In what has been an ongoing saga worthy of Charlton Heston epic, GM has finally decided that selling Saab for something is better than spending millions to shut it down. Apparently, the GM Board consulted with its economic advisors, who told them, “Getting money is better than spending it.” According to an insider, the board has formed a blue-ribbon committee to find out if this principle can be applied to other parts of the business.

The Swedish government has reviewed the transaction and the related request for guarantees of a Saab Automobile loan that has been requested from the European Investment Bank, and has apparently approved it.  Assuming quick action, the transaction is expected to close in mid-February, and previously announced wind down activities at Saab will be immediately suspended, pending the close of the transaction.

As part of the agreement, Spyker intends to form a new company, Saab Spyker Automobiles, which will carry the Saab brand forward.  The sale will be subject to customary closing conditions, including receipt of applicable regulatory, governmental and court approvals.  Other terms and conditions specific to the sale will be disclosed in due time.

As part of the deal, GM will get $74 million cash, $326 million of preferred stock, plus some other consideration that GM refused to identify. GM will also continue to provide powertrains, the upcoming 9-4x finished vehicles and engineering services on an ongoing basis. GM will continue to honor warranties until Saab Spyker sets up organizations in markets around the world. No word yet on whether the present plan to close down some of the Saab dealers will proceed under Saab Spyker.

That’s what I think - how about you? Please leave your comments below.

GM CEO Fritz Henderson issued the following news release this afternoon:

“Today we learned that Penske Automotive Group (PAG) has decided to terminate discussions with General Motors to acquire Saturn. 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. PAG’s announcement explained that their decision was not based on interactions with GM or Saturn retailers; rather it was because of the inability to source new products beyond what it had asked GM to build on contract.

As a result of PAG’s decision, we will be winding down the Saturn brand and dealership network, in accordance with the wind-down agreements that Saturn dealers recently signed with GM. Pursuant to the terms of those agreements, the wind down process will be determined and communicated shortly.

Saturn customers and owners will continue to be able to purchase and have their vehicles serviced at Saturn retailers during this process. Once the wind down is complete, Saturn owners will still be able to have their vehicles serviced at other GM dealerships. We will be communicating with our customers very soon to explain the next steps in this process.

Today’s disappointing news comes at a time when we’d hoped for a successful launch of the Saturn brand into a new chapter. We will be working closely with our dealers to ensure Saturn customers are cared for as we transition them to other GM dealers in the months ahead. I’d also like to thank every GM employee and Saturn retailer who worked so hard to try to make this new beginning happen for Saturn.”

To say this is a shocking announcement is an understatement.  Roger Penske, who some wanted to take over GM, was considered a white knight for Saturn dealers.  If anybody could have saved their butts as GM discarded them like day-old coffee, it was Penske.  Those dealers deserved so much better than the fate which will now be theirs.  Saturn consistently has ranked as one of the highest brands in dealer satisfaction, despite years of product neglect by the General.  That means they really worked their tails off to make the customers happy.  And what was their reward?  Selling out-of-date, less than adequate product for more than a decade.  Only recently was the lineup overhauled, making it one of the best around.  But it was too little; too late.  The damage was done.  Now there is only the task of shutting off the lights as the last employees of the once-proud dealers go home for the last time.  Like I said about Pontiac recently, RIP Saturn; you will be missed.

That’s what I think - how about you?

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.

Chrysler today filed papers with the U.S. Bankruptcy Court to eliminate the franchise agreements of 789 (about 25%) of its dealers.  In a conference call today, Jim Press, Chrysler President and Steven Landry, Executive VP, NA Sales and Marketing/Global Service and Parts outlined the transition.  They said that the “rejected” dealers will be dealt with exactly the same through the end of their franchises, which will be June 9.  Chrysler will assist with the redistribution of the 44,000 new vehicles on the lots to other dealers in the areas affected.  They will also assist with the parts, if the dealers wish.  The dealers will no longer be able to sell new Chrysler vehicles, but they will still be able to service vehicles.  They will not be eligible for warranty work, though, as that work is reserved for franchised dealers.

There is no appeal process for dealers; however, the bankruptcy court has to approve the action.

Landry stated that the problem “is not too many dealers, it is too little industry.”  Press reiterated this point, calling the dealers Chrysler’s partners and said this has been a very difficult decision.

The number of jobs lost as a result of this action is not known, because many of the affected dealers are dualed with competitive brands or will be combined with other Chrysler LLC dealers.  Many also sell fewer than 100 units per year.

Every state except Alaska is affected by this action.  Pennsylvania (53) and Texas (50) have the most and several others have over 30 each.  23 states have 10 or fewer dealers losing their franchises.

Chrysler says that while they are rejecting 25% of their franchises, those 789 only represent 14% of sales.