General Motors Corp. and Penske Automotive Group today confirmed details of a proposed transaction under which Penske would acquire the Saturn brand. If completed, the deal would save more than 350 dealerships and 13,000 jobs at Saturn and its retailers in the United States, and would preserve the customer-focused Saturn brand.

The proposed transaction is part of GM’s rebuilding efforts outlined in the viability plan that was submitted to the U.S. government earlier this year. Under the terms in the memorandum of understanding, Penske would obtain the rights to the brand as well as certain other Saturn assets, including the Saturn parts inventory. GM would continue production, on a contract basis, of the Saturn Aura, Vue and Outlook for an interim period.

“This is the combination of two iconic teams: Saturn and Penske,” said Saturn general manager Jill Lajdziak. “GM had the vision to create Saturn and has the desire to see it succeed in the future.”

“Saturn has a passionate customer base and outstanding dealer network,” said Roger Penske, chairman of Penske Automotive Group. “For nearly 20 years Saturn has focused on treating the customer right. We share that philosophy, and we want to build on those strengths.”

Saturn began selling cars in 1990 and has sold more than 4 million vehicles. More than 80 percent of those vehicles are still in operation, according to data from R.L. Polk. Saturn has regularly scored among the industry leaders for non-luxury brands in customer satisfaction surveys.

The transaction is expected to close in the third quarter of this year and is subject to customary closing conditions and regulatory approvals. Financial terms of the agreement will not be disclosed at this time.

This is the first arrangement of this kind in the auto industry, where there is a separate distribution company with its own brand, free to contract with any manufacturer to sell their product.  This is true retailing in the Sears or Best Buy model, as opposed to the traditional franchise arrangement in the industry.  Will it work?  My guess is yes, due in no small part to the well-deserved reputation of the Saturn retail network.  The Saturn brand can stand on its own, and it may be better off without being associated with General Motors. Because Saturn was launched as “A Different Kind of Car Company” back in 1990, and was never really included in General Motors from a customer standpoint, it should be easy to separate it from the negative baggage that goes with GM these days.

The other factor that will help Saturn succeed in this new frontier is Roger Penske, who has a track record of business and other successes, including Hertz Truck rental, Detroit Diesel and United Auto Group (now Penske Auto Group, the second largest auto dealer in the US) and Super Bowl XL, whose host committee Penske chaired.

Who knows - this may turn out to be the start of a new era of automotive retailing, where retail networks are free to sell whichever cars and trucks they choose. It would certainly make the manufacturers a little more eager to keep their retailers happy.  Under the present model, they are both captives to the other, and the only way to break that relationship is in court.

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