and Penske has to make a profit selling to the dealers and last but not least, the dealer has to make a profit selling to us!
I could understand if Penske bought the manufacturing plants but this just doesn't make any sense unless they intend to bump up the price of vehicles which of course would be unacceptable in this economy.

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Old 06-16-2009, 03:30 AM   #2
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Default Re: Penske and Saturn

Quote:
Originally Posted by cam View Post
OK. I understand Penske bought or is about to buy Saturn. I also heard that GM will continue to manufacture some of the cars for Penske over the next couple of years. What I don't comprehend is how in the world does this make any economic sense? GM has to make a profit selling to Penske and Penske has to make a profit selling to the dealers and last but not least, the dealer has to make a profit selling to us!
I could understand if Penske bought the manufacturing plants but this just doesn't make any sense unless they intend to bump up the price of vehicles which of course would be unacceptable in this economy.
Well, I guess it shows that Penske is convinced that he will succeed where GM mismanaged badly. Btw, GM obviously sold Saturn at a considerable loss.

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Old 06-16-2009, 07:15 AM   #3
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Default Re: Penske and Saturn

I think I read recently that the whole Penske purchase was in the tune of $100-$200 Million from GM.

There are most likely UAW contracts that need to be fulfilled until 2011, hence the reason why GM will continue to supply the Outlook, VUE, and Aura (These are the only 3 Saturn models that will be built for the next 2 years) until the 2011 expiration.

It has been documented both in the news and on this site; that the Astra is dead, as well as the Sky. No more importing of the Astra from Belgium, and the Sky was built in Wilmington; which is permanently shutting down after 62 years of operation.

So if you look at it from this regard, it DOES make sense, in the fact of fulfilling contractual obligations, while at the same time, gives Penske the opportunity to design and get manufacturing footholds in place, whereever those are going to be...since he has the Dealership network saved and 13K people to work with now.

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Old 06-17-2009, 05:30 PM   #4
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Default Re: Penske and Saturn

Think about it this way. GM has already invested in development and tooling for the 3 models in question. They are predicting a slow climb in overall sales in the US over the next few years so they they have to retain a little more production capacity than they have an immediate need for. Why not get some incremental revenue off the old investment as long as you have the capacity and there is still substantial parts commonality? They don't have to spend any on marketing or spend any on development of the next generation Saturns so they can sell them relatively cheap. They might even realize some savings on the "GM" models in the same plant due to greater economies of scale for the common parts. With a relatively clean-sheet in terms of "legacy costs" GM should be able to manufacture cost-effectively. Developing new product is the real money-pit. On the manufacturing side, the more you can build off the same platform the better. It drives your per-unit costs down.

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