Penske Automotive Buys Saturn

PENSKE AUTOMOTIVE BUYS SATURN

Penske Automotive (PAG) today announced that it will be purchasing the Saturn brand, including the rights to sell parts and cars through the Saturn dealerships.

There may be little cash involved, as no inventory is being transferred. The company also may outsource production to a lower-cost producer once an initial GM manufacturing period ends.

The keys to this deal are finding an Indian or Chinese producer to lower Saturn’s costs, and also pushing more and varied product through the Saturn dealerships. Ultimately, this is a “dealership acquisition” by Penske. We think the deal will be successful and is well timed. Auto sales have bottomed and may be poised for a slow recovery.

Read the full analyst report on PAG