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Renault Board Killed Deal with Penske Saturn

GM is now liquidating the division.

by on Oct.02, 2009

The Renault Board balks at Ghosn's Saturn plan.

The Renault Board balks at Ghosn's Saturn plan.

The key to the mystery behind the sudden end to General Motors Company’s effort to sell Saturn lies with the board of Renault-Nissan. Renault-Nissan chief Carlos Ghosn had signed off on the deal that would have cleared the way for Saturn to begin selling vehicles built by Renault-Nissan’s South Korean affiliate, Samsung, according to a source familiar with the negotiations.

The deal would have raised Samsung’s profile in the global industry and increased the utilization-rate at the Korean company’s manufacturing center, while providing Saturn with new vehicles.

Renault’s chief financial officer in an interview with Bloomberg news has acknowledged it was in talks with racing mogul Roger Penske, who is also the founder of the Penske Automotive Group of Bloomfield Hills, Michigan.

Penske, who prefers to maintain a low profile away from the track, had never identified his potential partner. That is the reason for his carefully worded statement where Penske said the “board” of an unidentified company led to the collapse of the deal.

Ultimately, Ghosn and Penske, two the most formidable executives in the car business, could not convince the Renault-Nissan board that a Samsung-Saturn alliance was a good idea.

It demonstrates a complete lack of faith in the U.S. auto market where Nissan is posting heavy losses. It also might indicate a lack of faith in Ghosn’s judgment. The list of possible reservations also include concern about creating a new-competitor for Nissan in the US and worries about potential liabilities for Renault-Nissan if the Saturn venture failed, analysts suggested privately.