June 10, 2009
Penske’s biggest win ahead? Roger that.
By Peter M. De Lorenzo
(Posted 6/9, 8:30AM) Detroit. A month ago I wrote about the possibility that Roger Penske might buy Saturn. Today, the deal is done, and now the hindsight hand-wringing has officially begun. There are some skeptics out there who are wondering out loud what Roger can possibly do for Saturn that GM couldn’t.
How about plenty?
As I recounted in my column back then, when I sat with Jill Lajdziak (then Saturn’s enthusiastic and capable General Manager) in early March, and she first broached the subject with me that Saturn was considering going off on its own, The Plan for the New Saturn was to take the brand’s outstanding network of dealers and forge a national distribution company that will revolve around Saturn’s legacy of customer service, while bringing in “the best of the best” products from around the world – in some cases specifically crafted for Saturn – so that the Saturn brand could survive and maybe even thrive again.
I told her I could think of only one man who could make The Plan happen, someone with the knowledge, talent and, most important, the financial wherewithal to put it together and pull that kind of adventurous scenario off.
And that was Roger Penske.
And make no mistake; now that this deal is signed, sealed and almost delivered (there’s a 60-day due-diligence period under way), Roger Penske will stand the entire retail part of the car business on its ear. With no heavy overhead to speak of, no legacy costs to wrestle with and no stumblebum board of directors butting in and telling him what to do, we’re going to see a dramatic transformation in the automotive retailing model.
Yes, he’s going to continue with the GM-based Saturns - the Aura, the Vue and the Outlook – for two more years, but after that all bets are off. When I spoke to Roger last week he said that there was a possibility he’d continue with GM after this agreement expires, and I take him at his word. But I also know he is the king of maximizing opportunity, and if there is a better opportunity out there he will jump on it.
One opportunity Penske is said to be pursuing involves a deal with Nissan-Renault’s Carlos Ghosn to import Renault Samsung Motors vehicles built in South Korea, as Automotive News first reported. Samsung builds four passenger vehicles, all based on existing Nissan vehicle architectures. Renault owns 80.1 percent of Renault Samsung, while South Korean credit card issuer Samsung Card owns the rest of the company.
If Penske goes this route he just may take over the low-end part of the U.S. market all by himself. I could certainly envision Penske commissioning a stylized urban mini car nicknamed the “Sammy” to be sold over here that would undercut the major players in one fell swoop.
And just how stupid would GM look at that point?
But GM was definitely in a Catch-22 situation with Saturn. If they made a deal with a lesser entity than the Penske Automotive Group, then they would have willingly thrown their excellent Saturn dealer body under the bus, which would have been disastrous. But now that they have made a deal with Penske, it’s very possible that they have just signed away their ability to compete at the low-end of the market, which, as we like to say around here, would be a Mount Rushmore-sized Bowl of Not Good.
With this deal, Penske gets the Saturn brand, the crucial parts and service operation (still based in Spring Hill, Tennessee) and around 350 dealerships, although that number is expected to be slashed considerably. Penske is offering “roles in the company” to former Chrysler Vice Chairman and President Tom LaSorda and to Jill Lajdziak, who worked so long and hard to make this deal happen.
Anyone who thinks Penske won’t be a force to be reckoned with in the U.S. market with this Saturn deal is sadly mistaken. He’s too smart and his organization is too talented, and the leanly configured Penske Automotive Group is perfectly constructed to make this deal work successfully.
“Effort = Results” has been a motto of Roger's since back when he first started his own racing team. And it still drives him today.
No one outworks Roger Penske and his legions.
And the rest of the U.S auto industry is about to find that out.
Thanks for listening.
Editor's Note: This is the 500th issue of Autoextremist.com, so we felt it was appropriate that the subject of Peter's column this week be the "King" of the Indianapolis 500, Roger Penske, who just two weeks ago captured his 15th win in the "Greatest Spectacle in Racing." Also, if you would like to read Peter's 10th Anniversary of AE column - "Ten Years After" - or any of the previous issues, scroll down and click on "Next Entry" below. - WG
See another live episode of "Autoline After Hours" hosted by Autoline Detroit's John McElroy, with Peter De Lorenzo and auto industry PR veteran Jason Vines this Thursday evening, June 11, at 7:00PM EDT at www.autolinedetroit.tv. By the way, if you'd like to subscribe to the Autoline After Hours podcasts, click on the following links:
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