Have a look at WSJ colleague Evan Newmark’s “Deal Journal” blog headlined, “Taxpayers Rejoice, Saturn Is Dead.” Evan argues that American taxpayers, General Motors and Roger Penske himself will be better off without Saturn, whose commercial raison d’etre evaporated long ago. His last line’s pretty scathing: “The sad truth is that the U.S. car market simply can’t support Saturn. And we will find out soon enough that it can’t support Chrysler, either.” I would add that GM itself needs to scuttle one or two more brands. The Buick and GMC names should be killed, and GM should shift to a streamlined Chevrolet-and-Cadillac brand strategy. Also in automotive news, today’s September car sales are abysmal, reflecting the foolishness of the U.S. government’s Cash for Clunkers program. In effect, Uncle Sam spent a lot of money to get people to trade in older cars for newer ones; people dove into the market; auto makers sold down inventories and ramped up production; the program ended; people stopped acquiring new cars; and – shock, horror! – car sales fell off a cliff. To quote my News Corp. colleague Homer Simpson: Doh!
Roger Penske is pulling out of his pact to acquire the remnants of GM’s Saturn. Is it taps for Saturn? It certainly looks like it. In a previous blog I waxed poetic about what Saturn once was, stood for, meant to me personally (when we met, my husband drove a Saturn, with an ironic fuzzy dice dangling from the rear-view mirror…) Now all I can say is: Roger, what were you thinking? In buying Saturn, Penske was getting a brand and a concept, both tired and tarnished after more than a decade of degradation at the hands of GM’s former bosses. Penske, no fool, intended to revive it as a youthful, fuel-efficient car brand built on other auto makers’ spare capacity. If anyone could have pulled it off, it was the entrepreneurial Penske. Even so, it was an exceedingly long shot. Details are only now emerging but Penske’s announcement says the firm which had agreed to assume production had vetoed the plan, leaving him with no manufacturing base. That partner would appear to be Renault SA, whose interest in producing Saturns for Penske seems to have shriveled up and died. There’s one glimmer of hope for Saturn: As with GM’s Saab, which found a benefactor in Swedish super-car maker Koenigsegg in partnership with a Chinese auto maker, Saturn might find an overseas sugar daddy or mommy. Could the Chinese – who have been circling any number of sick American brands (think: Volvo, Opel, Hummer, Saab) – be on the phone to Penske even now? Stay tuned! Saturn may yet live. By the way, have a look at Saturn’s website. It proclaims: “We’re optimistic about the future.”
Auto Industry / Comments Off
For auto industry geeks, a sad bit of history was made today as General Motors Corp. said it’s walking away from its 25-year-old joint venture with Toyota Motor Corp. Known as NUMMI (New United Motor Manufacturing Inc.), the JV was in Fremont, Calif. There, in 1984, a stodgy GM signed up to learn how to make profitable, desirable fuel-efficient cars. For Toyota, NUMMI was a way to demonstrate goodwill to an American political and business establishment wary (to say the least) of Japan Inc.’s lean-manufacturing prowess. The plant wasn’t hugely important to Toyota’s American ambitions, especially as it began dotting the southern landscape with factories employing a non-union workforce. Somewhat ironically, however, GM’s decision to end the JV creates a burden for Toyota, which has to figure out what to do about the Corolla car and Tacoma pickup capacity it will retain at Fremont. GM is killing its Pontiac brand (part of the bankruptcy diet it’s on) and so no longer needs to make the Vibe car at the NUMMI facility. As DJN colleague Sharon Terlep reports, Toyota is scrambling to right-size its American operations as part of a broader turn-around program; the end of the JV complicates matters. For NUMMI’s official history, check out the official website here: http://www.nummi.com/co_info.php
Also today comes news that GM is advising Roger Penske’s company on how to market the Saturn brand it now owns. GM is worried that tying Saturn to the Penske name will distract or turn off consumers. My advice to Penske Automotive Group Inc.: The last company you should take advice from is GM, which single-handledly turned Saturn into a stale commodity from the fresh-faced upstart it had been. Here’s the WSJ story:http://online.wsj.com/article/SB124623102240666083.html#mod=testMod.
Back to NUMMI: Auto industry expert and former colleague Paul Ingrassia once wrote that the creation of NUMMI “rocked the auto industry: For the first time, an American and a Japanese auto maker would build cars together on American soil.” As Paul recounted in a 1992 WSJ piece, the JV talks kicked off in 1982 when GM was the No. 1 U.S. auto maker and Toyota, No. 1 in Japan. Leading GM’s effort was an up-and-coming executive called John F. “Jack” Smith; a decade later, he became GM’s CEO and Chairman. As Paul wrote, “the NUMMI talks were a crucial lesson in the power of the rival GM faced. Mr. Smith got a close look at Toyota’s efficient methods of product development, manufacturing and purchasing management. Those methods, often called ‘lean production,’ propelled Toyota ahead of GM in profitability, quality and product success in the 1980s.”
Auto Industry, Corporate Governance, United Auto Workers / 3 Comments
Too bad Steve Girsky wasn’t on the General Motors board earlier. Maybe it wouldn’t have collapsed. Today, the United Auto Workers has announced it chose Girsky – a former Morgan Stanley auto analyst who briefly advised former GM CEO Rick Wagoner and recently helped expedite the sale of Saturn to Roger Penske – as its representative on the board. A UAW employee health-care trust will own 17.5% of GM when it emerges from Chapter 11 bankruptcy protection. John Stoll of WSJ reports that Girsky has been advising UAW President Ron Gettelfinger in negotiations with America’s ailing auto makers; Gettelfinger clearly liked Girsky enough to put him on the GM board. When I covered the auto industry in the mid 1990s, Girsky was the smartest investment banking analyst around; he was also one of a few analysts who visited automotive suppliers as part of his research into the health of the industry. In other words, he was far more than a desk-bound number cruncher – he went out and talked to people who made cars and car parts. It’s telling that he’s now on the board of a supplier, Dana Corp. Stoll says he’ll probably have to quit that post if he joins GM. If GM’s various new owners populate the board with experts like Girsky, the company may have a future.
Auto Industry / Comments Off
Roger Penske struck a deal today that will give him the Saturn brand name for $200 million, an amount that on the face of it has the look and feel of a steal. Bankrupt GM doesn’t break out financials on Saturn and in this deal Penske is not buying the 350 Saturn dealerships. And he doesn’t become a manufacturer. He will initially contract out through GM and later others to build cars for him, which in turn would be sold through those dealerships – and no doubt with Roger taking a slice of each car sold. He does own the brand, afterall.