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Foreign brands gain US entry with GM's dismantling

(Agencies)
Updated: 2009-06-07 20:43

DETROIT – More foreign car brands could find their way into American garages under a plan by auto racing magnate Roger Penske's dealership group to snap up Saturn from the ruins of General Motors Corp.

A customer looks at several different Saturn models for sale at a Saturn dealership in San Jose, Calif., June 5, 2009. General Motors Corp. has a tentative deal to sell its Saturn brand to auto racing magnate Roger Penske's dealership group, both companies said Friday. [Agencies]

The deal announced Friday is another example of how the cataclysm that hit Detroit's three carmakers is reshaping the global automotive landscape in profound ways, reducing their worldwide influence and — if Saturn turns out as Penske envisions — opening new markets to smaller companies.

"There's no doubt that the automotive deck chairs are changing," said Michael Robinet, vice president of CSM Worldwide, a Detroit-area auto industry consulting firm.

Full coverage:  Global Auto Industry Woes Related readings:  GM to sell Saturn brand to Roger Penske  GM bonds signal value may top Ford on bailout  GM's Chinese JVs report record monthly sales  GM China JVs report record monthly sales  GM to sell Hummer brand to Chinese company

In the shake-up, well-known brands are changing flags quicker than an oil tanker in pirate-infested waters. Italy's Fiat SpA is waiting for US courts to approve its acquisition of Chrysler LLC's assets.

GM has worked deals to turn its German subsidiary Adam Opel GmbH over to a Canadian auto parts company with Russian backing. And Hummer may be going Chinese.

Yet industry experts are doubtful that the flurry of mergers and alliances will be any more durable than failed marriages of the past, proving to be just one big distraction from the underlying issue that made them so vulnerable in the first place: making more cars than people can buy.

Still, Penske, who already runs Penske Automotive Group Inc., the second-largest US dealer network, thinks his business model is different enough to be successful.

GM and Penske expect to close the Saturn deal in the third quarter, with the wounded Detroit automaker continuing to build three models for Saturn to distribute.

Key to its success, though, will be the ability to sign on other global manufacturers to make cars for Saturn, giving it a diverse portfolio of vehicles that will sell whether gasoline prices are high or low.

But by opening the door to automakers not now in the US, such as France's Renault, Penske could alter the market here, allowing smaller automakers to compete against Detroit.

Penske, in an interview with The Associated Press, said foreign automakers would be key to his business model, but they will have to match GM quality standards before Saturn's 350-dealer network will distribute their products.

"As people around the world look at that, they have the opportunity to tap us on the shoulder and say 'we have product that we'd like to bring into the US,'" he said.

Other foreign automakers who have succeeded in the US began with a distribution network, then started manufacturing operations, he said.

Honda Motor Co., for example, started selling motorcycles at a few US dealerships in 1959, then imported cars as its dealership ranks grew. But the Japanese company didn't build vehicles in the US until 1979, when it opened a motorcycle plant in Marysville, Ohio, that later grew to build the popular Accord sedan.

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