ROGER ON THAT MISSION TO SATURN

6/8/09

According to the German Economy Ministry, venerable German carmaker and soon to be ex-GM division Opel will not enter the U.S. market after being taken over by Canadian parts (very broadly construed) maker Magna. I say “Not so fast.”

Now that Roger Penske, uber-entrepreneur of the type who made this country great, has taken over Saturn, the entire game has changed for overseas car makers wishing to enter the U.S. market. According to the terms of the purchase of Saturn by Penske Auto Group (“PAG”), Penske will take over the Saturn name, dealerships, and parts distribution operations but will take over no manufacturing operations. GM will supply Saturn with cars for the next two years, but then Saturn will become a distribution arm for other manufacturers, clearly primarily, if not exclusively, foreign automakers who want to enter the U.S. market. Reportedly, Mr. Penske has either entered into or soon will enter into an agreement with Renault with the aim of distributing cars made by Samsung, a Korean manufacturer that Renault controls, by Renault, and possibly by Nissan. No reports indicate that the Renault/Saturn deal is an exclusive one, and one doubts that the astute Mr. Penske would risk putting all his chips on one number, especially so questionable a number, at least for the U.S., as Renault. He will be looking for other products to distribute. While various Chinese manufacturers (There are scores of them.) are the most talked about candidates, Opel is the most logical. The very good Saturn Aura already rides on the same platform as Opel mid-sized sedans (along with the Saab 9-3, the Pontiac G-6, and the Chevy Malibu) and the admittedly so-so Saturn Astra is merely a rebadged, and not even renamed, Opel Astra. In fact, not that long ago, GM execs, including Bob Lutz, were considering making Saturn little more than a distribution arm for slightly tweaked Opel products so that Saturn, still looking for a mission after twenty years in business, could become GM’s latest “import fighter.” The compromise finally reached resulted in the Saturn of today, a confused agglomeration of rebadged GM domestic vehicles and rebadged Opels. The “import fighter” mission was doomed from the start, as my readers were apprised when that mission was first proposed, by the lack of manual transmissions in all but two Saturn products, and then only in a few variations thereon. How does one fight “imports” when one lacks one of the most salient features of the “imports” one is trying to fight? Import fighter indeed. But that is another issue.

Despite confusion regarding what Saturn really is, no one can accuse it of not being a valuable franchise because of the goodwill it has developed among its retail customers. Saturn dealers actually treat people like human beings, unlike an increasing number of car dealers who treat their customers as gormless marks ready for plucking. (I should relate the story of the dealer that my brother and I visited a few weeks ago. Our salesman, who had difficulty both recalling the names of his products and forming an English word, let alone an English sentence (and not because he was from Poland, Mexico, or Pakistan; he simply never seemed to have learned his native language), told us that the federal government would write us a “simulus” check for $6,000 if we bought one of his (Korean and Japanese manufactured) cars that night. But that whole story, and there is plenty more to it, will perhaps become grist for another post. For now, the Quinn Brothers can only conclude that they must look quite stupid.) While this may, in many cases, be a safe assumption, common courtesy and business sense dictates verification before one assumes one’s customer is an idiot. At any rate, Saturn has a stellar reputation for customer service and a very loyal band of customers.

With Penske in charge of Saturn, the game of selling cars in the United States has changed. In the past, entering this market required building an expensive and hard to dismantle distribution network, developing a reputation, etc. Most foreign manufacturers decided it wasn’t worth the effort, especially considering the cut-throat nature of the U.S. market and the meddlesome tendencies of the U.S. government. Now, a manufacturer who might want to break into this market with only one or two products, perhaps even with limited potential volume, has access to a distribution channel that has already done the heavy lifting and to the knowledge of one of this country’s great car guys and businessmen. There will be the hurdle of being able to produce something Roger Penske will sell, and, given his reputation and strong desire to maintain it, this hurdle may be insurmountable for many manufacturers, but certainly not for all of them. There is plenty of great product overseas that could sell, albeit perhaps in limited volume, here. Some might even be brought over here, mirabile dictu, with the transmissions the Almighty intended for them; we can only hope! The Saturn network could make such products profitable here.

With Roger Penske in charge of Saturn, lots of overseas manufacturers, including Opel, have to be reassessing their absence from the U.S. market, even if they deny such aspirations for public consumption. This could make the car business interesting despite the anticipated strident efforts of the U.S. government to make car manufacturing and marketing about as much fun as providing, say, electric power.