Renault says Saturn supply deal ‘just didn't add up'

In the eleventh hour of Roger Penske's venture to acquire Saturn from General Motors Co. to keep the brand alive, Renault's executive committee in France concluded, “Ca fait deux.”

Rough translation: “It's not going to come together.”

Despite Penske's statements that his organization had been in discussions with automakers around the world, ultimately his hopes had been pinned on only one: Renault SA.

Penske and Renault CEO Carlos Ghosn are friends and talk frequently.

But Frederique LeGreves, Renault's chief spokeswoman, says it came down to the math.

“The business case just didn't add up,” LeGreves said from Paris. “We looked at doing it. There was nothing political in our decision. It's just that the math wasn't happening.”

No models, no Saturn

Renault's decision effectively killed Saturn.

GM was to halt production of Saturn vehicles in late 2011. Without Renault's agreement to supply Penske's Saturn distribution network with future models after that, Penske could not sign a formal agreement with GM to take over the brand. Without a Penske deal, GM had no one else. GM immediately told dealers that it would wind down the brand and dealership network.

Tony Pordon, a senior vice president at Penske Automotive Group Inc., spoke of Renault's decision, although he refrained from identifying Renault as the other party in Penske's negotiations over sourcing vehicles.

“At that moment,” he says, “we didn't have anybody signed. For us to have closed this transaction with GM without a formal agreement for a supply of vehicles, we would be subjecting ourselves and our shareholders to a lot of risk.

“Yes, there are other automakers out there, but we spent four months negotiating this arrangement. It was time to sign, and we couldn't.”

Penske issued a formal statement saying only that the “board of directors” of an automaker with whom Penske had been negotiating had rejected the deal, making it impossible for Penske to move forward.

LeGreves says it was not Renault's board of directors, which is comprised of people from outside Renault, but was actually the automaker's executive committee, made up of company senior management.

Cherchez le dealer?

Don Groppetti, a Nissan dealer from Visalia, Calif., wonders if he, too, had something to do with killing the deal. Groppetti is 2009 chairman of the Nissan National Dealer Advisory Board.

Nissan dealers across the country had been reading the summer headlines about Penske's effort to keep Saturn alive by sourcing vehicles from another automaker. Saturn competes directly with Nissan in the United States.

It was widely known in the car business that Penske was talking to Renault. Carlos Ghosn is also CEO of Nissan Motor Co. Nissan's U.S. sales have shrunk along with almost everyone else's over the past year. Groppetti says Nissan dealers were beginning to murmur.

Was Nissan going to rebadge its vehicles and give them to Saturn?

“We were very concerned about that,” Groppetti says. “We obviously wondered about the wisdom of it.”

At a July dealer advisory board meeting, Groppetti and his fellow dealers questioned Nissan's North American management about the potential Saturn deal. “We said, ‘We don't want Nissan products going to Saturn,'” Groppetti recounts.

“They said, ‘Nissan is not involved in any conversations with Roger Penske.'

“We said, ‘Well, whoever is involved in talks with Mr. Penske, would you please pass along our concerns about this?'”

Renault's LeGreves said she can't confirm that any such message found its way into the Renault's executive committee deliberations. But she waves away the scenario.

“It was much simpler than that,” she said. “It was a business consideration. We talked about it. It was decided we couldn't make it work.”

By Lindsay Chappell- Automotive News